UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2004
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 000-31511
@ROAD, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 94-3209170 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
47200 Bayside Parkway
Fremont, CA 94538
(Address of principal executive offices, including zip code)
510-668-1638
(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), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No o
As of July 30, 2004 there were 54,514,222 shares of the registrant’s Common Stock outstanding.
1
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
@Road, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and par value amounts)
(unaudited)
| June 30, | December 31, | |||||||
| 2004 | 2003 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 14,864 | $ | 103,669 | ||||
Short-term investments |
96,784 | 2,000 | ||||||
Accounts receivable, net |
5,813 | 7,109 | ||||||
Inventories |
3,248 | 2,425 | ||||||
Deferred product costs |
12,735 | 11,921 | ||||||
Prepaid expenses and other |
1,047 | 1,269 | ||||||
Total current assets |
134,491 | 128,393 | ||||||
Property and equipment, net |
2,406 | 2,298 | ||||||
Deferred product costs |
6,693 | 7,270 | ||||||
Intangible assets, net |
6 | 28 | ||||||
Other assets |
334 | 1,027 | ||||||
Total assets |
$ | 143,930 | $ | 139,016 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 3,493 | $ | 5,057 | ||||
Accrued liabilities |
5,559 | 5,465 | ||||||
Deferred revenue and customer deposits |
10,696 | 9,751 | ||||||
Total current liabilities |
19,748 | 20,273 | ||||||
Deferred revenue |
5,669 | 6,582 | ||||||
Other long-term liabilities |
12 | 33 | ||||||
Total liabilities |
25,429 | 26,888 | ||||||
Stockholders’ equity: |
||||||||
Preferred stock, $0.0001 par value,
10,000,000 shares authorized, shares
issued and outstanding: none at June 30,
2004 and December 31, 2003 |
— | — | ||||||
Common stock, $0.0001 par value,
250,000,000 shares authorized, shares
issued and outstanding: 54,416,483 at June
30, 2004, 53,700,445 at December 31, 2003 |
230,772 | 228,441 | ||||||
Deferred stock compensation |
— | (4 | ) | |||||
Notes receivable from stockholders |
(37 | ) | (87 | ) | ||||
Accumulated other comprehensive loss |
(188 | ) | — | |||||
Accumulated deficit |
(112,046 | ) | (116,222 | ) | ||||
Total stockholders’ equity |
118,501 | 112,128 | ||||||
Total liabilities and stockholders’ equity |
$ | 143,930 | $ | 139,016 | ||||
See notes to condensed consolidated financial statements.
3
@Road, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues: |
||||||||||||||||
Service |
$ | 14,385 | $ | 12,135 | $ | 28,412 | $ | 22,738 | ||||||||
Product |
3,946 | 3,634 | 7,811 | 6,772 | ||||||||||||
Total revenues |
18,331 | 15,769 | 36,223 | 29,510 | ||||||||||||
Costs and expenses: |
||||||||||||||||
Cost of service revenue (excluding intangibles amortization included below) |
4,278 | 4,266 | 8,241 | 8,058 | ||||||||||||
Cost of product revenue |
4,391 | 5,192 | 8,796 | 9,829 | ||||||||||||
Intangibles amortization |
11 | 10 | 21 | 434 | ||||||||||||
Sales and marketing |
3,082 | 2,840 | 6,193 | 5,437 | ||||||||||||
Research and development |
1,431 | 1,297 | 2,798 | 2,633 | ||||||||||||
General and administrative |
2,371 | 2,440 | 4,553 | 4,658 | ||||||||||||
Terminated
acquisition costs (Note 9) |
2,017 | — | 2,017 | — | ||||||||||||
Stock compensation(*) |
— | 95 | 4 | 287 | ||||||||||||
Total costs and expenses |
17,581 | 16,140 | 32,623 | 31,336 | ||||||||||||
Income (loss) from operations |
750 | (371 | ) | 3,600 | (1,826 | ) | ||||||||||
Other income
(expense), net: |
||||||||||||||||
Interest
income, net |
329 | 137 | 583 | 285 | ||||||||||||
Other income
(expense), net |
(13 | ) | 7 | (7 | ) | 11 | ||||||||||
Total other
income (expense), net |
316 | 144 | 576 | 296 | ||||||||||||
Net income (loss) |
$ | 1,066 | $ | (277 | ) | $ | 4,176 | $ | (1,530 | ) | ||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | 0.02 | $ | 0.00 | $ | 0.08 | $ | (0.03 | ) | |||||||
Diluted |
$ | 0.02 | $ | 0.00 | $ | 0.07 | $ | (0.03 | ) | |||||||
Shares used in calculating net income (loss) per share: |
||||||||||||||||
Basic |
54,185 | 48,196 | 53,978 | 47,887 | ||||||||||||
Diluted |
57,414 | 48,196 | 57,856 | 47,887 | ||||||||||||
(*)Stock compensation: |
||||||||||||||||
Cost of service revenue |
$ | — | $ | 2 | $ | — | $ | 7 | ||||||||
Cost of product revenue |
— | 4 | — | 14 | ||||||||||||
Sales and marketing |
— | 5 | 1 | 10 | ||||||||||||
Research and development |
— | 15 | 1 | 50 | ||||||||||||
General and administrative |
— | 69 | 2 | 206 | ||||||||||||
Total |
$ | — | $ | 95 | $ | 4 | $ | 287 | ||||||||
See notes to condensed consolidated financial statements.
4
@Road, Inc.
Condensed Consolidated Statements of Stockholder’s Equity and
Comprehensive Income
For the Six Months Ended June 30, 2004 and 2003
and the Six Months Ended December 31,
2003
(In thousands, except share amounts)
(unaudited)
| Notes | Accumulated | |||||||||||||||||||||||||||||||
| Deferred | Receivable | Other | Total | |||||||||||||||||||||||||||||
| Common Stock | Stock | From | Comprehensive | Accumulated | Stockholders’ | Comprehensive | ||||||||||||||||||||||||||
| Shares | Amount | Compensation | Stockholders | Loss | Deficit | Equity | Income (Loss) | |||||||||||||||||||||||||
BALANCES, January 1, 2003 |
47,747,156 | $ | 170,610 | $ | (491 | ) | $ | (2,068 | ) | $ | — | $ | (117,884 | ) | $ | 50,167 | ||||||||||||||||
Net loss |
(1,530 | ) | (1,530 | ) | $ | (1,530 | ) | |||||||||||||||||||||||||
Shares
issued under employee stock purchase plan |
287,545 | 595 | 595 | |||||||||||||||||||||||||||||
Exercise of stock options |
638,438 | 1,351 | 1,351 | |||||||||||||||||||||||||||||
Collection of notes receivable from stockholders |
543 | 543 | ||||||||||||||||||||||||||||||
Deferred stock compensation |
5 | (5 | ) | |||||||||||||||||||||||||||||
Reversal of deferred stock compensation due to
employee terminations |
(25 | ) | 25 | |||||||||||||||||||||||||||||
Amortization of deferred stock compensation |
— | — | 287 | — | — | — | 287 | |||||||||||||||||||||||||
BALANCES,
June 30, 2003 |
48,673,139 | $ | 172,536 | $ | (184 | ) | $ | (1,525 | ) | $ | — | $ | (119,414 | ) | $ | 51,413 | ||||||||||||||||
Net income |
3,192 | 3,192 | $ | 3,192 | ||||||||||||||||||||||||||||
Common stock issued through secondary public
offering, net of issuance costs |
4,000,000 | 51,889 | 51,889 | |||||||||||||||||||||||||||||
Shares
issued under employee stock purchase plan |
275,750 | 889 | 889 | |||||||||||||||||||||||||||||
Exercise of stock options |
751,556 | 3,127 | 3,127 | |||||||||||||||||||||||||||||
Collection of notes receivable from stockholders |
1,438 | 1,438 | ||||||||||||||||||||||||||||||
Amortization of deferred stock compensation |
180 | — | — | — | 180 | |||||||||||||||||||||||||||
BALANCES, December 31, 2003 |
53,700,445 | $ | 228,441 | $ | (4 | ) | $ | (87 | ) | $ | — | $ | (116,222 | ) | $ | 112,128 | ||||||||||||||||
Net income |
$ | 4,176 | $ | 4,176 | $ | 4,176 | ||||||||||||||||||||||||||
Unrealized
gain (loss) loss on short-term investments |
(188 | ) | (188 | ) | (188 | ) | ||||||||||||||||||||||||||
Comprehensive
income |
$ | 3,988 | ||||||||||||||||||||||||||||||
Shares
issued under employee stock purchase plan |
242,585 | 1,129 | 1,129 | |||||||||||||||||||||||||||||
Exercise of stock options |
473,453 | 1,202 | 1,202 | |||||||||||||||||||||||||||||
Collection of notes receivable from stockholders |
50 | 50 | ||||||||||||||||||||||||||||||
Amortization of deferred stock compensation |
4 | — | — | — | 4 | |||||||||||||||||||||||||||
BALANCES,
June 30, 2004 |
54,416,483 | $ | 230,772 | $ | — | $ | (37 | ) | $ | (188 | ) | $ | (112,046 | ) | $ | 118,501 | ||||||||||||||||
See notes to condensed consolidated financial statements.
5
@Road, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2004 | 2003 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | 4,176 | $ | (1,530 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
617 | 1,511 | ||||||
Loss on disposal of property and equipment |
— | 4 | ||||||
Amortization of deferred stock compensation |
4 | 287 | ||||||
Provision for inventory reserves |
(48 | ) | 536 | |||||
Provision for doubtful accounts and sales returns |
(413 | ) | 60 | |||||
Change in assets and liabilities: |
||||||||
Accounts receivable |
1,709 | (210 | ) | |||||
Inventories |
(775 | ) | 269 | |||||
Deferred product costs |
(237 | ) | (2,758 | ) | ||||
Prepaid expenses and other |
(1,100 | ) | 250 | |||||
Accounts payable |
(1,564 | ) | (523 | ) | ||||
Accrued and other liabilities |
72 | (109 | ) | |||||
Deferred revenue and customer deposits |
32 | 3,471 | ||||||
Net cash provided by operating activities |
2,473 | 1,258 | ||||||
Cash flows from investing activities: |
||||||||
Purchase of property and equipment |
(704 | ) | (746 | ) | ||||
Terminated
acquisition costs |
2,017 | — | ||||||
Purchases of short-term investments |
(94,972 | ) | — | |||||
Proceeds from the sale of restricted short-term investments |
— | 241 | ||||||
Net cash used in investing activities |
(93,659 | ) | (505 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from sale of common stock |
2,331 | 1,946 | ||||||
Proceeds from payments on notes receivable issued to stockholders |
50 | 543 | ||||||
Net cash provided by financing activities |
2,381 | 2,489 | ||||||
Net increase (decrease) in cash and cash equivalents |
(88,805 | ) | 3,242 | |||||
Cash and cash equivalents: |
||||||||
Beginning of period |
103,669 | 35,659 | ||||||
End of period |
$ | 14,864 | $ | 38,901 | ||||
Non-cash investing and financing activities: |
||||||||
Deferred stock compensation |
$ | — | $ | 5 | ||||
Reversal of deferred stock compensation |
$ | — | $ | 25 | ||||
Unrealized
loss on short-term investments |
$ | 188 | $ | |||||
See notes to condensed consolidated financial statements.
6
@Road, Inc.
Notes To Condensed Consolidated Financial Statements
(unaudited)
Note 1 — Basis of Presentation and Summary of Significant Accounting Policies
The accompanying condensed consolidated financial statements were prepared by At Road, Inc., without audit, 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 accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. In the opinion of management, the financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the financial condition, results of operations, and cash flows for the periods presented. Results of operations for the periods presented are not necessarily indicative of results to be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto in its Form 10-K for the year ended December 31, 2003 (No. 000-31511), filed with the SEC.
Motorola is the sole supplier of microcontrollers used in the Company’s products. The Company expects to rely on Motorola as a source for this component for the next several years. Taiwan Semiconductor Manufacturing Company (TSMC) is the sole manufacturer of the Company’s Global Positioning System digital receiver chips used in some of the Company’s products. The Company expects to rely on TSMC as a source for this component for at least the next twelve months.
Note 2 — Basic and Diluted Net Income (Loss) per Share
Basic net income (loss) per share excludes the effect of dilutive securities and is computed by dividing net income (loss) by the weighted average common shares outstanding (excluding shares subject to repurchase). Diluted net income per share is computed by dividing net income by the weighted average common shares outstanding plus the weighted average number of common shares resulting from the assumed conversion of outstanding stock options and employee stock plan shares using the treasury stock method. Common share equivalents are excluded from the computation in loss periods, as their effect would be antidilutive.
The following is a reconciliation of the denominators used in calculating basic and diluted net income (loss) per share (in thousands, except per share data):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Net income (loss) |
$ | 1,066 | $ | (227 | ) | $ | 4,176 | $ | (1,530 | ) | ||||||
Shares (denominator): |
||||||||||||||||
Basic |
||||||||||||||||
Weighted average common shares outstanding |
54,185 | 48,373 | 53,990 | 48,125 | ||||||||||||
Weighted average common shares outstanding subject to repurchase |
— | (177 | ) | (12 | ) | (238 | ) | |||||||||
Shares used in computation of basic net income (loss) per share |
54,185 | 48,196 | 53,978 | 47,887 | ||||||||||||
Diluted |
||||||||||||||||
Dilution impact from option equivalent shares |
3,110 | N/A | 3,713 | N/A | ||||||||||||
Dilution impact from employee stock purchase plan |
119 | N/A | 153 | N/A | ||||||||||||
Add back weighted average common shares subject to repurchase |
— | N/A | 12 | N/A | ||||||||||||
Shares used in computation of diluted net income (loss) per share |
57,414 | 48,196 | 57,856 | 47,887 | ||||||||||||
Basic net income (loss) per share |
$ | 0.02 | $ | 0.00 | $ | 0.08 | $ | (0.03 | ) | |||||||
Diluted net income (loss) per share |
$ | 0.02 | $ | 0.00 | $ | 0.07 | $ | (0.03 | ) | |||||||
The total number of options and restricted stock subject to repurchase excluded from the diluted net loss per share computations were as follows (in thousands):
7
| Three and Six Months Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2004 | 2003 | |||||||||||||||
Shares of common stock subject to repurchase |
— | 131 | ||||||||||||||
Outstanding options |
3,586 | 7,638 | ||||||||||||||
Note 3 — Balance Sheet Items
Inventories consist of raw materials, work in process and finished goods, and are stated at the lower of cost (average cost) or market and consist of the following (in thousands):
| June 30, | December 31, | |||||||
| 2004 | 2003 | |||||||
Raw materials |
$ | 1,178 | $ | 1,294 | ||||
Work in process |
468 | 177 | ||||||
Finished goods |
1,602 | 954 | ||||||