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 March 31, 2005
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) 235-4399
(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 May 13, 2005, 16,711,562 shares of the issuer’s common stock were outstanding.
ACT TELECONFERENCING, INC.
FORM 10-Q
| Page No. | ||||
| PART I. |
Financial Information | |||
| Item 1. |
Financial Statements (Unaudited) | |||
| Consolidated Balance Sheets | 2 | |||
| Consolidated Statements of Operations | 3 | |||
| Consolidated Statements of Shareholders’ Equity | 4 | |||
| Consolidated Statements of Cash Flow | 5 | |||
| Notes to Consolidated Financial Statements | 6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 | ||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 13 | ||
| Item 4. |
Controls and Procedures | 14 | ||
| Item 5. |
Entry Into a Material Definitive Agreement | 14 | ||
| PART II. |
Other Information | |||
| Item 6. |
Exhibits and Reports on Form 8-K | 15 | ||
| 16 | ||||
1
PART I – Financial Information
Consolidated Balance Sheets
(Unaudited)
| In thousands (000s) except for share data |
March 31 2005 |
December 31 2004 |
||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 1,593 | $ | 2,740 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $414 and $413 in 2005 and 2004, respectively) |
8,975 | 8,394 | ||||||
| Prepaid expenses and other current assets |
1,508 | 1,271 | ||||||
| Total current assets |
12,076 | 12,405 | ||||||
| Equipment: |
||||||||
| Telecommunications equipment |
22,258 | 22,348 | ||||||
| Software |
7,440 | 7,335 | ||||||
| Office equipment |
12,128 | 12,030 | ||||||
| Less: accumulated depreciation |
(26,074 | ) | (25,310 | ) | ||||
| Total equipment – net |
15,752 | 16,403 | ||||||
| Other assets: |
||||||||
| Goodwill |
8,313 | 8,428 | ||||||
| Other intangible assets, net of accumulated amortization |
410 | 521 | ||||||
| Investments |
100 | 100 | ||||||
| Other long term assets |
687 | 661 | ||||||
| Total assets |
$ | 37,338 | $ | 38,518 | ||||
| Liabilities and shareholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 4,613 | $ | 3,869 | ||||
| Accrued liabilities |
5,764 | 4,858 | ||||||
| Deferred revenue – current |
8 | 84 | ||||||
| Current debt due to a related party |
4,045 | 4,098 | ||||||
| Current portion of debt |
10,755 | 11,478 | ||||||
| Capital lease obligations due in one year |
368 | 450 | ||||||
| Income taxes payable |
461 | 414 | ||||||
| Total current liabilities |
26,014 | 25,251 | ||||||
| Long-term debt |
243 | 71 | ||||||
| Capital lease obligations due after one year |
68 | 130 | ||||||
| Deferred income taxes |
292 | 249 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred stock, none outstanding. |
— | — | ||||||
| Common stock, no par value; 50,000,000 shares authorized 16,711,562 and 16,661,562 shares issued and 16,629,662 and 16,572,162 outstanding in 2004 and 2003, respectively |
51,112 | 51,049 | ||||||
| Treasury stock, at cost (81,900 shares) |
(241 | ) | (241 | ) | ||||
| Accumulated deficit |
(44,855 | ) | (42,836 | ) | ||||
| Accumulated other comprehensive income |
4,705 | 4,845 | ||||||
| Total shareholders’ equity |
10,721 | 12,817 | ||||||
| Total liabilities and shareholders’ equity |
$ | 37,338 | $ | 38,518 | ||||
See accompanying notes to consolidated financial statements.
2
Statements of Operations
(Unaudited)
| For the three months ended March 31, |
||||||||
| In thousands (000s) except for per share amounts |
2005 |
2004 |
||||||
| Net revenues |
$ | 13,031 | $ | 13,996 | ||||
| Cost of services |
8,352 | 8,482 | ||||||
| Gross profit |
4,679 | 5,514 | ||||||
| Selling, general and administration expense |
4,975 | 5,427 | ||||||
| Restructuring Costs |
831 | — | ||||||
| Operating income (loss) |
(1,127 | ) | 87 | |||||
| Other Income (expenses) |
||||||||
| Interest expense, net |
(693 | ) | (590 | ) | ||||
| Foreign currency (loss) |
(69 | ) | (91 | ) | ||||
| Gain on extinguishment of note payable |
— | 261 | ||||||
| Loss before income taxes |
(1,889 | ) | (333 | ) | ||||
| Provision for income taxes |
(130 | ) | (69 | ) | ||||
| Net loss |
$ | (2,019 | ) | $ | (402 | ) | ||
| Weighted average number of shares outstanding – basic and diluted |
16,710,451 | 13,439,523 | ||||||
| Loss per share |
||||||||
| Basic and diluted |
$ | (.12 | ) | $ | (.03 | ) | ||
See accompanying notes to consolidated financial statements.
3
Consolidated Statements of Shareholders’ Equity
(Unaudited)
| Common Stock |
Treasury Stock |
Accumulated Deficit |
Accumulated other income (loss) |
Total |
|||||||||||||||||
| In thousands (000s) – except for share data |
Shares |
Amount |
|||||||||||||||||||
| Balance at January 1, 2005 |
16,661,562 | $ | 51,049 | $ | (241 | ) | $ | (42,836 | ) | $ | 4,845 | $ | 12,817 | ||||||||
| Value of stock issued to employees and directors as compensation |
50,000 | 63 | 63 | ||||||||||||||||||
| Comprehensive loss |
|||||||||||||||||||||
| Net loss |
(2,019 | ) | (2,019 | ) | |||||||||||||||||
| Other comprehensive loss, net of tax Foreign currency translation |
(140 | ) | (140 | ) | |||||||||||||||||
| Total comprehensive loss |
(2,159 | ) | |||||||||||||||||||
| Balance at March 31, 2005 |
16,711,562 | $ | 51,112 | $ | (241 | ) | $ | (44,855 | ) | $ | 4,705 | $ | 10,721 | ||||||||
See accompanying notes to consolidated financial statements.
4
Consolidated Statements of Cash Flow
(Unaudited)
| For the three months ended March 31 |
||||||||
| In thousands (000s) |
2005 |
2004 |
||||||
| Operating activities |
||||||||
| Net (loss) |
$ | (2,019 | ) | $ | (402 | ) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: |
||||||||
| Depreciation |
1,097 | 1,273 | ||||||
| Gain on elimination of note payable |
— | (261 | ) | |||||
| Amortization of intangibles |
99 | 99 | ||||||
| Amortization of debt costs |
254 | 331 | ||||||
| Deferred income taxes |
48 | (49 | ) | |||||
| Shares issued for consulting fees and employee service |
63 | 133 | ||||||
| Foreign Currency Transaction (Gain)/Loss |
(69 | ) | 91 | |||||
| Cash flow before changes in operating assets and liabilities: |
(527 | ) | 1,215 | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(719 | ) | 1,223 | |||||
| Prepaid expenses and other assets |
(316 | ) | (364 | ) | ||||
| Accounts payable |
804 | (2,335 | ) | |||||
| Deferred Income |
(75 | ) | (320 | ) | ||||
| Accrued liabilities |
959 | (1,160 | ) | |||||
| Income taxes payable |
58 | 62 | ||||||
| Net cash (used for) provided by operating activities |
184 | (1,679 | ) | |||||
| Investing activities |
||||||||
| Equipment purchases |
(557 | ) | (542 | ) | ||||
| Net cash used for investing activities |
(557 | ) | (542 | ) | ||||
| Financing activities |
||||||||
| Net proceeds from the issuance of debt and warrants associated with debt |
624 | 294 | ||||||
| Repayments of debt and capital leases |
(1,448 | ) | (1,765 | ) | ||||
| Net proceeds from the issuance of common stock |
— | 5,321 | ||||||
| Net cash (used for) provided by financing activities |
(824 | ) | 3,850 | |||||
| Effect of exchange rate changes on cash |
50 | (55 | ) | |||||
| Net increase (decrease) in cash and cash equivalents |
(1,147 | ) | 1,574 | |||||
| Cash and cash equivalents beginning of period |
2,740 | 1,726 | ||||||
| Cash and cash equivalents end of period |
$ | 1,593 | $ | 3,300 | ||||
| Supplemental Information: |
||||||||
| Cash Paid for |
||||||||
| Interest |
439 | 259 | ||||||
| Income Taxes |
— | 7 | ||||||
See accompanying notes to consolidated financial statements.
5
Notes to Consolidated Financial Statements
(Unaudited)
1. Business
ACT Teleconferencing, Inc. is engaged in the business of providing high quality audio, video, data and web based conferencing products and services to business clients worldwide. The Company operates principally in the United States, Canada, the United Kingdom, France, the Netherlands, Germany, Australia, Hong Kong and Singapore.
Basis of Presentation and Significant Accounting Policies
The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three-month periods ending March 31, 2005, are not necessarily indicative of the results that may be expected for the year ended December 31, 2005. For further information, refer to the financial statements and footnotes included in our annual report on Form 10-K for the year ended December 31, 2004, and subsequent filings.
ACT Teleconferencing Inc. is also referred to in this document as “the Company,” “we,” and “our.”
The consolidated financial statements include the accounts of ACT Teleconferencing, Inc., and its wholly-owned domestic and worldwide subsidiaries. Significant intercompany accounts and transactions have been eliminated.