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 June 30, 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) 235-9000
(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 August 13, 2004, 14,936,049 shares of the issuer’s common stock were outstanding.
FORM 10-Q
Table of Contents
| Page No. | ||||
| PART I. | Financial Information | |||
| Item 1. | Financial Statements (Unaudited) | |||
| Consolidated Balance Sheets | 3 | |||
| Consolidated Statements of Operations | 4 | |||
| Consolidated Statements of Shareholders’ Equity | 5 | |||
| Consolidated Statements of Cash Flow | 6 | |||
| Notes to Consolidated Financial Statements | 7 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11 | ||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 15 | ||
| Item 4. | Controls and Procedures | 15 | ||
| PART II. | Other Information | |||
| Item 6. | Exhibits and Reports on Form 8-K | 16 | ||
| SIGNATURE | 17 | |||
| CERTIFICATIONS | 18 | |||
PART I – Financial Information
Consolidated Balance Sheets
| In thousands (000s) except for share data |
June 30 2004 |
December 31 2003 |
||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 2,721 | $ | 1,726 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $509 and $652 in 2004 and 2003, respectively) |
8,619 | 10,258 | ||||||
| Prepaid expenses and other current assets |
1,689 | 1,210 | ||||||
| Total current assets |
13,029 | 13,194 | ||||||
| Equipment: |
||||||||
| Telecommunications equipment |
23,215 | 23,021 | ||||||
| Software |
6,963 | 6,591 | ||||||
| Office equipment |
11,817 | 11,667 | ||||||
| Less: accumulated depreciation |
(22,398 | ) | (19,998 | ) | ||||
| Total equipment – net |
19,597 | 21,281 | ||||||
| Other assets: |
||||||||
| Goodwill |
18,264 | 18,264 | ||||||
| Other intangible assets (net of accumulated amortization of $1,257 and $784 in 2004 and 2003, respectively) |
309 | 780 | ||||||
| Investments |
100 | 100 | ||||||
| Other long term assets |
844 | 1,004 | ||||||
| Total assets |
$ | 52,143 | $ | 54,623 | ||||
| Liabilities and shareholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 4,630 | $ | 6,171 | ||||
| Accrued liabilities |
3,755 | 4,729 | ||||||
| Deferred revenue – current |
1,035 | 1,648 | ||||||
| Current debt due to a related party |
9,239 | 634 | ||||||
| Current portion of debt |
5,614 | 6,378 | ||||||
| Capital lease obligations due in one year |
589 | 769 | ||||||
| Income taxes payable |
43 | 51 | ||||||
| Other liabilities |
1,094 | 0 | ||||||
| Total current liabilities |
25,999 | 20,380 | ||||||
| Long-term debt |
0 | 3,121 | ||||||
| Long-term debt due to related party |
0 | 7,080 | ||||||
| Capital lease obligations due after one year |
347 | 466 | ||||||
| Other long term liabilities |
0 | 939 | ||||||
| Deferred income taxes |
560 | 527 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock, no par value; 25,000,000 shares authorized 14,935,562 and 11,022,043 shares issued and 14,835,662 and 10,940,207 outstanding in 2004 and 2003, respectively |
49,202 | 43,310 | ||||||
| Treasury stock, at cost (81,900 shares) |
(241 | ) | (241 | ) | ||||
| Accumulated deficit |
(24,002 | ) | (21,671 | ) | ||||
| Accumulated other comprehensive income |
278 | 712 | ||||||
| Total shareholders’ equity |
25,237 | 22,110 | ||||||
| Total liabilities and shareholders’ equity |
$ | 52,143 | $ | 54,623 | ||||
See accompanying notes to consolidated financial statements.
3
Consolidated Statements of Operations
(Unaudited)
| In thousands (000s) except for per share amounts |
For the three months ended June 30, |
For the six months ended June 30, |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net revenues |
$ | 13,601 | $ | 15,226 | $ | 27,597 | $ | 30,134 | ||||||||
| Cost of services |
8,642 | 8,909 | 17,124 | 18,766 | ||||||||||||
| Gross profit |
4,959 | 6,317 | 10,473 | 11,368 | ||||||||||||
| Selling, general and administration expense |
6,004 | 6,224 | 11,431 | 11,750 | ||||||||||||
| Operating income (loss) |
(1,045 | ) | 93 | (958 | ) | (382 | ) | |||||||||
| Interest expense, net |
(752 | ) | (475 | ) | (1,342 | ) | (786 | ) | ||||||||
| Foreign currency gain (loss) |
(60 | ) | 0 | (151 | ) | 0 | ||||||||||
| Gain on elimination of note payable |
0 | 0 | 261 | 0 | ||||||||||||
| Loss before income taxes |
(1,857 | ) | (382 | ) | (2,190 | ) | (1,168 | ) | ||||||||
| Provision for income taxes |
(72 | ) | (176 | ) | (141 | ) | (209 | ) | ||||||||
| Net Loss |
(1,929 | ) | (558 | ) | (2,331 | ) | (1,377 | ) | ||||||||
| Preferred stock dividends |
0 | (212 | ) | 0 | (440 | ) | ||||||||||
| Net loss available to common shareholders |
$ | (1,929 | ) | $ | (770 | ) | $ | (2,331 | ) | $ | (1,817 | ) | ||||
| Weighted average number of shares outstanding—basic and diluted |
14,835,276 | 10,202,380 | 14,199,212 | 9,843,184 | ||||||||||||
| Loss per share |
||||||||||||||||
| Basic and diluted |
$ | (0.13 | ) | $ | (0.08 | ) | $ | (0.16 | ) | $ | (0.18 | ) | ||||
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 comprehensive 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 placements |
3,600,000 | 5,253 | 5,253 | ||||||||||||||||||
| Issuance of warrants in association with debt |
137 | 137 | |||||||||||||||||||
| Shares purchased by employees |
51,729 | 49 | 49 | ||||||||||||||||||
| Value of stock issued to employees and directors as compensation |
198,925 | 374 | 374 | ||||||||||||||||||
| Exercise of Options |
62,865 | 79 | 79 | ||||||||||||||||||
| Comprehensive loss |
|||||||||||||||||||||
| Net loss |
(2,331 | ) | (2,331 | ) | |||||||||||||||||
| Other comprehensive loss, net of tax – Foreign currency translation |
(434 | ) | (434 | ) | |||||||||||||||||
| Total comprehensive loss |
(2,765 | ) | |||||||||||||||||||
| Balance at June 30, 2004 |
14,935,562 | $ | 49,202 | $ | (24,002 | ) | $ | (241 | ) | $ | 278 | $ | 25,237 | ||||||||
See accompanying notes to consolidated financial statements.
5
Consolidated Statements of Cash Flow
(Unaudited)
| For the six months ended June 30 |
||||||||
| In thousands (000s) |
2004 |
2003 |
||||||
| Operating activities |
||||||||
| Net loss |
$ | (2,331 | ) | $ | (1,377 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation |
2,569 | 2,441 | ||||||
| Amortization of other intangibles |
196 | 182 | ||||||
| Amortization of debt costs |
641 | 83 | ||||||
| Deferred income taxes |
31 | 21 | ||||||
| Shares issued to employees and directors for compensation |
374 | 461 | ||||||
| Foreign Currency Exchange (Gain)/Loss |
151 | — | ||||||
| Cash flow before changes in operating assets and liabilities: |
1,631 | 1,811 | ||||||
| Changes in operating assets and liabilities, net of effects of business combinations: |
||||||||
| Accounts receivable |
1,628 | 258 | ||||||
| Prepaid expenses and other assets |
(481 | ) | (1,193 | ) | ||||
| Accounts payable |
(1,527 | ) | (905 | ) | ||||