SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2005
Commission file number 000-25959
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Private Business, Inc. |
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(Exact name of registrant as specified in its charter) |
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Tennessee |
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62-1453841 |
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(State or other jurisdiction of |
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(I.R.S. Employer |
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9020 Overlook Blvd., Brentwood, Tennessee |
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37027 |
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(Address of principal executive offices) |
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(Zip Code) |
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(615) 221-8400 |
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(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.
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Yes x |
No o |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
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Yes o |
No x |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.
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Class |
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Outstanding as of April 30, 2005 |
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Common Stock, no par value |
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14,661,923 shares |
PRIVATE BUSINESS, INC.
Form 10-Q
For Quarter Ended March 31, 2005
INDEX
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Page No. |
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Part I – Financial Information |
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Item 1 – |
Financial Statements |
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Unaudited Consolidated Balance Sheets As of March 31, 2005 and December 31, 2004 |
3 |
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Unaudited Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004 |
4 |
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Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 |
5 |
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Notes to Unaudited Consolidated Financial Statements |
6 –11 |
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Item 2 – |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 – 25 |
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Item 3 – |
Quantitative and Qualitative Disclosures About Market Risk |
25 |
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Item 4 – |
Disclosure Controls and Procedures |
25 |
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Part II – Other Information |
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Item 1 – |
Legal Proceedings |
26 |
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Item 6 – |
Exhibits |
26 |
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Signatures |
27 |
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2
Part 1
Financial Information
Item 1. Financial Statements
PRIVATE BUSINESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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(in thousands, except per share data) |
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March 31, |
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December 31, |
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(Unaudited) |
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(Audited) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
7 |
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$ |
7 |
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Accounts receivable — trade, net of allowance for doubtful accounts of $265 and $242, respectively |
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4,526 |
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4,506 |
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Accounts receivable — other |
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84 |
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104 |
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Deferred tax assets |
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151 |
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70 |
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Prepaid and other current assets |
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1,105 |
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1,245 |
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Total current assets |
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5,873 |
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5,932 |
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PROPERTY AND EQUIPMENT, NET |
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2,087 |
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2,327 |
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OTHER ASSETS: |
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Software development costs, net |
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1,165 |
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1,138 |
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Deferred tax assets |
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2,421 |
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2,704 |
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Intangible and other assets, net |
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9,112 |
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9,235 |
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Total other assets |
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12,698 |
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13,077 |
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Total assets |
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$ |
20,658 |
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$ |
21,336 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: |
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Accounts payable |
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$ |
1,421 |
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$ |
1,861 |
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Accrued liabilities |
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1,652 |
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1,976 |
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Deferred revenue |
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486 |
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586 |
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Current portion of long-term debt and capital lease obligations |
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1,667 |
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1,667 |
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Total current liabilities |
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5,226 |
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6,090 |
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REVOLVING LINE OF CREDIT |
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510 |
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110 |
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OTHER NONCURRENT LIABILITIES |
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64 |
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74 |
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LONG-TERM DEBT, net of current portion |
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1,250 |
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1,666 |
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Total liabilities |
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7,050 |
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7,940 |
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COMMITMENTS AND CONTINGENCIES |
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STOCKHOLDERS’ EQUITY: |
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Common stock, no par value; 100,000,000 shares authorized; shares issued and outstanding, 14,655,927 and 14,388,744, respectively |
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0 |
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0 |
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Preferred Stock, 20,000,000 shares authorized: |
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Series A, non-convertible, no par value; 20,000 shares issued and outstanding |
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6,209 |
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6,209 |
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Series B, convertible, no par value; 40,031 shares issued and outstanding |
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114 |
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114 |
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Additional paid-in capital |
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4,089 |
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3,716 |
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Retained earnings |
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3,196 |
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3,357 |
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Total stockholders’ equity |
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13,608 |
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13,396 |
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Total liabilities and stockholders’ equity |
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$ |
20,658 |
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$ |
21,336 |
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The accompanying notes are an integral part of these consolidated financial statements.
3
PRIVATE BUSINESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED
For the Three Months Ended March 31, 2005 and 2004
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(in thousands, except per share data) |
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2005 |
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2004 |
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REVENUES: |
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Participation fees |
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$ |
5,590 |
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$ |
6,297 |
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Software license |
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194 |
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53 |
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Retail planning services |
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2,202 |
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2,251 |
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Maintenance and other |
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1,213 |
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1,242 |
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Total revenues |
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9,199 |
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9,843 |
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OPERATING EXPENSES: |
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General and administrative |
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3,817 |
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4,309 |
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Selling and marketing |
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4,390 |
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4,376 |
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Research and development |
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91 |
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113 |
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Amortization |
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208 |
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326 |
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Other operating expense, net |
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0 |
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1,701 |
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Total operating expenses |
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8,506 |
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10,825 |
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OPERATING INCOME (LOSS) |
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693 |
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(982 |
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INTEREST EXPENSE, NET |
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70 |
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190 |
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INCOME (LOSS) BEFORE INCOME TAXES |
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623 |
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(1,172 |
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Income tax expense (benefit) |
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244 |
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(457 |
) |
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NET INCOME (LOSS) |
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379 |
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(715 |
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Preferred stock dividends |
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540 |
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438 |
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NET LOSS AVAILABLE TO COMMON SHAREHOLDERS |
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$ |
(161 |
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$ |
(1,153 |
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LOSS PER SHARE: |
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Basic |
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$ |
(0.01 |
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$ |
(0.08 |
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Diluted |
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$ |
(0.01 |
) |
$ |
(0.08 |
) |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
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Basic |
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14,575 |
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14,079 |
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Diluted |
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14,575 |
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14,079 |
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The accompanying notes are an integral part of these consolidated financial statements.
4
PRIVATE BUSINESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
For the Three Months Ended March 31, 2005 and 2004
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(in thousands) |
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2005 |
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2004 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) |
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$ |
379 |
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$ |
(715 |
) |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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549 |
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803 |
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Deferred taxes |
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202 |
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(143 |
) |
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Write-off of debt issuance cost from Fleet debt facility |
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0 |
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|
780 |
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Stock compensation |
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6 |
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0 |
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Deferred gain on land sale |
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(4 |
) |
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(4 |
) |
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Changes in assets and liabilities: |
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Accounts receivable |
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(15 |
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197 |
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Prepaid and other current assets |
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140 |
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|
140 |
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Other assets |
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0 |
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24 |
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Accounts payable |
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(440 |
) |
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(311 |
) |
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Accrued liabilities |
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(309 |
) |
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(312 |
) |
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Deferred revenue |
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(100 |
) |
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(32 |
) |
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Net cash provided by operating activities |
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|
408 |
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|
427 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Additions to property and equipment |
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(66 |
) |
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(37 |
) |
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Software development costs |
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(153 |
) |
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(173 |
) |
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Payment received on note receivable |
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0 |
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15 |
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Net cash used in investing activities |
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(219 |
) |
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(195 |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Repayments on long-term debt |
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(416 |
) |
|
(417 |
) |
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Repayments on capitalized lease obligations |
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0 |
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(111 |
) |
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Repayments of other short-term borrowings |
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0 |
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(201 |
) |
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Extinguishment of long-term debt facility with Fleet |
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0 |
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(23,875 |
) |
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Proceeds from revolving line of credit |
|
|
400 |
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|
750 |
|
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Proceeds from exercise of employee stock options |
|
|
358 |
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|
23 |
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Stock issued through employee stock purchase plan |
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|
9 |
|
|
7 |
|
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Net proceeds from sale of Series A preferred shares and comon stock warrant |
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0 |
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|
17,295 |
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Net proceeds from new debt facility with Bank of America |
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0 |
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7,214 |
|
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Payments of declared preferred dividends |
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(540 |
) |
|
(400 |
) |
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