United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-27560
ACT TELECONFERENCING, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1132665
(State or other jurisdiction of (IRS Employer
incorporated or organization) Identification No.)
1658 Cole Blvd., Suite 162, Golden, Colorado 80401
(Address of principle executive offices) (Zip Code)
303-233-3500 FAX 303-238-0096
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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 ____
As of August 13, 1996, 3,038,830 shares of the issuer's common stock were
outstanding.
This report contains 13 pages.
ACT TELECONFERENCING, INC.
FORM 10-QSB
Table of Contents
PART I. Financial Information Page No.
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statement of Shareholders' Equity 5
Consolidated Statements of Cash Flow 6
Notes to Consolidated Financial Statements 7
Item 2. Management Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II.
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibit Index 10
<TABLE>
<CAPTION>
Item 1. ACT TELECONFERENCING, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
----------- ------------
ASSETS (unaudited) (note)
- - ------
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,161,$35 $ 288,345
Accounts Receivable, net allowance for doubtful
accounts of $115,104 and $6,224 1,308,137 658,722
Inventory 178,725 111,347
Prepaid Expenses and other 99,973 29,968
----------- -----------
Total Current Assets 2,748,370 1,088,382
Equipment:
Furniture and Equipment 1,811,933 1,363,051
Less accumulated depreciation (578,130) (447,886)
----------- -----------
Total 1,233,803 915,165
OTHER ASSETS:
Deferred Offering Costs -- 125,742
Excess of purchase price over fair value of
tangible assets acquired 513,401 533,515
Other 50,000
----------- -----------
Total 563,401 659,257
TOTAL ASSETS $ 4,545,57$ $ 2,662,804
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 30,000 $ 75,000
Accounts Payable 688,984 608,282
Accrued Liabilities 312,194 196,180
Deferred income and other liabilities 23,197 3,950
Current portion of long term debt 56,567 53,139
Income tax payable 186,502 127,628
----------- -----------
Total Current Liabilities 1,297,444 1,064,179
LONG-TERM DEBT 143,102 168,272
DEFERRED TAXES 18,551 18,551
MINORITY INTEREST 260,829 213,016
Common Stock Subject to Put -- 125,000
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 1,000,000 shares
authorized; none issued -- --
Common stock, no par value; 10,000,000 shares
authorized; 3,038,830 and 2,318,000 shares
issued and outstanding 4,270,473 2,157,940
Accumulated deficit (1,441,512) (1,084,154)
Currency Translation (3,313) --
----------- -----------
Shareholders' equity 2,825,648 1,073,786
----------- -----------
TOTAL Liabilities & Shareholder's Equity $ 4,545,57$ $ 2,662,804
=========== ===========
</TABLE>
Note: The Balance Sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by General Accepted Accounting Principles for complete
financial statements.
<TABLE>
<CAPTION>
ACT TELECONFERENCING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Conferencing Services $ 1,474,909 $ 784,165 $ 2,725,698 $ 1,595,155
Equipment Sales 90,197 11,375 211,848 27,376
----------- ----------- ----------- -----------
TOTAL REVENUE 1,565,106 795,540 2,937,546 1,622,531
COSTS AND EXPENSES:
Cost of conferencing services 906,295 436,101 1,600,570 874,021
Cost of equipment sales 69,825 5,342 147,133 17,559
Marketing, general and administration 760,413 350,440 1,440,179 661,757
----------- ----------- ----------- -----------
Total costs and expenses 1,736,533 791,883 3,187,882 1,553,337
----------- ----------- ----------- -----------
(Loss) Income before income taxes and
minority interest (171,427) 3,657 (250,336) 69,194
Taxes on income 17,149 17,052 59,050 47,863
----------- ----------- ----------- -----------
(Loss) Income before minority interest (188,576) (13,395) (309,386) 21,331
Minority interest 14,185 15,916 47,972 44,673
----------- ----------- ----------- -----------
NET LOSS $ (202,761) $ (29,311) $ (357,358) $ (23,342)
=========== =========== =========== ===========
NET LOSS PER SHARE $ (0.07) $ (0.01) $ (0.13) $ (0.01)
=========== =========== =========== ===========
Weighted average shares outstanding 3,035,350 1,985,030 2,777,868 1,827,987
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
ACT TELECONFERENCING, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Common Stock
------------------------------------
Accumulated Currency
Shares Amount Deficit Adjustment Total
------------------ ---------------- -------------- ------------ -------------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 1,729,050 $ 952,747 $ (660,094) $ -- $ 292,653
Shares issued for cash 388,950 830,193 830,193
Shares issued in connection with
acquisition 200,000 375,000 375,000
Net loss (424,060) (424,060)
------------------ ---------------- -------------- ------------ -------------------
BALANCE, December 31, 1995 2,318,000 2,157,940 (1,084,154) -- 1,073,786
Shares issued for cash 712,497 1,987,533 1,987,533
Shares issued in connection with
acquisition -- 125,000 125,000
Shares issued in connection
with employee stock options 8,333 -- --
Currency Translation (3,313) (3,313)
Net loss (357,358) (357,358)
------------------ ---------------- -------------- ------------ -------------------
BALANCE, June 30, 1996 3,038,830 $4,270,473 ($1,441,512) ($3,313) $2,825,648
================== ================ ============== ============ ===================
</TABLE>
<TABLE>
<CAPTION>
ACT TELECONFERENCING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Six Months Ended June 30,
1996 1995
---------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (357,358) $ (23,341)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 150,358 73,739
Provision for income taxes 58,874 (15,076)
Changes in assets and liabilities:
Increase in accounts receivable (649,418) (366,523)
Decrease (increase) in other assets (61,641) (17,503)
(Decrease) increase in accounts payable 80,707 (54,939)
Increase in other liabilities and
deferred income 135,259 63,184
----------- -----------
Net cash used in operating activities (643,219) (340,459)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment purchases (448,882) (117,267)
----------- -----------
Net cash used in investing activities (448,882) (117,267)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and capital leases 25,605 20,488
Payments on notes payable and capital leases (92,347) (33,093)
Net proceeds from issuance of common stock 1,987,533 678,293
Increase in minority interests 47,813 44,672
----------- -----------
Net cash provided by financing activities 1,968,604 710,360
----------- -----------
Increase in cash and cash equivalents 876,503 252,634
Effect of exchange rates on cash (3,313) --
Cash and cash equivalents, beginning of period 288,345 120,703
----------- -----------
Cash and cash equivalents, end of period $ 1,161,535 $ 373,337
=========== ===========
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
NOTE 1 - BASIS OF PRESENTATION
Reference is made to Note 1 of the Consolidated Financial Statements included in
the Special Financial Report for the year ended December 31, 1995, which
describes the accounting policies of the Company for annual reporting purposes.
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the Company's financial position as of
June 30, 1996 and the results of its operations and changes in its shareholders'
equity, and its cash flows for the six-month periods ended June 30, 1996 and
June 30, 1995.
NOTE 2 - INCOME (LOSS) PER SHARE
Loss per share is based on the weighted average number of common shares
outstanding during each period. Shares issuable upon the exercise of outstanding
warrants and options are not included in the calculation since their inclusion
would be anti-dilutive.
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues for the second quarter of 1996 were $1,565,106, an increase of
$769,566 or 97% from the comparable quarter of the prior year. Net revenues
increased 81 percent to $2,937,546 for the six months ended June 30, 1996,
compared to $1,622,531 for the same period in 1995. This increase is primarily
due to higher sales of teleconferencing services, and additional revenue from
the Company's two new business units, ACT VideoConferencing, Inc. and ACT
Teleconferencing B.V. During the three months ended June 30, 1996, domestic
operations accounted for 53 percent of net revenues, compared to 45 percent for
the prior three month period. For the six months ending June 30, 1996, domestic
operations comprised 52 percent of net revenue, and 45 percent for the same
period in the prior year. Domestic net revenues continue to grow at a higher
rate than foreign net revenues. The difference in revenue growth for domestic
operations compared to foreign operations is primarily due to a new market
segment being developed by the United States business.
Cost of sales for the three months ended June 30, 1996 were $976,120, up 121%
from the cost of sales for the same period in 1995. Cost of sales increased 96
percent to $1,747,703 for the six months ended June 30, 1996, compared to
$891,580 for the prior period, reflecting commensurate increases in sales of
teleconferencing services and equipment. This increase can be attributed to
development costs of a new market segment service, plus costs from the Company's
two new business units.
Marketing, general, and administrative expenses increased 117% to $760,413 for
the three months ending June 30, 1996 as compared to the same period in 1995.
Marketing, general, and administrative expenses for the six months ended June
30, 1996 were $1,440,179, or 49 percent of revenue, compared to $661,757 or 41
percent of revenue, for the same period in 1995. This increase can be attributed
to expansion of sales and marketing activities, plus start-up expenses of the
Company's two new business units.
Loss before taxes and minority interest increased to $171,427 for the three
months ended June 30, 1996, as compared to income before taxes and minority
interest of $3,657 for the same period in the prior year. Loss before taxes and
minority interest was $250,336 for the six months ended June 30, 1996, compared
to income before taxes and minority interest of $69,194 for the same period in
1995. Loss before taxes and minority interest can be attributed to the start up
of ACT VideoConferencing, Inc. and ACT Teleconferencing B.V. These start-up
subsidiaries are expected to continue to incur losses during 1996.
Net (loss) income for the second quarter was $(202,761), or $(.07) per share,
compared to $(29,311), or $(.01) per share for the second quarter of the prior
year. For the six months ended June 30, 1996, net (loss) income was $(357,358),
or $(.13) per share, as compared to $(23,342), or $(.01) for the same period on
1995.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1996 was $1,450,926, which represents a current
ratio of 2.1 to 1. This compares to working capital of $24,203 at December 31,
1995, a current ratio of 1.0 to 1. The Company believes that funds on hand are
sufficient to support its existing and planned operations for at least the next
twelve months. During the six months ended June 30, 1996, cash used in operating
activities was primarily to support an increase in accounts receivable. Cash
used from investing activities for this same period was primarily for additional
fixed assets and expanded bridging capacity as a result of increased revenues.
PART II Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders (the "Meeting") on June 6,
1996. Carolyn R. Van Eeckhout and Donald L. Sturtevant were nominated and
elected to serve as directors of the Company for three-year terms. Results of
the voting were as follows:
For Against Abstain
Carolyn R. Van Eeckhout 1,958,083 25,000 4,500
Donald L. Sturtevant 1,983,083 0 4,500
Item 6. Exhibits
Exhibit Index
Exhibit No.
Description
3.1** Restated Articles of Incorporation of the Company dated April 15,
1996
3.2** Bylaws of the Company, amended as of April 15, 1996
4.1* Form of specimen certificate for Common Stock of the Company
4.2* Form of Unit Purchase Option to be issued by the Company to the
Underwriter
4.3* Impound Agreement
4.4* Lock-up Letter Agreement
10.1* Stock Option Plan of 1992, as amended, authorizing 400,000 shares of
Common Stock for issuance pursuant to the Plan
10.2* Form of Stock Option Agreement
10.3* Form of Common Stock Purchase Warrant
10.4* Form of Placement Agent Warrant
10.5* Denver West Office Building Lease dated April 1, 1993, by and
between Denver West Office Building No. 6 Venture and the Company,
as amended
10.6* Leases for United Kingdom facilities (First floor of Howard House)
dated September 29, 1993 and April 17, 1995, between Garfunkel &
Wanderer Limited and Reichwald Brothers Limited, Landlord, and ACT
Teleconferencing Limited, Tenant
10.7* Letter agreement dated May 31, 1995 with Worldcom regarding lease of
Amsterdam facilities
10.8* Sublease Agreement with Integraf Corporation dated August 1995 for
ACT VideoConferencing, Inc. premises
10.9* Term Loan Agreement dated August 11, 1994, between the Company and
Norwest Bank, N.A., Boulder, Colorado
10.10* Split Dollar Insurance Agreement dated March 1, 1990, between the
Company and Gerald D. Van Eeckhout
10.11* Service Agreement dated April 10, 1992 between David Holden and ACT
Teleconferencing Limited
10.12* Stock Purchase Agreement dated July 13, 1995, between the Company
and Paul Clifford for acquisition of NBS, Inc.
10.13* Employment Agreement dated July 14, 1995, between the Company and
Paul Clifford
10.14* Agreement between Company and Gerald D. Van Eeckhout limiting his
compensation in 1996 and 1997
10.15* Memorandum dated December 22, 1995 from director Seifert amending
Mr. Van Eeckhout's compensation
10.16* Terms of employment of Harry Walls, president-designate of ACT
Teleconferencing Services, Inc. per Company's letter dated December
13, 1995
10.17* Agreement to Exchange Stock between Apogee Robotics, Inc. and
Company
10.18* Agreement between Company and Ronald J. Bach to borrow proceeds from
sale of Apogee Robotics common stock
27.1 Financial Data Schedule
27.2 Amended Financial Data Schedule for the Quarter ended March 31, 1996
* Exhibit incorporated by reference to the Company's Registration Statement
on Form SB-2, filed with the Securities and Exchange Commission on October
10, 1995, and amendments thereto. Exhibits incorporated by reference carry
exhibit numbers identical to those in the Registration Statement.
** Incorporated by reference to the exhibit of the same number to the
Comapny's Form 10-QSB for the Quarter ended March 31, 1996, File No.
0-27560.
The Company filed a report on Form 8-K, dated March 20, 1996, containing
information regarding the successful conclusion of the Company's initial public
offering.
The Company filed a report on Form 8-K, dated June 18, 1996, amended July 5,
1996, regarding the dismissal of Van Dorn & Bossi as the Company's independent
accountants.
The Company filed a report on Form 8-K, dated July 5, 1996, regarding the
appointment of Ernst & Young LLP as the Company's independent accountants.
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ACT Teleconferencing, Inc.
Date: August 13, 1996 by /s/ Pamela S. Van Eeckhout
-------------------------------
Pamela S. Van Eeckhout, CFO
Date: August 13, 1996 by /s/ Gerald D. Van Eeckhout
-------------------------------
Gerald D. Van Eeckhout, CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED JUNE 30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 48,792
<SECURITIES> 1,112,743
<RECEIVABLES> 1,423,241
<ALLOWANCES> 115,104
<INVENTORY> 178,725
<CURRENT-ASSETS> 2,748,371
<PP&E> 1,811,933
<DEPRECIATION> (578,130)
<TOTAL-ASSETS> 4,545,574
<CURRENT-LIABILITIES> 1,297,444
<BONDS> 0
0
0
<COMMON> 4,270,473
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,545,574
<SALES> 211,848
<TOTAL-REVENUES> 2,937,546
<CGS> 147,133
<TOTAL-COSTS> 1,747,703
<OTHER-EXPENSES> 1,440,179
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> (6,445)
<INCOME-PRETAX> (250,336)
<INCOME-TAX> 59,050
<INCOME-CONTINUING> (357,358)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (357,358)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED MARCH 31, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 206,541
<SECURITIES> 1,576,921
<RECEIVABLES> 1,123,137
<ALLOWANCES> 32,724
<INVENTORY> 103,478
<CURRENT-ASSETS> 3,037,405
<PP&E> 1,560,216
<DEPRECIATION> 512,118
<TOTAL-ASSETS> 4,608,852
<CURRENT-LIABILITIES> 1,133,571
<BONDS> 0
0
0
<COMMON> 4,273,730
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,608,852
<SALES> 121,251
<TOTAL-REVENUES> 1,372,440
<CGS> 102,109
<TOTAL-COSTS> 771,583
<OTHER-EXPENSES> 679,766
<LOSS-PROVISION> 26,500
<INTEREST-EXPENSE> (126)
<INCOME-PRETAX> (78,909)
<INCOME-TAX> 41,901
<INCOME-CONTINUING> (154,597)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (154,597)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
