DRAFT 5/12/05
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 March 31, 2005.
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 |
|
|
|
Trevose, Pennsylvania |
|
19053 |
|
(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 May 9, 2005, there were 33,756,436 shares of common stock, par value $.01 per share, outstanding.
WORLDGATE COMMUNICATIONS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2005
TABLE OF CONTENTS
|
|
||
|
|
|
|
|
|
||
|
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations |
|
|
|
|
||
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
2
WORLDGATE COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
|
|
|
March 31, |
|
December 31, |
|
||
|
|
|
(Unaudited) |
|
(Audited) |
|
||
|
|
|
|
|
|
|
||
|
ASSETS |
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
9,929 |
|
$ |
11,840 |
|
|
Other receivables |
|
12 |
|
28 |
|
||
|
Inventory, net |
|
99 |
|
46 |
|
||
|
Prepaid and other assets |
|
355 |
|
184 |
|
||
|
|
|
|
|
|
|
||
|
Total current assets |
|
10,395 |
|
12,098 |
|
||
|
|
|
|
|
|
|
||
|
Property and equipment |
|
3,609 |
|
3,530 |
|
||
|
Less: accumulated depreciation and amortization |
|
(1,985 |
) |
(1,815 |
) |
||
|
Property and equipment, net |
|
1,624 |
|
1,715 |
|
||
|
Deposits and other assets |
|
9 |
|
9 |
|
||
|
|
|
|
|
|
|
||
|
Total assets |
|
$ |
12,028 |
|
$ |
13,822 |
|
|
|
|
|
|
|
|
||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY |
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Accounts payable |
|
$ |
258 |
|
$ |
222 |
|
|
Accrued expenses |
|
841 |
|
951 |
|
||
|
Accrued compensation and benefits |
|
241 |
|
540 |
|
||
|
Dividend payable on Preferred Stock |
|
82 |
|
85 |
|
||
|
Detachable Warrants |
|
3,527 |
|
5,583 |
|
||
|
Notes payable |
|
0 |
|
37 |
|
||
|
Conversion option on Preferred Stock |
|
5,417 |
|
8,612 |
|
||
|
Deferred revenues |
|
190 |
|
369 |
|
||
|
|
|
|
|
|
|
||
|
Total liabilities |
|
$ |
10,556 |
|
$ |
16,399 |
|
|
|
|
|
|
|
|
||
|
Commitments |
|
$ |
0 |
|
$ |
0 |
|
|
Redeemable Preferred Stock; 6,675 shares outstanding at March 31, 2005, and 6,775 outstanding at December 31, 2004 |
|
$ |
3,382 |
|
$ |
2,995 |
|
|
|
|
|
|
|
|
||
|
Stockholders’ deficiency: |
|
|
|
|
|
||
|
Preferred Stock, $.01 par value, 13,500,000 shares authorized; shares issued 7,550 at March 31, 2005 and December 31, 2004 |
|
$ |
0 |
|
$ |
0 |
|
|
Common Stock, $.01 par value; 80,000,000 shares authorized, 31,716,189 shares issued and outstanding at March 31, 2005 and 30,865,777 shares issued and outstanding at December 31, 2004 |
|
317 |
|
308 |
|
||
|
Additional paid-in capital |
|
215,418 |
|
213,863 |
|
||
|
Accumulated deficit |
|
$ |
(217,645 |
) |
(219,743 |
) |
|
|
|
|
|
|
|
|
||
|
Total stockholders’ deficiency |
|
$ |
(1,910 |
) |
$ |
(5,572 |
) |
|
|
|
|
|
|
|
||
|
Total liabilities and stockholders’ deficiency |
|
$ |
12,028 |
|
$ |
13,822 |
|
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 March 31, |
|
||||
|
|
|
2005 |
|
2004 |
|
||
|
Revenues |
|
$ |
179 |
|
$ |
0 |
|
|
Cost of revenues |
|
125 |
|
0 |
|
||
|
Gross margins |
|
54 |
|
0 |
|
||
|
|
|
|
|
|
|
||
|
Engineering and development (excluding depreciation and amortization amounts of $66, and $0, respectively) |
|
1,305 |
|
800 |
|
||
|
Sales and marketing (excluding depreciation and amortization amounts of $8 and $0, respectively) |
|
379 |
|
191 |
|
||
|
General and administrative (excluding depreciation and amortization amounts of $97 and $102, respectively) |
|
847 |
|
1,674 |
|
||
|
Depreciation and amortization |
|
171 |
|
102 |
|
||
|
|
|
|
|
|
|
||
|
Total expenses from continuing operations |
|
2,702 |
|
2,767 |
|
||
|
|
|
|
|
|
|
||
|
Loss from operating activities of continuing operations |
|
(2,648 |
) |
(2,767 |
) |
||
|
Interest and other income |
|
66 |
|
7 |
|
||
|
Change in fair value of warrants and conversion options |
|
5,176 | |||||