ANALYTICAL SURVEYS INC - 10-Q Quarterly Report

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, 2003

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 0-13111

ANALYTICAL SURVEYS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

COLORADO

84-0846389

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification Number)

11900 CROWNPOINT DRIVE, SAN ANTONIO, TEXAS 78233

(Address of principal executive offices)

(210) 657-1500

(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 past twelve (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 ninety (90) days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of common stock outstanding as of February 6, 2004, was 1,085,423.

TABLE OF CONTENTS


		PAGE
PART 1.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	25

PART 2.	OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 6.	Exhibits and Reports of Form 8-K	27

SIGNATURES		28

EXHIBIT INDEX

Exhibit 31.1	Section 302 Certification of Chief Executive Officer	29

Exhibit 31.2	Section 302 Certification of Chief Financial Officer	31

Exhibit 32.1	Section 906 of the Sarbanes-Oxley Act of 2002	33

Exhibit 32.2	Section 906 of the Sarbanes-Oxley Act of 2002	34

Part I

Financial Information

Item 1. Financial Statements

ANALYTICAL SURVEYS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)


	December 31, 2003			September 30, 2003
	(Unaudited)
ASSETS
Current assets:
Cash	$	2,032		1,952
Accounts receivable, net of allowance for doubtful accounts of $100 and $100		2,037		3,029
Revenue in excess of billings		5,713		6,112
Prepaid expenses and other		308		166

Total current assets		10,090		11,259

Equipment and leasehold improvements, at cost:
Equipment		4,899		4,896
Furniture and Fixtures		484		484
Leasehold improvement		267		267

		5,650		5,647
Less accumulated depreciation and amortization		(5,211	)	(5,126	)

Net equipment and leasehold improvements		439		521

Total assets	$	10,529		11,780

ANALYTICAL SURVEYS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)


	December 31, 2003			September 30, 2003
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		75		74
Billings in excess of revenue		262		162
Accounts payable		2,379		2,504
Accrued liabilities		615		647
Accrued interest – related party		148		150
Redeemable preferred stock – current portion		800		—
Accrued payroll and related benefits		830		958

Total current liabilities		5,109		4,495

Notes payable, less current portion		33		53
Senior secured convertible debenture – related party		1,617		1,900
Redeemable preferred stock; no par value. Authorized 2,500 shares; 1,600 shares issued and outstanding at December 31 and September 30 (liquidation value $2,240 and $1,600 respectively, less current portion)		800		1,450

Total long-term liabilities		2,450		3,403

Total liabilities		7,559		7,898

Stockholders’ equity:
Common stock; no par value. Authorized 10,000 shares; 1,085 and 824 shares issued and outstanding at December 31 and September 30, respectively		33,363		33,039
Accumulated deficit		(30,393	)	(29,157	)

Total stockholders’ equity		2,970		3,882

Total liabilities and stockholders’ equity	$	10,529		11,780

See accompanying notes to consolidated financial statements

ANALYTICAL SURVEYS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended December 31
	2003			2002
Revenues	$	2,554		4,285

Costs and expenses
Salaries, wages and related benefits		1,809		2,596
Subcontractor costs		796		621
Other general and administrative		864		1,257
Depreciation and amortization		85		145
Severance and related costs		22		253

		3,576		4,872

Loss from operations		(1,022	)	(587	)

Other income (expense)
Interest expense, net		(214	)	(50	)
Other		—		40

		(214	)	(10	)

Net loss		(1,236	)	(597	)

Accretion of discount and dividends on preferred shares		—		(220	)

Net loss available to common shareholders	$	(1,236	)	(817	)

Basic loss per common share: available to common shareholders	$	(1.26	)	(0.99	)

Diluted loss per common share: available to common shareholders	$	(1.26	)	(0.99	)

Weighted average common shares:
Basic		980		824
Diluted		980		824

See accompanying notes to consolidated financial statements

ANALYTICAL SURVEYS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended December 31, 2003

(In thousands)

(Unaudited)


	Common Stock			Accumulated Deficit		Total
	Shares	Amount		Accumulated Deficit		Total
Balances at September 30, 2003	824	$	33,039	(29,157	)	3,882

Common Stock issued pursuant to conversion of senior secured convertible note	261		324	—		324

Net loss	—		—	(1,236	)	(1,236	)

Balances at December 31, 2003	1,085	$	33,363	(30,393	)	2,970

See accompanying notes to consolidated financial statements.

ANALYTICAL SURVEYS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended December 31
	2003			2002
Cash flow from operating activities:
Net loss	$	(1,236	)	(597	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		85		145
Accretion of preferred stock and convertible debt		167		17
Changes in operating assets and liabilities:
Accounts receivable, net		992		(676	)
Revenue in excess of billings		399		1,731
Prepaid expenses and other		(142	)	(76	)
Billings in excess of revenue		100		74
Accounts payable and other accrued liabilities		(135	)	(536	)
Accrued payroll and related benefits		(128	)	(199	)

Net cash provided by (used in) operating activities		102		(117	)

Cash flows used in investing activities:
Purchase of equipment and leasehold improvements		(3	)	(108	)

Cash flows used in financing activities:
Principal payments on long-term debt, net		(19	)	(43	)

Net increase (decrease) in cash		80		(268	)

Cash at beginning of period	$	1,952		3,114

Cash at end of period	$	2,032		2,846

Supplemental disclosure of cash flow information:
Cash paid for interest	$	2		21

Issuance of common stock pursuant to conversion of debt	$	324		—

Accretion of preferred stock	$	150		200

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements

(Unaudited)

1. Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with the accounting policies described in our annual report for the year ended September 30, 2003. The consolidated financial statements include the accounts of Analytical Surveys, Inc. (“ASI” or the “Company”) and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended September 30, 2003.

The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present fairly the financial position of ASI, and its subsidiaries at December 31, 2003, the results of their operations for the three months ended December 31, 2003 and 2002 and cash flows for the three months ended December 31, 2003 and 2002.

All shares and per share amounts have been adjusted to reflect the Company’s one-for-ten reverse stock split effected in October 2002.

Stock Based Compensation. As permitted by SFAS No. 123, we account for our stock-based compensation utilizing the intrinsic-value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations. No stock-based employee compensation expense related to our stock option plans is reflected in net loss, as all options granted under those plans had an exercise price equal to the market value of the underlying Common Stock on the date of grant. Pro forma information regarding net loss and loss per share is required by SFAS No. 148. This information has been estimated at the date of grant using the fair value method.


	Three Months Ended December 31,
	2003			2002
	(in thousands)
Net loss, available to common shareholders as reported	$	(1,236	)	$	(817	)
Less: Pro forma option expense		15			50

Pro forma net loss	$	(1,251	)	$	(867	)

Basic loss per share, as reported	$	(1.26	)	$	(0.99	)
Less: Pro forma option expense		(0.02	)		(0.06	)

Pro forma basic loss per share	$	(1.28	)	$	(1.05	)

Diluted loss per share, as reported	$	(1.26	)	$	(0.99	)
Less: Pro forma option expense		(0.02	)		(0.06	)

Pro forma diluted loss per share	$	(1.28	)	$	(1.05	)

2. Earnings Per Share

Basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share include the effects of the potential dilution of outstanding options, warrants, and converti

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents