UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Mark One
ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the Quarterly Period Ended September 30, 2003.
or
o 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: 000-25755
WORLDGATE COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
|
Delaware |
|
23-2866697 |
|
(State of Incorporation) |
|
(I.R.S. Employer Identification No.) |
|
|
||
|
3190
Tremont Avenue |
||
|
(Address of Principal Executive Offices) (Zip Code) |
||
|
|
||
|
(215) 354-5100 |
||
|
(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 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 ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.
Yes o No ý
As of November 7, 2003, there were 23,580,876 shares of common stock, par value $.01 per share, outstanding.
WORLDGATE COMMUNICATIONS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
TABLE OF CONTENTS
|
|
||
|
|
|
|
|
3 |
||
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 |
|
|
15 |
||
|
15 |
||
|
|
|
|
|
|
||
|
|
|
|
|
16 |
||
|
16 |
||
|
16 |
||
|
16 |
||
|
16 |
||
|
18 |
||
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WORLDGATE COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
|
|
|
September
30, |
|
December
31, |
|
||
|
|
|
(Unaudited) |
|
(Audited) |
|
||
|
ASSETS |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
850 |
|
$ |
589 |
|
|
Short - term investments |
|
— |
|
3,218 |
|
||
|
Accounts receivable, less allowance for doubtful accounts of $343 at September 30, 2003 and $1,596 at December 31, 2002 |
|
2,674 |
|
1,407 |
|
||
|
Accounts receivable due from related parties |
|
138 |
|
1,186 |
|
||
|
Inventory |
|
1,423 |
|
3,962 |
|
||
|
Prepaid and other assets |
|
380 |
|
281 |
|
||
|
Total current assets |
|
5,465 |
|
10,643 |
|
||
|
|
|
|
|
|
|
||
|
Property and equipment |
|
4,503 |
|
5,109 |
|
||
|
Less: accumulated depreciation and amortization |
|
(2,732 |
) |
(2,605 |
) |
||
|
|
|
|
|
|
|
||
|
Property and equipment, net |
|
1,771 |
|
2,504 |
|
||
|
Deposits and other assets |
|
397 |
|
872 |
|
||
|
|
|
|
|
|
|
||
|
Total assets |
|
$ |
7,633 |
|
$ |
14,019 |
|
|
|
|
|
|
|
|
||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Current Liabilities: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Notes Payable |
|
$ |
— |
|
$ |
50 |
|
|
Accounts payable |
|
740 |
|
775 |
|
||
|
Accounts payable due to related party |
|
65 |
|
453 |
|
||
|
Accrued expenses |
|
564 |
|
779 |
|
||
|
Accrued compensation and benefits |
|
212 |
|
1,132 |
|
||
|
Contractual obligations related to equity financing |
|
0 |
|
3,283 |
|
||
|
Deferred rent credit, current and other |
|
30 |
|
87 |
|
||
|
Total current liabilities |
|
1,611 |
|
6,559 |
|
||
|
|
|
|
|
|
|
||
|
Deferred rent credit |
|
142 |
|
165 |
|
||
|
Total liabilities |
|
1,753 |
|
6,724 |
|
||
|
|
|
|
|
|
|
||
|
Stockholders’ equity: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Preferred Stock, $.01 par value, 13,500,000 shares authorized |
|
— |
|
— |
|
||
|
Common stock, $.01 par value, 50,000,000 shares authorized, 23,580,876 shares issued and outstanding at September 30, 2003 and 23,577,963 shares issued and outstanding at December 31, 2002 |
|
236 |
|
236 |
|
||
|
Additional paid-in capital |
|
197,758 |
|
193,391 |
|
||
|
Warrant for Common Stock |
|
1,911 |
|
1,911 |
|
||
|
Accumulated deficit |
|
(194,020 |
) |
(189,238 |
) |
||
|
Less Treasury Stock, at cost – 500,000 shares as of September 30, 2003 and December 31, 2002 |
|
(5 |
) |
(5 |
) |
||
|
Total stockholders’ equity |
|
6,180 |
|
7,295 |
|
||
|
Total liabilities and stockholders’ equity |
|
$ |
7,633 |
|
$ |
14,019 |
|
The accompanying notes are an integral part of these financial statements.
3
WORLDGATE COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in Thousands, Except per Share Amounts)
|
|
|
Three Months ended September 30, |
|
Nine Months ended September 30, |
|
||||||||
|
|
|
2003 |
|
2002 |
|
2003 |
|
2002 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenues |
|
|
|
|
|
|
|
|
|
||||
|
Equipment product revenues earned from third parties |
|
$ |
674 |
|
$ |
445 |
|
$ |
805 |
|
481 |
|
|
|
Equipment product revenues earned from related parties |
|
14 |
|
87 |
|
1,119 |
|
263 |
|
||||
|
Service fee revenues earned from third parties |
|
201 |
|
207 |
|
623 |
|
963 |
|
||||
|
Service fee revenues earned from related parties |
|
52 |
|
3,557 |
|
950 |
|
9,682 |
|
||||
|
Total revenues |
|
941 |
|
4,296 |
|
3,497 |
|
11,389 |
|
||||
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of equipment product revenues |
|
1,523 |
|
685 |
|
3,414 |
|
4,354 |
|
||||
|
Cost of service fee revenues |
|
1 |
|
3,291 |
|
804 |
|
9,120 |
|
||||
|
Engineering and development (excluding depreciation and amortization amounts of $69 and $151 for the three months ended September 30, 2003 and 2002, respectively, and $289 and $450 for the nine months ended September 30, 2003 and September 30, 2002, respectively). |
|
723 |
|
1,920 |
|||||||||