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10-Q

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 September 30, 2022

☐ 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 November 9, 2022, the registrant had 18,773,994 shares of common stock, $0.001 par value per share, outstanding.

PCTEL, INC.

Form 10-Q

For the Quarterly Period Ended September 30, 2022

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION	Page
Item 1	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4	Controls and Procedures	35

PART II	OTHER INFORMATION	36
Item 1	Legal Proceedings	36
Item 1A	Risk Factors	36
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3	Defaults Upon Senior Securities	36
Item 4	Mine Safety Disclosures	36
Item 5	Other Information	36
Item 6	Exhibits	36
Signatures		37

PART I – FINANCIAL INFORMATION

Item 1: Financial Statements (unaudited)

PCTEL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share data)



	September 30,			December 31,
	2022			2021
ASSETS
Cash and cash equivalents	$	5,858		$	8,192
Short-term investment securities		22,147			22,562
Accounts receivable, net of allowances of $143 and $64 at September 30, 2022 and
December 31, 2021, respectively		20,553			18,905
Inventories, net		16,730			13,691
Prepaid expenses and other assets		1,374			1,747
Total current assets		66,662			65,097

Property and equipment, net		10,300			11,949
Goodwill		5,778			6,334
Intangible assets, net		1,058			1,579
Other noncurrent assets		2,636			2,438
TOTAL ASSETS	$	86,434		$	87,397
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	6,194		$	5,360
Accrued liabilities		10,618			11,117
Total current liabilities		16,812			16,477
Long-term liabilities		3,533			3,999
Total liabilities		20,345			20,476
Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 shares authorized at
September 30, 2022 and December 31, 2021, respectively, and 18,676,629 and 18,238,030
shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		19			18
Additional paid-in capital		123,964			123,998
Accumulated deficit		(55,916	)		(56,735	)
Accumulated other comprehensive loss		(1,978	)		(360	)
Total stockholders’ equity		66,089			66,921
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	86,434		$	87,397

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

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021

REVENUES	$	25,988		$	22,411		$	73,506		$	61,799
COST OF REVENUES		14,052			12,157			40,810			33,266
GROSS PROFIT		11,936			10,254			32,696			28,533
OPERATING EXPENSES:
Research and development		3,178			3,338			9,784			9,754
Sales and marketing		3,600			3,347			10,910			9,497
General and administrative		3,705			2,817			10,399			9,228
Amortization of intangible assets		63			80			201			135
Restructuring expenses		57			(1	)		1,309			59
Total operating expenses		10,603			9,581			32,603			28,673
OPERATING INCOME (LOSS)		1,333			673			93			(140	)
Other income (expense), net		205			(4	)		330			(10	)
INCOME (LOSS) BEFORE INCOME TAXES		1,538			669			423			(150	)
(Benefit) Expense for income taxes		(434	)		5			(396	)		17
NET INCOME (LOSS)	$	1,972		$	664		$	819		$	(167	)

Net Income (Loss) per Share:
Basic	$	0.11		$	0.04		$	0.05		$	(0.01	)
Diluted	$	0.11		$	0.04		$	0.04		$	(0.01	)

Weighted Average Shares:
Basic		18,166			17,945			18,099			18,078
Diluted		18,187			17,962			18,214			18,078

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

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

(in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021

NET INCOME (LOSS)	$	1,972		$	664		$	819		$	(167	)

OTHER COMPREHENSIVE LOSS:
Foreign currency translation adjustments		(686	)		(152	)		(1,618	)		(238	)

COMPREHENSIVE INCOME (LOSS)	$	1,286		$	512		$	(799	)	$	(405	)

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

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)


										Accumulated			Total
				Additional						Other			Stockholders'
	Common			Paid-In			Accumulated			Comprehensive			Equity of
	Stock			Capital			Deficit			Loss			PCTEL, Inc.

BALANCE at JUNE 30, 2022	$	19		$	123,844		$	(57,888	)	$	(1,292	)	$	64,683
Stock-based compensation expense		0			1,147			0			0			1,147
Issuance of shares for stock purchase plans and stock options		0			0			0			0			0
Cancellation of shares for payment of withholding tax		0			0			0			0			0
Dividends paid ($0.055 per share)		0			(1,027	)		0			0			(1,027	)
Net income		0			0			1,972			0			1,972
Change in cumulative translation adjustment, net		0			0			0			(686	)		(686	)
BALANCE at SEPTEMER 30, 2022	$	19		$	123,964		$	(55,916	)	$	(1,978	)	$	66,089

BALANCE at JUNE 30, 2021	$	19		$	126,791		$	(57,719	)	$	(68	)		69,023
Stock-based compensation expense		0			372			0			0			372
Issuance of shares for stock purchase plans and stock options		0			0			0			0			-
Cancellation of shares for payment of withholding tax		0			0			0			0			0
Repurchase of common stock		(1	)		(2,459	)		0			0			(2,460	)
Dividends paid ($0.055 per share)		0			(1,002	)		0			0			(1,002	)
Net income		0			0			664			0			664
Change in cumulative translation adjustment, net		0			0			0			(152	)		(152	)
BALANCE at SEPTEMBER 30, 2021	$	18		$	123,702		$	(57,055	)	$	(220	)	$	66,445

BALANCE at DECEMBER 31, 2021	$	18		$	123,998		$	(56,735	)	$	(360	)	$	66,921
Stock-based compensation expense		1			3,006			0			0			3,007
Issuance of shares for stock purchase plans and stock options		0			404			0			0			404
Cancellation of shares for payment of withholding tax		0			(396	)		0			0			(396	)
Dividends paid ($0.165 per share)		0			(3,048	)		0			0			(3,048	)
Net income		0			0			819			0			819
Change in cumulative translation adjustment, net		0			0			0			(1,618	)		(1,618	)
BALANCE at SEPTEMER 30, 2022	$	19		$	123,964		$	(