ANALYTICAL SURVEYS INC - 10-Q Quarterly Report

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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 March 31, 2004

¨ 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 May 11, 2004, was 1,089,173.

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	26

Item 4.	Controls and Procedures	27

PART 2.	OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 6.	Exhibits and Reports of Form 8-K	29

SIGNATURES		31

EXHIBIT INDEX

Exhibit 31.1	Section 302 Certification of Chief Executive Officer

Exhibit 31.2	Section 302 Certification of Chief Financial Officer

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

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

Part I

Financial Information

Item 1. Financial Statements

ANALYTICAL SURVEYS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)


	March 31, 2004			September 30, 2003
	(Unaudited)

ASSETS
Current assets:
Cash	$	600		1,952
Accounts receivable, net of allowance for doubtful accounts of $100 and $100		3,054		3,029
Revenue in excess of billings		4,894		6,112
Prepaid expenses and other		244		166


Total current assets		8,792		11,259


Equipment and leasehold improvements, at cost:
Equipment		4,867		4,896
Furniture and Fixtures		484		484
Leasehold improvement		267		267

		5,618		5,647
Less accumulated depreciation and amortization		(5,253	)	(5,126	)

Net equipment and leasehold improvements		365		521


Total assets	$	9,157		11,780

ANALYTICAL SURVEYS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)


	March 31, 2004			September 30, 2003
	(Unaudited)			(As Restated)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		77		74
Billings in excess of revenue		126		162
Accounts payable		1,431		2,504
Accrued liabilities		1,049		647
Accrued interest – related party		170		150
Redeemable preferred stock – current portion		800		—
Accrued payroll and related benefits		906		958
Fair value of derivative features – related party		204		207

Total current liabilities		4,763		4,702

Long-term debt:
Notes payable, less current portion		14		53
Long-term debt – related party		1,588		1,832
Redeemable preferred stock; no par value. Authorized 2,500 shares; 1,600 shares issued and outstanding at March 31 and September 30 (liquidation value $2,240 and $1,600 respectively, less current portion)		925		1,450

Total long-term debt		2,527		3,335

Total liabilities		7,290		8,037

Stockholders’ equity:
Common stock; no par value. Authorized 10,000 shares; 1,085 and 824 shares issued and outstanding at March 31 and September 30, respectively		33,166		32,839
Accumulated deficit		(31,299	)	(29,096	)

Total stockholders’ equity		1,867		3,743

Total liabilities and stockholders’ equity	$	9,157		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 March 31,						Six Months Ended March 31,
	2004			2003			2004			2003
				(as restated)						(As restated)
Revenues	$	3,674		$	3,672		$	6,229		$	7,957

Costs and expenses
Salaries, wages and related benefits		1,682			2,402			3,396			4,998
Subcontractor costs		1,282			453			2,078			1,074
Other general and administrative		1,280			1,265			2,239			2,522
Depreciation and amortization		70			130			156			275
Severance and related costs		115			54			137			307

		4,429			4,304			8,006			9,176

Loss from operations		(755	)		(632	)		(1,777	)		(1,219	)

Other income (expense)
Interest expense, net		(204	)		(55	)		(430	)		(116	)
Other		57			(390	)		4			(286	)

		(147	)		(445	)		(426	)		(402	)

Loss before income taxes		(902	)		(1,077	)		(2,203	)		(1,621	)

Income tax expense		—			14			—			14

Net loss		(902	)		(1,091	)		(2,203	)		(1,635	)
Accretion of discount and dividends on preferred shares		—			(174	)		—			(394	)

Net loss available to common shareholders		(902	)		(1,265	)		(2,203	)		(2,029	)

Basic loss per common share: available to common shareholders		(0.83	)		(1.54	)		(2.13	)		(2.46	)

Diluted loss per common share: available to common shareholders		(0.83	)		(1.54	)		(2.13	)		(2.46	)

Weighted average common shares:
Basic		1,085			824			1,033			824
Diluted		1,085			824			1,033			824

See accompanying notes to consolidated financial statements

ANALYTICAL SURVEYS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended March 31, 2004

(In thousands)

(Unaudited)


	Common Stock
	Shares	Amount		Accumulated Deficit		Total
Balances at September 30, 2003 (As Restated)	824	$	32,839	(29,096	)	3,743

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

Issuance of inducement stock options	—		3	—		3

Net loss	—		—	(2,203	)	(2,203	)

Balances at March 31, 2004	1,085	$	33,166	(31,299	)	1,867

See accompanying notes to consolidated financial statements.

ANALYTICAL SURVEYS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended March 31
	2004			2003
				(As restated)
Cash flow from operating activities:
Net loss		(2,203	)	(1,635	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		156		275
Issuance of inducement options		3		—
Accretion of interest expense on preferred stock and convertible debt—related party		331		56
Change in fair value of derivative features—related party		(3	)	338
Gain on sale of assets		1		—
Changes in operating assets and liabilities:
Accounts receivable, net		(25	)	181
Revenue in excess of billings		1,218		2,122
Prepaid expenses and other		(79	)	115
Billings in excess of revenue		(36	)	(302	)
Accounts payable and other accrued liabilities		(624	)	(1,010	)
Accrued payroll and related benefits		(52	)	(466	)

Net cash used in operating activities		(1,313	)	(326	)

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