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Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
 
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
    
 
SECURITIES AND EXCHANGE ACT OF 1934
 
    
 
For the quarterly period ended June 30, 2002
 
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
    
 
SECURITIES AND EXCHANGE ACT OF 1934
 
    
 
For the transition period from                      to                     
 
Commission file number: 000-33001
 
 
NATUS MEDICAL INCORPORATED
(Exact name of registrant as specified in its charter)
 
Delaware
  
77-0154833
(State or other jurisdiction
of incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
1501 Industrial Road, San Carlos, CA 94070
(Address of principal executive offices) (Zip Code)
 
(650) 802-0400
(Registrant’s telephone number, including area code)
 
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 and Exchange Act of 1934 during the preceding 12 months (or for 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  ¨
 
The number of issued and outstanding shares of the registrant’s Common Stock, $0.001 par value, as of June 30, 2002, was 16,079,894.
 

Table of Contents
NATUS MEDICAL INCORPORATED
 
TABLE OF CONTENTS
 
           
Page No.
PART I.
        
3
Item 1.
        
3
         
3
         
4
         
5
         
6
Item 2.
        
9
Item 3.
        
29
PART II.
        
30
Item 2.
        
30
Item 6.
        
30
    
31

2

Table of Contents
PART I.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
    
June 30,
2002
     
December 31,
2001(1)
  
    
(unaudited)
         
ASSETS:
                  
Current assets:
                  
Cash and cash equivalents
   
$
23,751
 
   
$
30,351
 
Short-term investments
   
 
25,840
 
   
 
22,735
 
Accounts receivable, net of allowance for doubtful accounts of $193 in 2002 and $239 in 2001
   
 
4,416
 
   
 
5,209
 
Inventories
   
 
3,972
 
   
 
3,598
 
Prepaid expenses and other current assets
   
 
695
 
   
 
655
 
    
  
Total current assets
   
 
58,674
 
   
 
62,548
 
Property and equipment, net
   
 
1,654
 
   
 
1,757
 
Long-term investment
   
 
331
 
   
 
327
 
Deposits and other assets
   
 
1,289
 
   
 
303
 
    
  
Total assets
   
$
61,948
 
   
$
64,935
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Liabilities:
                  
Accounts payable
   
$
807
 
   
$
892
 
Notes payable
   
 
500
 
   
 
—  
 
Accrued liabilities
   
 
2,542
 
   
 
2,702
 
Deferred revenues
   
 
354
 
   
 
312
 
    
  
Total liabilities
   
 
4,203
 
   
 
3,906
 
    
  
Commitments and contingencies
                  
Stockholders’ equity:
                  
Common stock, $0.001 par value, 120,000,000 shares authorized; shares issued and outstanding: 16,079,894 in 2002 and 15,864,670 in 2001
   
 
86,366
 
   
 
86,007
 
Deferred stock compensation
   
 
(448
)
   
 
(767
)
Accumulated deficit
   
 
(28,080
)
   
 
(24,299
)
Accumulated other comprehensive (loss) income
   
 
(93
)
   
 
88
 
    
  
Total stockholders’ equity
   
 
57,745
 
   
 
61,029
 
    
  
Total liabilities and stockholders’ equity
   
$
61,948
 
   
$
64,935
 
    
  
(1)
 
Derived from the consolidated audited financial statements at December 31, 2001.
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
    
Three Months Ended
June 30,
     
Six Months Ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenues
   
$
6,470
 
   
$
7,243
 
   
$
12,546
 
   
$
13,561
 
Cost of revenues*
   
 
2,920
 
   
 
2,710
 
   
 
5,436
 
   
 
5,138
 
    
  
  
  
Gross profit
   
 
3,550
 
   
 
4,533
 
   
 
7,110
 
   
 
8,423
 
    
  
  
  
Operating expenses:
                                    
Marketing and selling
   
 
3,567
 
   
 
3,026
 
   
 
6,934
 
   
 
5,971
 
Research and development
   
 
1,275
 
   
 
1,018
 
   
 
2,331
 
   
 
2,029
 
General and administrative
   
 
991
 
   
 
954
 
   
 
1,979
 
   
 
1,736
 
Amortization of deferred stock compensation*
   
 
136
 
   
 
284
 
   
 
280
 
   
 
572
 
    
  
  
  
Total operating expenses
   
 
5,969
 
   
 
5,282
 
   
 
11,524
 
   
 
10,308
 
    
  
  
  
Loss from operations
   
 
(2,419
)
   
 
(749
)
   
 
(4,414
)
   
 
(1,885
)
Interest income
   
 
238
 
   
 
3
 
   
 
500
 
   
 
22
 
Interest expense
   
 
(3
)
   
 
(21
)
   
 
(5
)
   
 
(21
)
Other income (expense), net
   
 
228
 
   
 
(5
)
   
 
206
 
   
 
(11
)
    
  
  
  
Loss before provision for income taxes
   
 
(1,956
)
   
 
(772
)
   
 
(3,713
)
   
 
(1,895
)
Provision for income taxes
   
 
38
 
   
 
—  
 
   
 
68
 
   
 
1
 
    
  
  
  
Net loss
   
 
(1,994
)
   
 
(772
)
   
 
(3,781
)
   
 
(1,896
)
Accretion of redeemable convertible preferred stock
   
 
—  
 
   
 
346
 
   
 
—  
 
   
 
692
 
    
  
  
  
Net loss available to common stockholders
   
$
(1,994
)
   
$
(1,118
)
   
$
(3,781
)
   
$
(2,588
)
    
  
  
  
Basic and diluted net loss per share
   
$
(0.12
)
   
$
(1.22
)
   
$
(0.24
)
   
$
(2.85
)
    
  
  
  
Common shares used in computing basic and diluted net loss per share
   
 
16,040
 
   
 
916
 
   
 
15,964
 
   
 
907
 
    
  
  
  
*  Amortization of deferred stock compensation included in:
                                    
Cost of revenues
   
$
18
 
   
$
42
 
   
$
39
 
   
$
83
 
    
  
  
  
Operating expenses:
                                    
Marketing and selling
   
$
78
 
   
$
150
 
   
$
152
 
   
$
299
 
Research and development
   
 
11
 
   
 
28
 
   
 
25
 
   
 
60
 
General and administrative
   
 
47
 
   
 
106
 
   
 
103
 
   
 
213
 
    
  
  
  
Total
   
$
136
 
   
$
284
 
   
$
280
 
   
$
572
 
    
  
  
  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
    
Six Months Ended
June 30,
  
    
2002
     
2001
  
Operating activities:
                  
Net loss
   
$
(3,781
)
   
$
(1,896
)
Adjustments to reconcile net loss to net cash used in operating activities:
                  
Depreciation
   
 
487
 
   
 
368
 
Amortization of deferred stock compensation
   
 
319
 
   
 
655
 
Changes in operating assets and liabilities:
                  
Accounts receivable
   
 
718
 
   
 
349
 
Inventories
   
 
(409
)
   
 
(285
)
Prepaid expenses and other current assets
   
 
(44
)
   
 
(174
)
Accounts payable