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, 2004.
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)
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Delaware |
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23-2866697 |
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(State of Incorporation) |
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(I.R.S. Employer Identification No.) |
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3190 Tremont Avenue |
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Trevose, Pennsylvania 19053 |
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(Address of Principal Executive Offices) (Zip Code) |
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(215) 354-5100 |
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(Registrant’s Telephone Number, Including Area Code) |
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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 8, 2004, there were 28,310,475 shares of common stock, par value $.01 per share, outstanding.
WORLDGATE COMMUNICATIONS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
TABLE OF CONTENTS
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Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations |
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Item 3. Quantitative And Qualitative Disclosures About Market Risk |
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2
WORLDGATE
COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
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September 30, |
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December 31, |
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(Unaudited) |
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(Audited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
8,290 |
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$ |
3,365 |
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Accounts receivable, less allowance for doubtful accounts of $0 at September 30, 2004 and $381 at December 31, 2003 |
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82 |
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146 |
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Prepaid and other assets |
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285 |
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199 |
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Total current assets |
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8,657 |
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3,710 |
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Property and equipment |
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2,802 |
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2,605 |
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Less: accumulated depreciation and amortization |
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(1,648 |
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(1,338 |
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Property and equipment, net |
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1,154 |
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1,267 |
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Deposits and other assets |
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0 |
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140 |
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Total assets |
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$ |
9,811 |
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$ |
5,117 |
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LIABILITIES AND STOCKHOLDERS’ (DEFICIENCY) EQUITY |
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Current Liabilities: |
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Accounts payable |
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$ |
110 |
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$ |
440 |
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Accrued expenses |
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1,557 |
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594 |
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Accrued compensation and benefits |
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228 |
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238 |
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Dividend payable on Preferred Stock |
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103 |
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0 |
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Detachable warrants |
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1,223 |
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0 |
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Notes payable |
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147 |
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0 |
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Conversion option on Preferred Stock |
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1,124 |
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0 |
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Deferred revenues |
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494 |
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0 |
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Deferred rent credit |
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143 |
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30 |
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Total current liabilities |
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5,129 |
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1,302 |
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Deferred rent credit |
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0 |
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135 |
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Total liabilities |
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$ |
5,129 |
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$ |
1,437 |
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Redeemable Preferred Stock |
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$ |
3,121 |
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0 |
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Total stockholders’ (deficiency) equity: |
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Preferred Stock, $.01 par value, 13,500,000 shares authorized |
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$ |
0 |
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$ |
0 |
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Redeemable Preferred Stock, $.01 par value, shares authorized, 7,550 shares issued and outstanding at September 30, 2004, and 0 outstanding at December 31, 2003 |
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0 |
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0 |
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Common stock, $.01 par value, 50,000,000 shares authorized, 28,235,456 shares issued and outstanding at September 30, 2004 and 25,706,843 shares issued and outstanding at December 31, 2003 |
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282 |
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262 |
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Additional paid-in capital |
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206,546 |
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202,466 |
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Unearned compensation |
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(400 |
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(400 |
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Accumulated deficit |
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(205,267 |
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(198,643 |
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Less Treasury Stock, at cost – 500,000 shares as of December 31, 2003 |
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0 |
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(5 |
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Total stockholders’ (deficiency) equity |
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1,561 |
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3,680 |
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Total liabilities and stockholders’ (deficiency) equity |
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$ |
9,811 |
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$ |
5,117 |
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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)
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Three Months ended September 30, |
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Nine Months ended September 30, |
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2004 |
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2003 |
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2004 |
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2003 |
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Revenues |
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$ |
106 |
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$ |
0 |
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$ |
106 |
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$ |
0 |
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Cost of revenues |
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50 |
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0 |
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50 |
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0 |
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Gross Margins |
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56 |
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0 |
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56 |
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0 |
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Engineering and development (excluding depreciation and amortization amounts of $2 and $0 for the three months ended September 30, 2004 and 2003, respectively, and $2 and $0 for the nine months ended September 30, 2004 and 2003, respectively). |
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1,038 |
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660 |
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2,637 |
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1,922 |
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Sales and marketing (excluding depreciation and amortization amounts of $6 and $0 for the three months ended September 30, 2004 and 2003, respectively, and $6 and $0 for the nine months ended September 30, 2004 and 2003, respectively). |
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324 |
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130 |
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924 |
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354 |
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General and administrative (excluding depreciation and amortization amounts of $99 and $0 for the three months ended September 30, 2004 and 2003, respectively, and $302 and $0 for the nine months ended September 30, 2004 and 2003, respectively). |
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