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‘s offio

 

UNITED STATES

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 June 30, 2020 

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 000-27115

 

PCTEL, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

77-0364943

(State or Other Jurisdiction of

 

(I.R.S. Employer

Incorporation or Organization)

 

Identification Number)

 

 

 

471 Brighton Drive,

 

 

Bloomingdale, IL

 

60108

(Address of Principal Executive Office)

 

(Zip Code)

 

Registrant's Telephone Number, Including Area Code: (630) 372-6800

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

 

Common Stock

 

PCTI

 

Nasdaq Global Select Market

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      No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definition of “large accelerated filer,” "accelerated filer,” “smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act: 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes     No   

 

As of August 10, 2020, the registrant had 18,640,295 shares of common stock, $0.001 par value per share, outstanding.

2


PCTEL, INC.

Form 10-Q

For the Quarterly Period Ended June 30, 2020

TABLE OF CONTENTS

 

PART I

 

FINANCIAL INFORMATION

 

Page

Item 1

 

Financial Statements (unaudited)

 

4

 

 

Condensed Consolidated Balance Sheets

 

4

 

 

Condensed Consolidated Statements of Operations

 

5

 

 

Condensed Consolidated Statements of Comprehensive Income

 

6

 

 

Condensed Consolidated Statement of Stockholders' Equity

 

7

 

 

Condensed Consolidated Statements of Cash Flows

 

8

 

 

Notes to the Condensed Consolidated Financial Statements

 

9

Item 2

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

28

Item 3

 

Quantitative and Qualitative Disclosures about Market Risk

 

35

Item 4

 

Controls and Procedures

 

35

 

 

 

 

 

PART II

 

OTHER INFORMATION

 

 

Item 1

 

Legal Proceedings

 

36

Item 1A

 

Risk Factors

 

36

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

37

Item 3

 

Defaults Upon Senior Securities

 

37

Item 4

 

Mine Safety Disclosures

 

37

Item 5

 

Other Information

 

37

Item 6

 

Exhibits

 

38

Signatures

 

 

 

39

 

 

3


PART I – FINANCIAL INFORMATION

Item 1: Financial Statements (unaudited)

PCTEL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

(unaudited)

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,458

 

 

$

7,094

 

Short-term investment securities

 

 

29,356

 

 

 

32,556

 

Accounts receivable, net of allowances of $115 and $104 at June 30, 2020 and

 

 

 

 

 

 

 

 

December 31, 2019, respectively

 

 

15,414

 

 

 

17,380

 

Inventories, net

 

 

11,017

 

 

 

11,935

 

Prepaid expenses and other assets

 

 

1,320

 

 

 

1,842

 

Total current assets

 

 

63,565

 

 

 

70,807

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

12,488

 

 

 

11,985

 

Long-term investment securities

 

 

3,742

 

 

 

0

 

Goodwill

 

 

3,332

 

 

 

3,332

 

Intangible assets, net

 

 

0

 

 

 

144

 

Other noncurrent assets

 

 

2,579

 

 

 

2,969

 

TOTAL ASSETS

 

$

85,706

 

 

$

89,237

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,242

 

 

$

3,190

 

Accrued liabilities

 

 

6,336

 

 

 

9,382

 

Total current liabilities

 

 

10,578

 

 

 

12,572

 

Long-term liabilities

 

 

4,449

 

 

 

3,315

 

Total liabilities

 

 

15,027

 

 

 

15,887

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 50,000,000 and 100,000,000 shares authorized at

 

 

 

 

 

 

 

 

June 30, 2020 and December 31, 2019, respectively, and 18,640,295 and 18,611,289

 

 

 

 

 

 

 

 

shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

 

19

 

 

 

19

 

Additional paid-in capital

 

 

130,853

 

 

 

133,954

 

Accumulated deficit

 

 

(59,801

)

 

 

(60,305

)

Accumulated other comprehensive loss

 

 

(392

)

 

 

(318

)

Total stockholders’ equity

 

 

70,679

 

 

 

73,350

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

85,706

 

 

$

89,237

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

19,842

 

 

$

23,499

 

 

$

37,348

 

 

$

44,090

 

COST OF REVENUES

 

 

10,321

 

 

 

12,805

 

 

 

19,612

 

 

 

24,737

 

GROSS PROFIT

 

 

9,521

 

 

 

10,694

 

 

 

17,736

 

 

 

19,353

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

3,070

 

 

 

3,006

 

 

 

6,099

 

 

 

6,009

 

Sales and marketing

 

 

2,397

 

 

 

3,097

 

 

 

5,539

 

 

 

5,895

 

General and administrative

 

 

2,945

 

 

 

3,914

 

 

 

5,747

 

 

 

7,167

 

Amortization of intangible assets

 

 

0

 

 

 

48

 

 

 

33

 

 

 

122

 

Restructuring expenses

 

 

11

 

 

 

0

 

 

 

98

 

 

 

0

 

Total operating expenses

 

 

8,423

 

 

 

10,065

 

 

 

17,516

 

 

 

19,193

 

OPERATING INCOME

 

 

1,098

 

 

 

629

 

 

 

220

 

 

 

160

 

Other income, net

 

 

102

 

 

 

320

 

 

 

300

 

 

 

481

 

INCOME BEFORE INCOME TAXES

 

 

1,200

 

 

 

949

 

 

 

520

 

 

 

641

 

Expense for income taxes

 

 

8

 

 

 

8

 

 

 

16

 

 

 

17

 

NET INCOME

 

$

1,192

 

 

$

941

 

 

$

504

 

 

$

624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

 

$

0.05

 

 

$

0.03

 

 

$

0.04

 

Diluted

 

$

0.07

 

 

$

0.05

 

 

$

0.03

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,159

 

 

 

17,828

 

 

 

18,180

 

 

 

17,725

 

Diluted

 

 

18,214

 

 

 

17,934

 

 

 

18,352

 

 

 

17,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividend per share

 

$

0.055

 

 

$

0.055

 

 

$

0.110

 

 

$

0.110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(in thousands)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

1,192

 

 

$

941

 

 

$

504

 

 

$

624

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

15

 

 

 

(148

)

 

 

(74

)

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

$

1,207

 

 

$

793

 

 

$

430

 

 

$

629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

6


PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Total

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Stockholders'

 

 

 

Common

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Equity of

 

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

PCTEL, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE at MARCH 31, 2020

 

$

18

 

 

$

130,438

 

 

$

(60,993

)

 

$

(407

)

 

$

69,056

 

Stock-based compensation expense

 

 

1

 

 

 

1,000

 

 

 

0

 

 

 

0

 

 

 

1,001

 

Issuance of shares for stock purchase plans

 

 

0

 

 

 

437

 

 

 

0

 

 

 

0

 

 

 

437

 

Dividends paid ($0.055 per share)

 

 

0

 

 

 

(1,022

)

 

 

0

 

 

 

0

 

 

 

(1,022

)

Net income

 

 

0

 

 

 

0

 

 

 

1,192

 

 

 

0

 

 

 

1,192

 

Change in cumulative translation adjustment, net

 

 

0

 

 

 

0

 

 

 

0

 

 

 

15

 

 

 

15

 

BALANCE at JUNE 30, 2020

 

$

19

 

 

$

130,853

 

 

$

(59,801

)

 

$

(392

)

 

$

70,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE at MARCH 31, 2019

 

$

18

 

 

$

133,320

 

 

$

(64,372

)

 

$

(63

)

 

$

68,903

 

Stock-based compensation expense

 

 

0

 

 

 

1,446

 

 

 

0

 

 

 

0

 

 

 

1,446

 

Dividends paid ($0.055 per share)

 

 

0

 

 

 

(1,013

)

 

 

0

 

 

 

0

 

 

 

(1,013

)

Net income

 

 

0

 

 

 

0

 

 

 

941

 

 

 

0

 

 

 

941

 

Change in cumulative translation adjustment, net

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(148

)

 

 

(148

)

BALANCE at JUNE 30, 2019

 

$

18

 

 

$

133,753

 

 

$

(63,431

)

 

$

(211

)

 

$

70,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE at DECEMBER 31, 2019

 

$

19

 

 

$

133,954

 

 

$

(60,305

)

 

$

(318

)

 

$

73,350

 

Stock-based compensation expense

 

 

1

 

 

 

1,562

 

 

 

0

 

 

 

0

 

 

 

1,563

 

Issuance of shares for stock purchase plans and stock options

 

 

0

 

 

 

496

 

 

 

0

 

 

 

0

 

 

 

496

 

Cancellation of shares for payment of withholding tax

 

 

0

 

 

 

(1,106

)

 

 

0

 

 

 

0

 

 

 

(1,106

)

Repurchase of common stock

 

 

(1

)

 

 

(1,999

)

 

 

0

 

 

 

0

 

 

 

(2,000

)

Dividends paid ($0.11 per share)

 

 

0

 

 

 

(2,054

)

 

 

0

 

 

 

0

 

 

 

(2,054

)

Net income

 

 

0

 

 

 

0

 

 

 

504

 

 

 

0

 

 

 

504

 

Change in cumulative translation adjustment, net

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(74

)

 

 

(74

)

BALANCE at JUNE 30, 2020

 

$

19

 

 

$

130,853

 

 

$

(59,801

)

 

$

(392

)

 

$

70,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE at DECEMBER 31, 2018

 

$

18

 

 

$

133,859

 

 

$

(64,055

)

 

$

(216

)

 

$

69,606

 

Stock-based compensation expense

 

 

0

 

 

 

2,328

 

 

 

0

 

 

 

0

 

 

 

2,328

 

Issuance of shares for stock purchase plans

 

 

0

 

 

 

338

 

 

 

0

 

 

 

0

 

 

 

338

 

Cancellation of shares for payment of withholding tax

 

 

0

 

 

 

(743

)

 

 

0

 

 

 

0

 

 

 

(743

)

Dividends paid ($0.11 per share)

 

 

0

 

 

 

(2,029

)

 

 

0

 

 

 

0

 

 

 

(2,029

)

Net income

 

 

0

 

 

 

0

 

 

 

624

 

 

 

0

 

 

 

624

 

Change in cumulative translation adjustment, net

 

 

0

 

 

 

0

 

 

 

0

 

 

 

5

 

 

 

5

 

BALANCE at JUNE 30, 2019

 

$

18

 

 

$

133,753

 

 

$

(63,431

)

 

$

(211

)

 

$

70,129