UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2004
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period to .
Commission file number 000-31253
PHARSIGHT CORPORATION
(Exact name of Registrant as specified in its charter)
| Delaware | 77-0401273 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
800 West El Camino Real
Mountain View, CA 94040
(Address of principal executive offices, including zip code)
(650) 314-3800
(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 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 Rule 12b-2 of the Exchange Act). YES ¨ NO x
The number of shares of Registrant’s common stock outstanding as of February 8, 2005: 19,186,961
FORM 10-Q
QUARTERLY REPORT
TABLE OF CONTENTS
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| December 31 2004 |
March 31, 2004* |
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| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 8,766 | $ | 10,027 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $71 and $14 at December 31, 2004 and March 31, 2004, respectively |
6,393 | 3,770 | ||||||
| Unbilled accounts receivable |
— | 50 | ||||||
| Prepaids and other current assets |
566 | 670 | ||||||
| Total current assets |
15,725 | 14,517 | ||||||
| Property and equipment, net |
565 | 495 | ||||||
| Other assets |
294 | 282 | ||||||
| Total assets |
$ | 16,584 | $ | 15,294 | ||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||
| Current liabilities: |
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| Accounts payable |
$ | 674 | $ | 407 | ||||
| Accrued expenses |
1,008 | 522 | ||||||
| Accrued compensation |
1,663 | 1,589 | ||||||
| Deferred revenue |
7,954 | 7,987 | ||||||
| Current portion of notes payable |
1,875 | 1,875 | ||||||
| Capital lease obligations |
— | 55 | ||||||
| Total current liabilities |
13,174 | 12,435 | ||||||
| Deferred revenue, long-term portion |
144 | 516 | ||||||
| Notes payable, less current portion |
438 | 1,094 | ||||||
| Redeemable convertible preferred stock, $0.001 par value: |
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| Authorized shares – 3,200,000 (2,000,000 designated as Series A and 1,200,000 designated as Series B) at December 31, 2004 and March 31, 2004 |
||||||||
| Issued and outstanding shares – 1,869,085 and 1,850,943 at December 31, 2004 and March 31, 2004, respectively (1,814,662 designated as Series A at December 31, 2004 and March 31, 2004 and 54,423 and 36,281 designated as Series B at December 31, 2004 and March 31, 2004, respectively), aggregate redemption and liquidation value - $7,491 at December 31, 2004 and $7,419 at March 31, 2004 |
6,266 | 6,164 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ deficit: |
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| Preferred stock, $0.001 par value: |
||||||||
| Authorized shares – 1,800,000 at December 31, 2004 and March 31, 2004 |
||||||||
| Issued and outstanding shares - none at December 31, 2004 and March 31, 2004 |
— | — | ||||||
| Common stock, $0.001 par value: |
||||||||
| Authorized shares – 120,000,000 at December 31, 2004 and March 31, 2004 |
||||||||
| Issued and outstanding shares – 19,134,457 and 19,058,453 at December 31, 2004 and March 31, 2004, respectively |
19 | 19 | ||||||
| Additional paid-in capital |
74,352 | 74,784 | ||||||
| Accumulated other comprehensive loss |
(17 | ) | — | |||||
| Accumulated deficit |
(77,792 | ) | (79,718 | ) | ||||
| Stockholders’ deficit |
(3,438 | ) | (4,915 | ) | ||||
| Total liabilities, redeemable convertible preferred stock and stockholders’ deficit |
$ | 16,584 | $ | 15,294 | ||||
| * | Derived from the Company’s audited consolidated financial statements as of March 31, 2004. |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended December 31, |
Nine Months Ended December 31, |
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| 2004 |
2003 |
2004 |
2003 |
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| Revenues: |
||||||||||||||||
| License and renewal |
$ | 3,571 | $ | 1,899 | $ | 7,951 | $ | 5,484 | ||||||||
| Services |
2,891 | 2,684 | 8,617 | 6,843 | ||||||||||||
| Total revenues |
6,462 | 4,583 | 16,568 | 12,327 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| License and renewal |
103 | 117 | 295 | 310 | ||||||||||||
| Services |
1,845 | 1,967 | 5,311 | 5,325 | ||||||||||||
| Total cost of revenues |
1,948 | 2,084 | 5,606 | 5,635 | ||||||||||||
| Gross margin |
4,514 | 2,499 | 10,962 | 6,692 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
750 | 680 | 2,176 | 2,168 | ||||||||||||
| Sales and marketing |
1,067 | 977 | 3,083 | 3,007 | ||||||||||||
| General and administrative |
1,207 | 1,072 | 3,592 | 3,448 | ||||||||||||
| Amortization of deferred stock compensation |
— | 42 | — | 159 | ||||||||||||
| Total operating expenses |
3,024 | 2,771 | 8,851 | 8,782 | ||||||||||||
| Income (loss) from operations |
1,490 | (272 | ) | 2,111 | (2,090 | ) | ||||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense |
(36 | ) | (47 | ) | (115 | ) | (160 | ) | ||||||||
| Interest income |
10 | 6 | 27 | 31 | ||||||||||||
| Other expense |
(7 | ) | — | (29 | ) | (17 | ) | |||||||||
| Total other income (expense) |
(33 | ) | (41 | ) | (117 | ) | (146 | ) | ||||||||
| Income (loss) before income taxes |
1,457 | (313 | ) | 1,994 | (2,236 | ) | ||||||||||
| Provision for income taxes |
(46 | ) | (14 | ) | (68 | ) | (69 | ) | ||||||||
| Net income (loss) |
1,411 | (327 | ) | 1,926 | (2,305 | ) | ||||||||||
| Preferred stock dividends |
(145 | ) | (145 | ) | (465 | ) | (436 | ) | ||||||||
| Deemed dividend to preferred stockholders |
— | — | — | (339 | ) | |||||||||||
| Net income (loss) attributable to common stockholders |
$ | 1,266 | $ | (472 | ) | $ | 1,461 | $ | (3,080 | ) | ||||||
| Earnings per share attributable to common stockholders |
||||||||||||||||
| Basic |
$ | 0.07 | $ | (0.02 | ) | $ | 0.08 | $ | (0.16 | ) | ||||||
| Diluted |
$ | 0.05 | $ | (0.02 | ) | $ | 0.07 | $ | (0.16 | ) | ||||||
| Shares used to compute earnings per share attributable to common stockholders |
||||||||||||||||
| Basic |
19,117 | 19,052 | 19,088 | 19,049 | ||||||||||||
| Diluted |
28,195 | 19,052 | 28,282 | 19,049 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended December 31, |
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| 2004 |
2003 |
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| Cash Flows From Operating Activities: |
||||||||
| Net income (loss) |
$ | 1,926 | $ | (2,305 | ) | |||
| Adjustments to reconcile net income (loss) to operating activities: |
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| Depreciation and amortization |
273 | 919 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable, net |
(2,623 | ) | (3,497 | ) | ||||
| Unbilled accounts receivable |
50 | 77 | ||||||
| Prepaids and other assets |
92 | (37 | ) | |||||
| Accounts payable |
267 | (219 | ) | |||||
| Accrued expenses |
486 | (562 | ) | |||||
| Accrued compensation |
74 | 333 | ||||||
| Deferred revenue |
(405 | ) | 4,434 | |||||
| Net cash provided by (used in) operating activities |
1 | |||||||