FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2004
or
| ¨ | 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 0-27560
ACT Teleconferencing, Inc.
(Exact name of registrant as specified in its charter)
| Colorado | 84-1132665 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
1526 Cole Blvd., Suite 300, Golden, Colorado 80401
(Address of principal executive offices, zip code)
(303) 235-4399
(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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of May 13, 2004, 14,699,120 shares of the issuer’s common stock were outstanding.
FORM 10-Q
Table of Contents
| Page No. | ||||
| PART I. |
||||
| Item 1. |
Financial Statements (Unaudited) |
|||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. |
14 | |||
| Item 4. |
14 | |||
| PART II. |
||||
| Item 6. |
15 | |||
| 16 | ||||
PART I – Financial Information
Consolidated Balance Sheets
(Unaudited)
| In Thousands (000s) – except for share data |
March 31 2004 |
December 31 2003 |
||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 3,300 | $ | 1,726 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $545 and $652 in 2004 and 2003, respectively) |
9,137 | 10,258 | ||||||
| Prepaid expenses and other current assets |
1,587 | 1,210 | ||||||
| Total current assets |
14,024 | 13,194 | ||||||
| Equipment: |
||||||||
| Telecommunications equipment |
23,391 | 23,021 | ||||||
| Software |
6,800 | 6,591 | ||||||
| Office equipment |
11,777 | 11,667 | ||||||
| Less: accumulated depreciation |
(21,373 | ) | (19,998 | ) | ||||
| Total equipment – net |
20,595 | 21,281 | ||||||
| Other assets: |
||||||||
| Goodwill |
18,264 | 18,264 | ||||||
| Other intangible assets (net of accumulated amortization of $1,172 and $784 in 2004 and 2003, respectively) |
394 | 780 | ||||||
| Investments |
100 | 100 | ||||||
| Other long term assets |
923 | 1,004 | ||||||
| Total assets |
$ | 54,300 | $ | 54,623 | ||||
| Liabilities and shareholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 3,858 | $ | 6,171 | ||||
| Accrued liabilities |
3,674 | 4,729 | ||||||
| Deferred revenue – current |
1,328 | 1,648 | ||||||
| Current debt due to a related party |
634 | 634 | ||||||
| Current portion of debt |
4,909 | 6,378 | ||||||
| Capital lease obligations due in one year |
695 | 769 | ||||||
| Income taxes payable |
113 | 51 | ||||||
| Total current liabilities |
15,211 | 20,380 | ||||||
| Long-term debt |
1,423 | 3,121 | ||||||
| Long-term debt due to related party |
8,667 | 7,080 | ||||||
| Capital lease obligations due after one year |
452 | 466 | ||||||
| Other long term liabilities |
1,017 | 939 | ||||||
| Deferred income taxes |
488 | 527 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock, no par value; 25,000,000 shares authorized 14,665,634 and 10,132,660 shares issued and 14,583,734 and 10,050,760 outstanding in 2004 and 2003, respectively |
48,901 | 43,310 | ||||||
| Treasury stock, at cost (81,900 shares) |
(241 | ) | (241 | ) | ||||
| Accumulated deficit |
(22,073 | ) | (21,671 | ) | ||||
| Accumulated other comprehensive income |
455 | 712 | ||||||
| Total shareholders’ equity |
27,042 | 22,110 | ||||||
| Total liabilities and shareholder’s equity |
$ | 54,300 | $ | 54,623 | ||||
See accompanying notes to consolidated financial statements.
3
Consolidated Statements of Operations
(Unaudited)
| For the three months ended March 31, |
||||||||
| In thousands (000s) except for per share amounts |
2004 |
2003 |
||||||
| Net revenues |
$ | 13,996 | $ | 14,908 | ||||
| Cost of services |
8,482 | 9,857 | ||||||
| Gross profit |
5,514 | 5,051 | ||||||
| Selling, general and administration expense |
5,427 | 5,527 | ||||||
| Operating income (loss) |
87 | (476 | ) | |||||
| Other Income (expenses) |
||||||||
| Interest expense, net |
(590 | ) | (311 | ) | ||||
| Foreign currency (loss) |
(91 | ) | — | |||||
| Gain on elimination of note payable |
261 | — | ||||||
| Loss before income taxes |
(333 | ) | (787 | ) | ||||
| Provision for income taxes |
(69 | ) | (31 | ) | ||||
| Net loss |
(402 | ) | (818 | ) | ||||
| Preferred stock dividends |
— | 228 | ||||||
| Net loss available to common shareholders |
$ | (402 | ) | $ | (1,046 | ) | ||
| Weighted average number of shares outstanding – basic and diluted |
13,439,523 | 9,479,998 | ||||||
| Loss per share |
||||||||
| Basic and diluted |
$ | (.03 | ) | $ | (0.11 | ) | ||
See accompanying notes to consolidated financial statements.
4
Consolidated Statements of Shareholders’ Equity
(Unaudited)
| In Thousands (000s) – except for share data |
Common Stock |
Accumulated Deficit |
Treasury stock |
Accumulated other income (loss) |
Total |
||||||||||||||||
| Shares |
Amount |
||||||||||||||||||||
| Balance at January 1, 2004 |
11,022,043 | $ | 43,310 | $ | (21,671 | ) | $ | (241 | ) | $ | 712 | $ | 22,110 | ||||||||
| Shares issued in private placement |
3,600,000 | 5,307 | 5,307 | ||||||||||||||||||
| Issuance of warrants in association with debt |
137 | 137 | |||||||||||||||||||
| Shares purchased by employees |
9,666 | 14 | 14 | ||||||||||||||||||
| Value of stock issued to employees and |
33,925 | 133 | 133 | ||||||||||||||||||
| Comprehensive loss |
|||||||||||||||||||||
| Net loss |
(402 | ) | (402 | ) | |||||||||||||||||
| Other comprehensive loss, net of tax |
(257 | ) | (257 | ) | |||||||||||||||||
| Balance at March 31, 2004 |
14,665,634 | $ | 48,901 | $ | (22,073 | ) | $ | (241 | ) | $ | 455 | $ | 27,042 | ||||||||
See accompanying notes to consolidated financial statements.
5
Consolidated Statements of Cash Flow
(Unaudited)
| For the three months ended March 31 |
||||||||
| In thousands (000s) |
2004 |
2003 |
||||||
| Operating activities |
||||||||
| Net (loss) |
$ | (402 | ) | $ | (818 | ) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: |
||||||||
| Depreciation |
1,273 | 1,270 | ||||||
| Gain on elimination of note payable |
(261 | ) | — | |||||
| Amortization of other intangibles |
99 | 93 | ||||||
| Amortization of debt costs |
331 | 50 | ||||||
| Deferred income taxes |
(49 | ) | 23 | |||||
| Shares issued to employees and directors for compensation |
133 | 382 | ||||||
| Foreign Currency Exchange (Gain)/Loss |
91 | — | ||||||
| Cash flow before changes in operating assets and liabilities: |
1,215 | 1,000 | ||||||
| Changes in operating assets and liabilities, net of effects of business combinations: |
||||||||
| Accounts receivable |
1,223 | (349 | ) | |||||
| Prepaid expenses and other assets |
(364 | ) | (517 | ) | ||||
| Accounts payable |
(2,335 | ) | (205 | ) | ||||
| Deferred Revenue |
(320 | ) | (457 | ) | ||||
| Accrued liabilities |
(1,160 | ) | 408 | |||||
| Income taxes payable |
62 | (183 | ) | |||||
| Net cash used for operating activities |
(1,679 | ) | (303 | ) | ||||
| Investing activities |
||||||||
| Equipment purchases |
(542 | ) | (569 | ) | ||||
| Net cash used for investing activities |
(542 | ) | (569 | ) | ||||
| Financing activities |
||||||||
| Net proceeds from the issuance of debt |
157 | 824 | ||||||
| Repayments of debt and capital leases |
(1,765 | ) | (767 | ) | ||||
| Net proceeds from the issuance of common stock |
5,321 | 17 | ||||||
| Net proceeds from issuance of warrants in association with debt |
137 | — | ||||||
| Cash paid for the purchase of treasury stock |
— | (5 | ) | |||||
| Payment of preferred stock dividends and principal |
— | (168 | ) | |||||
| Net cash provided by (used for) financing activities |
3,850 | (99 | ) | |||||
| Effect of exchange rate changes on cash |
(55 | ) | (298 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
1,574 | (1,269 | ) | |||||
| Cash and cash equivalents beginning of period |
1,726 | 3,176 | ||||||