SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 | ||
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| For the quarterly period ended March 31, 2003 | |||
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT | ||
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| Commission file number 0-19567 | |||
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| CARDIAC SCIENCE, INC. | |||
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| (Exact name of Registrant as specified in its charter) | |||
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| DELAWARE |
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33-0465681 | |
| (State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) | |
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| 1900 Main Street, Suite 700, Irvine, California, 92614 | |||
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| (Address of principal executive offices) | |||
Registrant’s telephone number, including area code: (949) 797-3800
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 o |
Indicate by check mark if the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).
| Yes x |
No o |
The number of shares of the Common Stock of the registrant outstanding as of May 14, 2003 was 66,997,014.
CARDIAC SCIENCE, INC.
INDEX TO FORM 10-Q
| Financial Statements |
CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
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March 31, |
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December 31, |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
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$ |
11,111 |
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$ |
15,598 |
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| Accounts receivable, net of allowance for doubtful accounts of $1,135 at March 31, 2003 and $1,042 at December 31, 2002 |
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11,799 |
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10,986 |
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| Inventories |
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5,981 |
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5,918 |
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| Assets held-for-sale |
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1,452 |
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1,161 |
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| Prepaid expenses and other current assets |
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1,160 |
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2,098 |
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| Total current assets |
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31,503 |
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35,761 |
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| Property and equipment, net |
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5,197 |
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5,206 |
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| Goodwill and other intangibles, net |
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106,097 |
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106,546 |
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| Other assets |
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7,465 |
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6,407 |
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$ |
150,262 |
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$ |
153,920 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
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$ |
5,627 |
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$ |
6,921 |
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| Accrued expenses and other current liabilities |
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7,082 |
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7,188 |
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| Liabilities held-for-sale |
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907 |
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2,067 |
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| Deferred revenue |
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162 |
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162 |
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| Current portion of long term obligations |
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206 |
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246 |
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| Total current liabilities |
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13,984 |
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16,584 |
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| Senior secured promissory notes |
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42,348 |
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41,054 |
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| Deferred revenue |
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966 |
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1,021 |
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| Other long term obligations |
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71 |
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91 |
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| Total liabilities |
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57,369 |
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58,750 |
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| Minority interest in subsidiary |
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948 |
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900 |
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Common stock - $.001 par value; 100,000,000 shares authorized, 66,978,566 and 66,827,170 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
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67 |
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67 |
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| Additional paid-in capital |
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187,376 |
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187,239 |
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| Accumulated other comprehensive income |
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235 |
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115 |
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| Accumulated deficit |
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(95,733 |
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(93,151 |
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| Total stockholders’ equity |
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91,945 |
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94,270 |
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$ |
150,262 |
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$ |
153,920 |
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The accompanying notes are an integral part of the financial statements.
3
CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
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Three Months Ended |
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March 31, |
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March 31, |
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| Net revenue |
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$ |
14,024 |
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$ |
9,361 |
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| Cost of goods sold |
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6,089 |
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4,910 |
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| Gross profit |
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7,935 |
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4,451 |
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| Operating expenses: |
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| Sales and marketing |
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4,417 |
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3,614 |
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| Research and development |
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1,102 |
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1,553 |
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| General and administrative |
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3,207 |
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2,454 |
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| Amortization of goodwill and other intangibles |
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449 |
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501 |
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| Gain on settlement |
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— |
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(832 |
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| Total operating expenses |
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9,175 |
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7,290 |
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| Loss from operations |
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(1,240 |
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(2,839 |
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| Interest income (expense), net |
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(1,401 |
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(659 |
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| Loss before minority interest |
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(2,641 |
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(3,498 |
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| Minority interest in consolidated subsidiary |
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(48 |
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16 |
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| Loss from continuing operations |
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(2,689 |
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(3,482 |
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| Discontinued operations |
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107 |
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— |
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| Net loss |
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$ |
(2,582 |
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$ |
(3,482 |
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| Net loss per share (basic and diluted) |
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$ |
(0.04 |
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$ |
(0.05 |
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| Weighted average number of shares used in the computation of net loss per share |
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66,932,228 |
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67,188,166 |
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The accompanying notes are an integral part of the financial statements.
4
CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(Dollars in thousands)
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Three Months Ended |
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March 31, |
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March 31, |
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| Net loss |
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$ |
(2,582 |
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$ |
(3,482 |
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| Other comprehensive income (loss): |
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| Foreign currency translation adjustments |
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120 |
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(49 |
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| Comprehensive loss |
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$ |
(2,462 |
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$ |
(3,531 |
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The accompanying notes are an integral part of the financial statements.
5
CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
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Three Months Ended |
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March 31, |
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March 31, |
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| Cash flows from operating activities: |
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| Net loss |
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$ |
(2,582 |
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$ |
(3,482 |
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| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Depreciation |
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756 |
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476 |
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| Amortization of intangibles |
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449 |
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501 |
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| Minority interest |
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48 |
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(16 |
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| Provision for doubtful accounts |
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76 |
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73 |
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| Gain on settlement |
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— |
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(832 |
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| Corporate relocation and restructuring costs, net of accelerated Depreciation |
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292 |
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— |
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| Accrued paid in kind interest and amortization of debt discount/ issuance costs |
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1,431 |
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— |
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| Changes in operating assets and liabilities: |
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| Accounts receivable |
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(906 |
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440 |
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| Inventories |
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202 |
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(2,354 |
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| Placement of Powerheart CRMs at customer locations |
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(447 |
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(27 |
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| Prepaid expenses and other assets |
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275 |
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(367 |
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| Deferred revenue |
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(55 |
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— |
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| Accounts payable and accrued expenses |
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(1,931 |
) |
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(56 |
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| Assets and liabilities held-for-sale |
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(1,451 |
) |
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160 |
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| Net cash used in operating activities |
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(3,843 |
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(5,484 |
) |
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| Cash flows from investing activities: |
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| Purchase of property and equipment |
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(325 |
) |
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(245 |
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| Funds in escrow to buy minority interest |
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(1,299 |
) |
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— |
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| Proceeds from sale of assets at subsidiary, net of costs |
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767 |
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— |
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| Net cash used in investing activities |
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(857 |
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(245 |
) |
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| Cash flows from financing activities: |
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| Payments on long term obligations |
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(60 |
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(18 |
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| Proceeds from exercise of common stock options and warrants |
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137 |
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17 |
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| Costs of equity issuances |
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— |
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< | |