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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 EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
 
OR
 
¨
 
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:
 
PATIENT SAFETY TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
13-3419202
(State of Incorporation)
 
(I.R.S. Employer Identification Number)
     
100 Wilshire Boulevard, Suite 1500
Santa Monica, California 90401
(Address of principal executive offices)
 
Registrant’s telephone number, including area code: (310) 752-1442
 
With Copies To:
Marc J. Ross, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
(212) 930-9700

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 Exchange Act. Yes ¨ No x
 
 
APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: On April 22, 2005, there were 5,404,783 shares outstanding of the Registrant’s common stock, $0.33 par value.
 
 
 


PATIENT SAFETY TECHNOLOGIES, INC.
 
FORM 10-Q FOR THE THREE MONTHS
ENDED MARCH 31, 2005
 
TABLE OF CONTENTS
 
 
Page
PART I - FINANCIAL INFORMATION
  
   
Item 1. Condensed Consolidated Financial Statements
1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
13
Item 3. Quantitative and Qualitative Disclosures About Market Risk
30
Item 4. Controls and Procedures
30
   
PART II - OTHER INFORMATION
  
   
Item 1. Legal Proceedings
30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
31
Item 3. Defaults Upon Senior Securities
31
Item 4. Submission of Matters to a Vote of Security Holders
31
Item 5. Other Information
34
Item 6. Exhibits
34
   
SIGNATURES
35
 
 

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.


PATIENT SAFETY TECHNOLOGIES, INC. AND SUBSIDIARIES
   
            
Condensed Balance Sheets (Unaudited)
           
            
            
   
March 31,
  
 December 31,
  
   
2005
 
 2004 *
  
            
ASSETS
           
            
CURRENT ASSETS
           
               
Cash and cash equivalents
  
$
10,741
  
$
846,404
  
Marketable securities
    
4,435,433
   
3,487,719
 
Other current assets
    
269,452
   
255,510
 
               
TOTAL CURRENT ASSETS
    
4,715,626
   
4,589,633
 
               
Property, plant and equipment, net
    
34,818
   
23,657
 
Intangible assets, net
    
4,657,497
       
Long-term investments
    
2,385,959
   
2,320,953
 
               
TOTAL ASSETS
  
$
11,793,900
  
$
6,934,243
  
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
CURRENT LIABILITIES
              
               
Notes payable
  
$
839,469
  
$
892,530
  
Accounts payable and accrued liabilities
   
1,137,833
   
939,568
 
Marketable securities, sold short
          
1,075,100
 
Due to broker
    
2,564,749
   
460,776
 
               
TOTAL CURRENT LIABILITIES
    
4,542,051
   
3,367,974
 
               
STOCKHOLDERS' EQUITY
              
               
Convertible preferred stock, $1 par value, cumulative 7% dividend:
              
1,000,000 shares authorized; 10,950 issued and outstanding
              
at March 31, 2005 and December 31, 2004
              
(Liquidation preference $1,095,000)
    
10,950
   
10,950
 
Common stock, $0.33 par value: 25,000,000 shares authorized;
              
6,826,017 shares issued and 5,374,278 shares outstanding as of March 31, 2005; 6,128,067
              
shares issued and 4,670,703 shares outstanding at December 31, 2004
    
2,252,586
   
2,022,262
 
Paid-in capital
    
19,176,731
   
13,950,775
 
Accumulated deficit
    
(11,597,835
)
  
(9,800,885
)
               
     
9,842,432
   
6,183,102
 
Deduct: 1,451,739 and 1,457,364 shares of common stock held in treasury,
              
at cost, at March 31, 2005 and December 31, 2004, respectively
    
(2,590,583
)
  
(2,616,833
)
               
TOTAL STOCKHOLDERS' EQUITY
    
7,251,849
   
3,566,269
 
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  
$
11,793,900
  
$
6,934,243
  
               
* Restated to include the impact of share-based compensation expense
              
               
The accompanying notes are an integral part of these condensed financial statements.
  
               
 
1
 


PATIENT SAFETY TECHNOLOGIES, INC. AND SUBSIDIARIES
               
                
Condensed Statements of Operations (Unaudited)
               
                
                
  
               
     
Three Months Ended
  
               
     
March 31,
    
March 31,
  
     
2005
    
2004
  
REVENUES
   $ —   $ —  
               
EXPENSES
              
Salaries and employee benefits
    
1,210,950
   
128,901
 
Professional fees
   
556,971
   
57,000
 
Rent
          
18,075
 
Insurance
    
19,551
   
17,038
 
Taxes other than income taxes
    
22,035
   
12,764
 
Interest expense
    
27,318
   
8,926
 
Amortization of patents
    
27,078
       
General and administrative
    
257,770
   
50,144
 
               
Operating expenses
    
2,121,673
   
292,848
 
               
Operating loss
    
(2,121,673
)
  
(292,848
)
               
Interest, dividend income and other, net
    
28,602
   
165
 
Realized gains (losses) on investments, net
    
(34,728
)
  
49,478
 
Unrealized gains (losses) on marketable securities, net
    
343,587
   
102,759
 
               
Net loss
    
(1,784,212
)
  
(140,446
)
               
Preferred dividends
    
(12,738
)
  
(19,164
)
               
Net loss attributable to common shareholders
  
$
(1,796,950
)
$
(159,610
)
               
Basic and diluted net loss per common share
  
$
(0.37
)
$
(0.05
)
               
Weighted average common shares outstanding
    
4,910,963
    
3,060,300
  
 
 
 
The accompanying notes are an integral part of these condensed financial statements.
 
2