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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


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 DECEMBER 31, 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 000-27427

 
ALTIGEN COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE
  
94-3204299
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification Number)
     
4555 Cushing Parkway
Fremont, CA
  
94538
(Address of principal executive offices)
  
(Zip Code)
     
Registrant's telephone number, including area code: (510) 252-9712


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.     YES o NO  x

The number of shares of our common stock outstanding as of February 9, 2005 was: 14,563,687 shares
 



Table of Contents

PART I. FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements:
  
     
 
Balance Sheets as of December 31, 2004 and September 30, 2004
3
     
 
Statements of Operations for the Three Months Ended December 31, 2004 and 2003
4
     
 
Statements of Cash Flows for the Three Months Ended December 31, 2004 and 2003
5
     
 
Notes to Financial Statements
6
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
12
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
25
     
Item 4.
Controls and Procedures
25
     

PART II. OTHER INFORMATION

  
     
Item 1.
Legal Proceedings
26
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
26
     
Item 3.
Defaults Upon Senior Securities
26
     
Item 4.
Submission of Matters to a Vote of Security Holders
26
     
Item 5
Other Information
26
     
Item 6.
Exhibits
26
     
SIGNATURE
27
   
EXHIBIT INDEX
28
 

2
 
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements

ALTIGEN COMMUNICATIONS, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

   
December 31,
2004
  
September 30,
2004
  
           
ASSETS
              
Current assets:
              
Cash and cash equivalents
  
$
6,753
  
$
5,367
  
Short-term investments
    
3,261
    
4,667
  
Accounts receivable, net of allowances of $30 and $35 at December 31, 2004 and September 30, 2004, respectively
    
2,015
    
1,857
  
Inventories
    
890
    
1,058
  
Prepaid expenses and other current assets
    
168
    
67
  
Total current assets
    
13,087
    
13,016
  
Property and equipment:
              
Furniture and equipment
    
1,004
    
987
  
Computer software
    
920
    
915
  
     
1,924
    
1,902
  
Less: Accumulated depreciation and amortization
    
(1,772
)
  
(1,750
)
Net property and equipment
    
152
    
152
  
Other non-current assets:
              
Long-term investment
    
255
    
274
  
Long-term deposit
    
74
    
74
  
Total other non-current assets
    
329
    
348
  
Total assets
  
$
13,568
  
$
13,516
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
Accounts payable
  
$
724
  
$
798
  
Accrued liabilities:
              
Payroll and related benefits
    
273
    
330
  
Warranty (Note 3)
    
407
    
424
  
Marketing
    
126
    
139
  
Other
    
424
    
493
  
Deferred revenue
    
295
    
518
  
Total current liabilities
    
2,249
    
2,702
  
               
Long-term deferred rent
   
134
    
145
  
               
Stockholders' equity:
              
Convertible preferred stock, $0.001 par value; Authorized - 5,000,000 shares; None issued and outstanding at December 31, 2004 and September 30, 2003
    
--
    
--
  
Common stock, $0.001 par value; Authorized - 50,000,000 shares; Outstanding - 15,594,607 shares at December 31, 2004 and 15,462,506 shares at September 30, 2004
    
15
    
15
  
Treasury stock at cost - 1,063,895 shares at December 31, 2004 and September 30, 2004
    
(1,014
)
  
(1,014
)
Additional paid-in capital
    
62,678
    
62,505
  
Accumulated other comprehensive loss
    
--
   
(2
)
Accumulated deficit
    
(50,494
)
  
(50,835
)
Total stockholders' equity
    
11,185
    
10,669
  
Total liabilities and stockholders' equity
  
$
13,568
  
$
13,516
  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


3
 
ALTIGEN COMMUNICATIONS, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
 
   
Three Months Ended
December 31,
  
   
2004
  
2003
  
           
Net revenue:
              
Hardware 
  
$
3,564
  
$
3,220
  
Software 
    
711
    
410
  
Total net revenue
    
4,275
    
3,630
  
Cost of revenues:
              
Hardware 
    
1,615
   
1,406
  
Software 
    
52
    
32
  
Total cost of revenues
    
1,667
    
1,438
  
               
Gross profit 
    
2,608
    
2,192
  
               
Operating expenses:
              
Research and development 
    
822
    
828
  
Sales and marketing 
    
1,001
    
1,013
  
General and administrative 
    
475
    
422
  
               
Total operating expenses