U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended February 28, 2003
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For The Transition Period from to
Commission File Number: 0-11868
CARDIODYNAMICS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
| California |
95-3533362 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| 6175 Nancy Ridge Drive, Suite 300, San Diego, California |
92121 | |
| (Address of principal executive offices) |
(Zip Code) |
(858) 535-0202
(Registrant’s telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨
As of April 10, 2003, 46,186,787 shares of common stock and no shares of preferred stock were outstanding.
CARDIODYNAMICS INTERNATIONAL CORPORATION
FORM 10-Q
| Page No. | ||||
| PART I—FINANCIAL INFORMATION |
||||
| Item 1. |
||||
| Balance Sheets at February 28, 2003 (unaudited) and November 30, 2002 (audited). |
3 | |||
| Statements of Operations (unaudited) for the three months ended February 28, 2003 and 2002. |
5 | |||
| Statements of Cash Flows (unaudited) for the three months ended February 28, 2003 and 2002. |
6 | |||
| 8 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operation |
12 | ||
| Item 3. |
17 | |||
| Item 4. |
17 | |||
| PART II—OTHER INFORMATION |
||||
| Item 1. |
19 | |||
| Item 2. |
19 | |||
| Item 3. |
19 | |||
| Item 4. |
19 | |||
| Item 5. |
19 | |||
| Item 6. |
19 | |||
| 20 | ||||
2
PART I—FINANCIAL INFORMATION
CARDIODYNAMICS INTERNATIONAL CORPORATION
(In thousands, except share data)
| February 28, 2003 (Unaudited) |
November 30, 2002 (Audited) | |||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ |
6,965 |
$ |
6,879 | ||
| Accounts receivable, net of allowance for doubtful accounts of $1,943 in 2003 and $1,726 in 2002 |
|
8,431 |
|
8,349 | ||
| Inventory, net |
|
3,514 |
|
3,474 | ||
| Current portion of long-term receivables |
|
2,069 |
|
2,255 | ||
| Other current assets |
|
291 |
|
222 | ||
| Total current assets |
|
21,270 |
|
21,179 | ||
| Property and equipment, net |
|
413 |
|
414 | ||
| Long-term receivables and note receivable, net |
|
1,985 |
|
1,921 | ||
| Other assets |
|
52 |
|
52 | ||
| Total assets |
$ |
23,720 |
$ |
23,566 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ |
1,526 |
$ |
1,528 | ||
| Accrued expenses |
|
236 |
|
173 | ||
| Accrued salaries, wages and benefits |
|
1,132 |
|
1,195 | ||
| Income taxes payable |
|
9 |
|
— | ||
| Current portion of deferred service revenue |
|
249 |
|
285 | ||
| Current portion of deferred rent |
|
16 |
|
16 | ||
| Reserve for warranty repairs – current |
|
30 |
|
69 | ||
| Current portion of capital lease obligations |
|
16 |
|
16 | ||
| Total current liabilities |
|
3,214 |
|
3,282 | ||
| Long-term portion of deferred service revenue |
|
145 |
|
166 | ||
| Long-term portion of deferred rent |
|
104 |
|
106 | ||
| Reserve for warranty repairs – long-term |
|
358 |
|
264 | ||
| Long-term obligations under capital leases |
|
15 |
|
24 | ||
| Total long-term liabilities |
|
622 |
|
560 | ||
| Total liabilities |
|
3,836 |
|
3,842 | ||
Continued
3
CARDIODYNAMICS INTERNATIONAL CORPORATION
BALANCE SHEETS (Continued)
(In thousands, except share data)
| February 28, 2003 (Unaudited) |
November 30, 2002 (Audited) |
|||||||
| Commitments and contingencies |
$ |
— |
|
$ |
— |
| ||
| Shareholders’ equity: |
||||||||
| Preferred stock, 18,000,000 shares authorized, no shares issued or outstanding at February 28, 2003 or November 30, 2002 |
|
— |
|
|
— |
| ||
| Common stock, no par value, 100,000,000 shares authorized, issued and outstanding 46,186,787 at February 28, 2003 and 46,171,584 shares at November 30, 2002 |
|
49,809 |
|
|
49,774 |
| ||
| Accumulated other comprehensive income |
|
12 |
|
|
3 |
| ||
| Accumulated deficit |
|
(29,937 |
) |
|
(30,053 |
) | ||
| Total shareholders’ equity |
|
19,884 |
|
|
19,724 |
| ||
| Total liabilities and shareholders’ equity |
$ |
23,720 |
|
$ |
23,566 |
| ||
See accompanying notes to financial statements.
4
CARDIODYNAMICS INTERNATIONAL CORPORATION
(in thousands, except per share data)
(unaudited)
| Three months ended February 28, |
||||||||
| 2003 |
2002 |
|||||||
| Net sales |
$ |
6,385 |
|
$ |
4,366 |
| ||
| Cost of sales |
|
1,632 |
|
|
1,278 |
| ||
| Gross margin |
|
4,753 |
|
|
3,088 |
| ||
| Operating expenses: |
||||||||
| Research and development |
|
736 |
|
|
642 |
| ||
| Selling and marketing |
|
3,481 |
|
|
2,721 |
| ||
| General and administrative |
|
499 |
|
|
439 |
| ||
| Total operating expenses |
|
4,716 |
|
|
3,802 |
| ||
| Income (loss) from operations |
|
37 |
|
|
(714 |
) | ||
| Other income (expense): |
||||||||
| Interest income |
|
93 |
|
|
105 |
| ||
| Interest expense |
|
(5 |
) |
|
(18 |
) | ||
| Other, net |
|
— |
|
|
(3 |
) | ||
| Total other income |
|
88 |
|
|
84 |
| ||
| Income (loss) before provision for income taxes |
|
125 |
|
|
(630 |
) | ||
| Provision for income taxes |
|
(9 |
) |
|
— |
| ||
| Net income (loss) |
$ |
116 |
|
$ |
(630 |
) | ||
| Net income (loss) per common share, basic and diluted |
$ |
.00 |
|
$ |
(.01 |
) | ||
| Weighted-average number of shares used in per share calculation |
||||||||
| Basic |
|
46,181 |
|
|
45,933 |
| ||
| Diluted |
|
47,240 |
|
|
45,933 |
| ||
See accompanying notes to financial statements.
5
CARDIODYNAMICS INTERNATIONAL CORPORATION
(Unaudited—In thousands)
| Three Months Ended February 28, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
116 |
|
$ |
(630 |
) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used) in operating activities: |
||||||||
| Depreciation and amortization |
|
57 |
|
|
70 |
| ||
| Provision for obsolete inventory |
|
12 |
|
|
46 |
| ||
| Provision for warranty repairs |
|
55 |
|
|
51 |
| ||
| Provision for demonstration inventory |
|
3 |
|
|
(10 |
) | ||
| Provision for doubtful receivables |
|
217 |
|
|
111 |
| ||
| Provision for doubtful long-term receivables |
|
3 |
|
|
19 |
| ||
| Compensatory stock options granted |
|
10 |
|
|
21 |
| ||
| Other non-cash items |
|
9 |
|
|
— |
| ||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
|
(299 |
) |
|
281 |
| ||
| Inventory |
|
(55 |
) |
|
(390 |
) | ||
| Other current assets |
|
(69 |
) |
|
(107 |
) | ||
| Long-term receivables and note receivable |
|
119 |
|
|
115 |
| ||
| Accounts payable |
|
(2 |
) |
|
87 |
| ||
| Accrued expenses |
|
63 |
|
|
(34 |
) | ||