U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 2, 2004
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File No. 0-28452
VELOCITY EXPRESS CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 87-0355929 | |
| (State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) | |
| One Morningside Drive North, Bldg. B Suite 300, Westport, Connecticut |
06880 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(203) 349-4160
(Registrant’s telephone number, including area code)
Check 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 ¨ NO x
Check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x
As of January 6, 2005 there were 13,405,373 shares of common stock of the registrant issued and outstanding.
VELOCITY EXPRESS CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
October 2, 2004
| Page | ||||
| PART I. |
FINANCIAL INFORMATION | 3 | ||
| ITEM 1. |
Consolidated Financial Statements (Unaudited) | |||
| 3 | ||||
| Statements of Operations for the Three Months Ended October 2, 2004 and September 27, 2003 |
4 | |||
| Statement of Shareholders’ Equity for the Three Months Ended October 2, 2004 |
5 | |||
| Statements of Cash Flows for the Three Months Ended October 2, 2004 and September 27, 2003 |
6 | |||
| 7 | ||||
| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | ||
| ITEM 3. |
Quantitative and Qualitative Disclosures About Market Risk | 22 | ||
| ITEM 4. |
Controls and Procedures | 22 | ||
| PART II. |
OTHER INFORMATION | 23 | ||
| ITEM 1. |
Legal Proceedings | 23 | ||
| ITEM 2. |
Changes in Securities and Use of Proceeds | 23 | ||
| ITEM 3. |
Defaults Upon Senior Securities | 25 | ||
| ITEM 4. |
Submission of Matters to a Vote of Security Holders | 25 | ||
| ITEM 5. |
Other Information | 26 | ||
| ITEM 6. |
Exhibits and Reports on Form 8-K | 26 | ||
| 26 | ||||
2
VELOCITY EXPRESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value)
| October 2, 2004 |
July 3, 2004 |
|||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash |
$ | 1,950 | $ | 1,220 | ||||
| Accounts receivable, net of allowance of $4,600 and $4,743 at October 2, 2004 and July 2, 2004, respectively |
29,329 | 27,419 | ||||||
| Accounts receivable - other |
996 | 592 | ||||||
| Prepaid workers’ compensation and auto liability insurance |
7,660 | 6,289 | ||||||
| Other prepaid expenses |
1,833 | 2,185 | ||||||
| Other current assets |
224 | 317 | ||||||
| Total current assets |
41,992 | 38,022 | ||||||
| Property and equipment, net |
12,092 | 11,362 | ||||||
| Goodwill |
42,830 | 42,830 | ||||||
| Deferred financing costs, net |
346 | 235 | ||||||
| Other assets |
1,311 | 1,227 | ||||||
| Total assets |
$ | 98,571 | $ | 93,676 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Trade accounts payable |
$ | 25,166 | $ | 26,481 | ||||
| Accrued insurance and claims |
2,748 | 3,697 | ||||||
| Accrued wages and benefits |
2,833 | 3,738 | ||||||
| Accrued legal and claims |
2,886 | 2,926 | ||||||
| Due to Related Parties |
6,627 | 3,625 | ||||||
| Other accrued liabilities |
1,517 | 2,090 | ||||||
| Current portion of long-term debt |
31,741 | 31,008 | ||||||
| Total current liabilities |
73,518 | 73,565 | ||||||
| Long-term debt less current portion |
5,330 | 5,235 | ||||||
| Accrued insurance and claims |
7,879 | 8,400 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, $0.004 par value, 53,510 shares authorized 45,046 and 32,919 shares issued and outstanding at October 2, 2004 and July 3, 2004, respectively |
108,879 | 91,051 | ||||||
| Preferred warrants, 1,042 outstanding at October 2, 2004 and July 3, 2004 |
7,600 | 7,600 | ||||||
| Common stock, $0.004 par value, 150,000 shares authorized 12,266 and 10,415 shares issued and outstanding at October 2, 2004 and July 2, 2004, respectively |
49 | 42 | ||||||
| Subscriptions receivable |
(7,550 | ) | (100 | ) | ||||
| Additional paid-in-capital |
120,670 | 101,120 | ||||||
| Accumulated deficit |
(217,658 | ) | (193,058 | ) | ||||
| Foreign currency translation |
(146 | ) | (179 | ) | ||||
| Total shareholders’ equity |
11,844 | 6,476 | ||||||
| Total liabilities and shareholders’ equity |
$ | 98,571 | $ | 93,676 | ||||
See notes to consolidated financial statements.
3
VELOCITY EXPRESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share data)
| Three Months Ended |
||||||||
| October 2, 2004 |
September 27, 2003 |
|||||||
| Revenue |
$ | 67,913 | $ | 76,639 | ||||
| Cost of services |
55,052 | 61,052 | ||||||
| Gross profit |
12,861 | 15,587 | ||||||
| Operating expenses: |
||||||||
| Occupancy |
3,442 | 3,207 | ||||||
| Selling, general and administrative |
15,034 | 13,112 | ||||||
| Total operating expenses |
18,476 | 16,319 | ||||||
| Loss from operations |
(5,615 | ) | (732 | ) | ||||
| Other expense: |
||||||||
| Interest expense |
(762 | ) | (1,041 | ) | ||||
| Other |
45 | — | ||||||
| Net loss |
$ | (6,332 | ) | $ | (1,773 | ) | ||
| Net loss applicable to common shareholders |
$ | (24,600 | ) | $ | (1,773 | ) | ||
| Loss per share applicable to common shareholders: |
||||||||
| Basic |
$ | (2.18 | ) | $ | (0.33 | ) | ||
| Diluted |
$ | (2.18 | ) | $ | (0.33 | ) | ||
| Weighted average shares outstanding: |
||||||||
| Basic |
11,265 | 5,426 | ||||||
| Diluted |
11,265 | 5,426 | ||||||
See notes to consolidated financial statements.
4
VELOCITY EXPRESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)
(Amounts in thousands)
| Series B Preferred Stock |
Series C Preferred Stock |
Series D Preferred Stock |
Series F Preferred Stock |
Series G Preferred Stock |
Series H Preferred Stock |
Series I Preferred Stock | |||||||||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount | ||||||||||||||||||||||||||||
| Balance at July 3, 2004 |
2,807 | $ | 24,304 | 2,000 | $ | 13,600 | 1,517 | $ | 8,308 | 740 | $ | 7,802 | 5,478 | $ | 4,087 | 478 | $ | 3,761 | 16,810 | $ | 24,558 | ||||||||||||||||||||
| Stock options |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Issuance of restricted stock |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Warrants issued to contractors for services |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Warrant exercises |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Non-cash interest expense/bank charges |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Conversion of Series F to Common Stock |
— | — | — | — | — | — | (15 | ) | (172 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
| Conversion of Series G to Common Stock |
— | — | — | — | — | — | — | — | (10 | ) | (8 | ) | — | — | — | — | |||||||||||||||||||||||||
| Conversion of Series H to Common Stock |
— | — | — | — | — | — | — | — | — | — | (26 | ) | (259 | ) | — | — | |||||||||||||||||||||||||
| Payments against stock subscription receivable |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Additional subscription receivable |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Issuance of Series J Preferred Stock |
— | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||