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 September 26, 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 000-21559
VIISAGE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 04-3320515 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 296 Concord Road, Third Floor, Billerica, MA | 01821 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (978) 932-2200
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. x Yes ¨ No
Indicate by a check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) ¨ Yes x No
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at November 8, 2004 | |
| Common stock, $.001 par value |
47,359,858 |
FORM 10 – Q FOR THE QUARTER ENDED SEPTEMBER 26, 2004
INDEX
| Page | ||||
| 1 | ||||
| 2 | ||||
| PART I - FINANCIAL INFORMATION |
||||
| Item 1 – Financial Statements |
||||
| Consolidated Balance Sheets as of September 26, 2004 and December 31, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | |||
| Item 3 – Quantitative and Qualitative Disclosures about Market Risk |
30 | |||
| Item 4 – Controls and Procedures |
30 | |||
| PART II - OTHER INFORMATION |
31 | |||
| Item 1 – Legal Proceedings |
31 | |||
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds |
31 | |||
| Item 3 – Defaults Upon Senior Securities |
31 | |||
| Item 4 – Submission of Matters to a Vote of Security Holders |
31 | |||
| Item 5 – Other Information |
31 | |||
| Item 6 – Exhibits |
31 | |||
| 32 | ||||
| 33 | ||||
2
PART 1 – FINANCIAL INFORMATION
Consolidated Balance Sheets
(in thousands)
| September 26, 2004 |
*December 31, 2003 | |||||
| (Unaudited) | ||||||
| Assets |
||||||
| Current Assets: |
||||||
| Cash and cash equivalents |
$ | 34,363 | $ | 6,666 | ||
| Accounts receivable |
18,002 | 7,057 | ||||
| Inventories and other costs and estimated earnings in excess of billings |
3,293 | 4,050 | ||||
| Other current assets |
1,176 | 439 | ||||
| Total current assets |
56,834 | 18,212 | ||||
| Property and equipment, net |
22,308 | 25,088 | ||||
| Goodwill |
61,858 | — | ||||
| Intangible assets, net |
21,708 | 2,693 | ||||
| Restricted cash |
3,000 | 6,311 | ||||
| Other assets |
1,427 | 2,176 | ||||
| $ | 167,135 | $ | 54,480 | |||
| Liabilities and Shareholders’ Equity |
||||||
| Current Liabilities: |
||||||
| Accounts payable and accrued expenses |
$ | 14,447 | $ | 6,851 | ||
| Related party payable |
1,385 | — | ||||
| Current portion of project financing |
3,968 | 3,734 | ||||
| Current portion of related party notes |
10,300 | 1,740 | ||||
| Total current liabilities |
30,100 | 12,325 | ||||
| Project financing |
4,966 | 5,813 | ||||
| Related party notes |
— | 2,334 | ||||
| Other liabilities |
414 | — | ||||
| Total liabilities |
35,480 | 20,472 | ||||
| Shareholders’ equity |
131,655 | 34,008 | ||||
| $ | 167,135 | $ | 54,480 | |||
| * | Derived from audited financial statements. |
The accompanying notes are an integral part of these financial statements.
3
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| September 26, 2004 |
September 28, 2003 |
September 26, 2004 |
September 28, 2003 |
|||||||||||||
| Revenues |
$ | 19,907 | $ | 10,108 | $ | 48,442 | $ | 27,053 | ||||||||
| Cost of revenues |
14,400 | 6,728 | 34,613 | 20,344 | ||||||||||||
| Gross margin |
5,507 | 3,380 | 13,829 | 6,709 | ||||||||||||
| Operating Expenses: |
||||||||||||||||
| Sales and marketing |
1,588 | 1,237 | 4,659 | 3,786 | ||||||||||||
| Research and development |
896 | 946 | 2,797 | 2,828 | ||||||||||||
| General and administrative |
2,362 | 1,328 | 6,717 | 3,454 | ||||||||||||
| Total operating expenses |
4,846 | 3,351 | 14,173 | 10,068 | ||||||||||||
| Operating income (loss) |
661 | (131 | ) | (344 | ) | (3,359 | ) | |||||||||
| Interest income |
67 | 19 | 108 | 67 | ||||||||||||
| Interest expense |
(478 | ) | (295 | ) | (1,488 | ) | (793 | ) | ||||||||
| Other (income) expense |
27 | (18 | ) | (48 | ) | (18 | ) | |||||||||
| Income (loss) before income taxes and cumulative effect of change in accounting principle |
223 | (389 | ) | (1,676 | ) | (4,067 | ) | |||||||||
| Provision for income taxes |
(25 | ) | — | (75 | ) | (63 | ) | |||||||||
| Income (loss) before cumulative effect of change in accounting principle |
198 | (389 | ) | (1,751 | ) | (4,130 | ) | |||||||||
| Cumulative effect of change in accounting principle |
— | — | — | (12,131 | ) | |||||||||||
| Net income (loss) |
$ | 198 | $ | (389 | ) | $ | (1,751 | ) | $ | (16,261 | ) | |||||
| Basic net income (loss) per share before cumulative effect of change in accounting principle |
$ | 0.00 | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.20 | ) | |||||
| Diluted net income (loss) per share before cumulative effect of change in accounting principle |
$ | 0.00 | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.59 | ) | |||||
| Cumulative effect of change in accounting principle |
$ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.79 | ) | |||||
| Net income (loss) per basic share |
$ | 0.00 | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.79 | ) | |||||
| Net income (loss) per diluted share |
$ | 0.00 | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.79 | ) | |||||
| Weighted average basic shares |
40,072 | 21,512 | 35,783 | 20,711 | ||||||||||||
| Weighted average diluted shares |
41,090 | 21,512 | 35,783 | 20,711 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
| Nine Months Ended |
||||||||
| September 26, 2004 |
September 28, 2003 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Net loss |
$ | (1,751 | ) | $ | (16,261 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities, net of effects of acquisitions: |
||||||||
| Depreciation and amortization |
7,877 | 5,288 | ||||||
| Gain on sale of equipment |
— | (18 | ) | |||||
| Impact of cumulative effect of change in accounting principle |
— | 12,131 | ||||||
| Directors fees paid in common stock |
333 | 210 | ||||||
| Change in operating assets and liabilities: |
||||||||
| Accounts receivable |
(7,831 | ) | (666 | ) | ||||
| Inventories and costs and estimated earnings in excess of billings |
1,081 | 956 | ||||||
| Other current assets |
(299 | ) | (707 | ) | ||||
| Accounts payable and accrued expenses |
2,299 | 1,988 | ||||||
| Net cash provided by operating activities |
1,709 | 2,921 | ||||||
| Cash Flows from Investing Activities: |
||||||||
| Decrease in restricted cash |
3,311 | 2,284 | ||||||
| Additions to property and equipment |
(1,680 | ) | (5,792 | ) | ||||
| Cash paid for acquisitions, net of cash acquired |
(6,227 | ) | (1,054 | ) | ||||
| Proceeds from sale of equipment |
— | 35 | ||||||
| Increase in other assets |
(1,524 | ) | (443 | ) | ||||
| Net cash used for investing activities |
(6,120 | ) | (4,970 | ) | ||||
| Cash Flows from Financing Activities: |
||||||||
| Net proceeds from project financing and related party notes |
4,273 | 2,781 | ||||||
| Principal payments on project financing and related party notes |
(13,150 | ) | (3,935 | ) | ||||
| Net proceeds from issuance of common stock |
40,985 | 12,414 | ||||||
| Net cash provided by financing activities |
32,108 | 11,260 | ||||||
| Net increase in cash and cash equivalents |
27,697 | 9,211 | ||||||
| Cash and cash equivalents, beginning of period |
6,666 | 2,212 | ||||||
| Cash and cash equivalents, end of period |
$ | 34,363 | $ | 11,423 | ||||
| Supplemental Cash Flow Information: |
||||||||
| Cash paid during the period for interest |
$ | 333< | ||||||