ACT TELECONFERENCING INC - 10-Q Quarterly Report

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 September 30, 2004

¨	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 November 11, 2004, 16,635,005 shares of the issuer’s common stock were outstanding.

ACT TELECONFERENCING, INC.

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 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 4.	Submission of Matters to a Vote of Security Holders	16

Item 6.	Exhibits and Reports on Form 8-K	16

SIGNATURE		17

CERTIFICATIONS

PART I – Financial Information

ACT Teleconferencing, Inc.

Consolidated Balance Sheets


In thousands (000s) except for share data	September 30 2004			December 31 2003
Assets
Current assets:
Cash and cash equivalents	$	2,963		$	1,726
Accounts receivable (net of allowance for doubtful accounts of $463 and $652 in 2004 and 2003, respectively)		8,337			10,258
Prepaid expenses and other current assets		1,563			1,210

Total current assets		12,863			13,194
Equipment:
Telecommunications equipment		23,439			23,021
Software		7,146			6,591
Office equipment		12,202			11,667
Less: accumulated depreciation		(23,858	)		(19,998	)

Total equipment – net		18,929			21,281
Other assets:
Goodwill		18,264			18,264
Other intangible assets (net of accumulated amortization of $1,343 and $891 in 2004 and 2003, respectively)		222			780
Investments		100			100
Other long term assets		776			1,004

Total assets	$	51,154		$	54,623

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	3,839		$	6,171
Accrued liabilities		3,698			4,729
Deferred revenue – current		448			1,648
Current debt due to a related party		9,909			634
Current portion of debt		5,373			6,378
Capital lease obligations due in one year		508			769
Income taxes payable		131			51

Total current liabilities		23,906			20,380
Long-term debt		0			3,121
Long-term debt due to related party		0			8,019
Capital lease obligations due after one year		245			466
Deferred income taxes		613			527
Shareholders’ equity:
Common stock, no par value; 50,000,000 shares authorized 16,635,055 and 10,647,291 shares issued and 16,553,155 and 10,565,391 outstanding in 2004 and 2003, respectively		50,941			43,310
Treasury stock, at cost (81,900 shares)		(241	)		(241	)
Accumulated deficit		(24,791	)		(21,671	)
Accumulated other comprehensive income		481			712

Total shareholders’ equity		26,390			22,110

Total liabilities and shareholders’ equity	$	51,154		$	54,623

See accompanying notes to consolidated financial statements.

ACT Teleconferencing, Inc.

Consolidated Statements of Operations

(Unaudited)


	For the three months ended September 30,						For the nine months ended September 30,
In thousands (000s) except for per share amounts	2004			2003			2004			2003
Net revenues	$	12,686		$	12,120		$	40,283		$	42,254
Cost of services		7,819			8,851			24,943			27,617

Gross profit		4,867			3,269			15,340			14,637
Selling, general and administration expense		5,106			6,802			16,537			18,552

Operating income (loss)		(239	)		(3,533	)		(1,197	)		(3,915	)
Interest expense, net		(507	)		(826	)		(1,849	)		(1,612	)
Foreign currency gain (loss)		33			0			(118	)		0
Gain on elimination of note payable		0			0			261			0

Loss before income taxes		(713	)		(4,359	)		(2,903	)		(5,527	)
Provision for income taxes		(76	)		(98	)		(217	)		(307	)

Net Loss		(789	)		(4,457	)		(3,120	)		(5,834	)
Preferred stock dividends		0			(196	)		0			(636	)

Net loss available to common shareholders	$	(789	)	$	(4,653	)	$	(3,120	)	$	(6,470	)

Weighted average number of shares outstanding—basic and diluted		15,255,664			10,339,117			14,552,765			10,003,691

Loss per share
Basic and diluted	$	(0.05	)	$	(0.45	)	$	(0.21	)	$	(0.65	)

See accompanying notes to consolidated financial statements.

ACT Teleconferencing, Inc.

Consolidated Statements of Shareholders’ Equity

(Unaudited)


In thousands (000s) except for share data	Common Stock			Treasury stock			Accumulated deficit			Accumulated other comprehensive income (loss)			Total
In thousands (000s) except for share data	Shares	Amount		Treasury stock			Accumulated deficit			Accumulated other comprehensive income (loss)			Total
Balance at January 1, 2004	11,022,043	$	43,310	$	(241	)	$	(21,671	)	$	712		$	22,110
Shares issued in private placements	5,280,900		6,967											6,967
Issuance of warrants in association with debt			137											137
Shares purchased by employees	49,835		47											47
Value of stock issued to employees and directors as compensation	218,925		400											400
Exercise of Options	63,352		80											80
Comprehensive loss
Net loss								(3,120	)					(3,120	)
Other comprehensive loss, net of tax – Foreign currency translation											(231	)		(231	)

Total comprehensive loss														(3,351	)

Balance at September 30, 2004	16,635,055	$	50,941	$	(241	)	$	(24,791	)	$	481		$	26,390

See accompanying notes to consolidated financial statements.

ACT Teleconferencing, Inc.

Consolidated Statements of Cash Flow

(Unaudited)


	For the nine months ended September 30
In thousands (000s)	2004			2003
Operating activities
Net loss	$	(3,120	)	$	(5,834	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		3,883			3,806
Amortization of other intangibles		294			269
Amortization of debt costs		789			418
Deferred income taxes		80			(3	)
Shares issued to employees and directors for compensation		400			525
Shares and warrants issued to settle legal dispute		—			588
Foreign Currency Exchange (Gain)/Loss		118			—

Cash flow before changes in operating assets and liabilities:		2,444			(231	)
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable		1,982			3,446
Prepaid expenses and other assets		(344	)		(955	)
Accounts payable		(2,343	)