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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
 
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 ý NO  o

Indicate by check mark whether the registrant is an accelerated filer.     YES o NO  ý

The number of shares of our common stock outstanding as of May 9, 2005 was: 14,695,371 shares
 


Table of Contents

PART I. FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements:
  
     
 
Balance Sheets as of March 31, 2005 and September 30, 2004
3
     
 
Statements of Operations for the Three and Six Months Ended March 31, 2005 and 2004
4
     
 
Statements of Cash Flows for the Six Months Ended March 31, 2005 and 2004
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)
 
   
March 31,
2005
  
September 30,
2004
  
ASSETS
          
Current assets:
          
Cash and cash equivalents
  
$
3,117
  
$
2,898
  
Short-term investments
    
6,565
    
7,136
  
Accounts receivable, net of allowances of $29 and $35 at March 31, 2005 and September 30, 2004, respectively
    
1,692
    
1,857
  
Inventories
    
1,131
    
1,058
  
Prepaid expenses and other current assets
    
151
    
67
  
Total current assets
    
12,656
    
13,016
  
Property and equipment:
              
Furniture and equipment
    
992
    
987
  
Computer software
    
920
    
915
  
 
    
1,912
    
1,902
  
Less: Accumulated depreciation and amortization
    
(1,744
)
  
(1,750
)
Net property and equipment
    
168
    
152
  
Other non-current assets:
              
Long-term investments
    
246
    
274
  
Long-term deposit
    
74
    
74
  
Other
    
90
    
—
  
Total other non-current assets
    
410
    
348
  
Total assets
  
$
13,234
  
$
13,516
  
 
              
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
Current liabilities:
              
Accounts payable
  
$
695
  
$
798
  
Accrued liabilities:
              
Payroll and related benefits
    
309
    
330
  
Warranty (Note 3)
    
386
    
424
  
Marketing
    
122
    
139
  
Other
    
442
    
493
  
Deferred revenue
    
736
    
518
  
Total current liabilities
    
2,690
    
2,702
  
 
              
Long-term deferred rent
   
128
    
145
  
 
              
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; Authorized - 5,000,000 shares; None issued and outstanding at March 31, 2005 and September 30, 2004
    
—
    
—
  
Common stock, $0.001 par value; Authorized - 50,000,000 shares; Outstanding - 15,698,917 shares at March 31, 2005 and 15,462,506 shares at September 30, 2004
    
16
    
15
  
Treasury stock at cost - 1,063,895 shares at March 31, 2005 and September 30, 2004
    
(1,014
)
  
(1,014
)
Additional paid-in capital
    
62,765
    
62,505
  
Accumulated other comprehensive gain (loss)
    
1
    
(2
)
Accumulated deficit
    
(51,352
)
  
(50,835
)
Total stockholders’ equity
    
10,416
    
10,669
  
Total liabilities and stockholders’ equity
  
$
13,234
  
$
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 March 31,
  
Six Months Ended March 31,
  
   
2005
  
2004
  
2005
  
2004
  
Net revenues:
                  
Hardware
  
$
2,354
  
$
2,937
  
$
5,918
  
$
6,157
  
Software
    
447
    
356
    
1,158
    
766
  
Total net revenues
    
2,801
    
3,293
    
7,076
    
6,923
  
Cost of revenues:
                          
Hardware
    
1,227
   
1,221
   
2,842
    
2,626
  
Software
    
33
    
29
    
85
    
62
  
Total cost of revenues
    
1,260
    
1,250
    
2,927
    
2,688
  
Gross profit
    
1,541
    
2,043
    
4,149
    
4,235
  
                           
Operating expenses:
                          
Research and development
    
935
    
819
    
1,757
    
1,647
  
Sales and marketing