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 June 30, 2003
| ¨ | 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 000-49871
HEALTHETECH, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 77-0478611 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) | |
| 523 Park Point Drive, 3rd
Floor, Golden, Colorado |
80401 | |
| (Address of principal executive office) | (Zip code) | |
Registrant’s telephone number, including area code: (303) 526-5085
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 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
As of July 28, 2003, the number of shares outstanding of the registrant’s common stock, par value $0.001 per share, 19,615,292.
| Page | ||||
| PART I. |
1 | |||
| Item 1. |
1 | |||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. |
22 | |||
| Item 4. |
22 | |||
| PART II. |
23 | |||
| Item 1. |
23 | |||
| Item 2. |
23 | |||
| Item 3. |
24 | |||
| Item 4. |
24 | |||
| Item 5. |
25 | |||
| Item 6. |
25 | |||
| 26 | ||||
Item 1. Unaudited Financial Statements
HEALTHETECH, INC.
Unaudited
| June 30, 2003 |
December 31, 2002 |
||||||
| ASSETS |
|||||||
| Current assets: |
|||||||
| Cash and cash equivalents |
$ | 10,698,086 | 16,878,263 | ||||
| Investments |
1,406,015 | 5,242,726 | |||||
| Receivables, net of allowance of $77,000 and $29,000 in 2003 and 2002, respectively |
762,659 | 3,156,686 | |||||
| Inventory |
2,204,842 | 2,359,809 | |||||
| Prepaid expenses |
190,358 | 3,082,412 | |||||
| Other current assets |
185,276 | 17,420 | |||||
| Total current assets |
15,447,236 | 30,737,316 | |||||
| Property and equipment, net |
2,483,428 | 2,997,244 | |||||
| Deposits |
265,313 | 266,363 | |||||
| Restricted cash |
1,372,749 | 1,372,497 | |||||
| Intangible assets, net of accumulated amortization of $2,602,000 and $741,000 in 2003 and 2002, respectively |
1,711,461 | 3,406,326 | |||||
| TOTAL ASSETS |
$ | 21,280,187 | 38,779,746 | ||||
| LIABILITIES & STOCKHOLDERS’ EQUITY |
|||||||
| Current liabilities: |
|||||||
| Accounts payable |
$ | 906,093 | 2,243,769 | ||||
| Accrued liabilities |
3,055,989 | 2,956,560 | |||||
| Current portion of deferred revenue |
669,768 | 689,851 | |||||
| Note payable to related party |
— | 10,000 | |||||
| Total current liabilities |
4,631,850 | 5,900,180 | |||||
| Other liabilities: |
|||||||
| Deferred revenue, less current portion |
370,157 | 669,767 | |||||
| Other liabilities |
193,641 | 332,306 | |||||
| Total other liabilities |
563,798 | 1,002,073 | |||||
| Total liabilities |
5,195,648 | 6,902,253 | |||||
| Stockholders’ equity: |
|||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized in 2003 and 2002; 19,615,292 and 19,562,680 shares issued and outstanding in 2003 and 2002, respectively |
19,615 | 19,563 | |||||
| Deferred stock-based charges |
(1,728,293 | ) | (2,509,183 | ) | |||
| Additional paid-in capital |
99,006,999 | 98,566,849 | |||||
| Accumulated deficit |
(81,213,782 | ) | (64,199,736 | ) | |||
| Total stockholders’ equity |
16,084,539 | 31,877,493 | |||||
| Commitments and contingencies |
|||||||
| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY |
$ | 21,280,187 | 38,779,746 | ||||
The accompanying notes are an integral part of these unaudited financial statements.
1
Statements of Operations
Unaudited
| Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||
| 2003 |
2002 |
2003 |
2002 |
||||||||||
| Revenue: |
|||||||||||||
| Product sales |
$ | 675,235 | 2,696,417 | 1,603,353 | 4,708,630 | ||||||||
| Software and other |
533,185 | 582,168 | 1,223,123 | 925,010 | |||||||||
| Total revenue |
1,208,420 | 3,278,585 | 2,826,476 | 5,633,640 | |||||||||
| Cost of revenue: |
|||||||||||||
| Product sales |
677,370 | 1,436,225 | 1,549,084 | 3,101,553 | |||||||||
| Software and other |
459,895 | 234,628 | 733,415 | 452,185 | |||||||||
| Stock-based charges |
2,631 | 6,981 | 4,706 | 8,216 | |||||||||
| Total cost of revenue |
1,139,896 | 1,677,834 | 2,287,205 | 3,561,954 | |||||||||
| Gross profit |
68,524 | 1,600,751 | 539,271 | 2,071,686 | |||||||||
| Operating expenses: |
|||||||||||||
| Research & development, excluding $101,295, $60,332, $184,908 and $123,241 of stock-based charges for the three months ended June 30, 2003 and 2002 and the six months ended June 30, 2003 and 2002, respectively |
1,681,133 | 1,570,519 | 4,115,953 | 3,005,141 | |||||||||
| Selling, general and administrative, excluding $390,109, $1,002,119, $925,343 and $1,526,503 of stock-based charges for the three months ended June 30, 2003 and 2002 and the six months ended June 30, 2003 and 2002, respectively |
2,843,581 | 3,073,034 | 10,333,790 | 5,456,008 | |||||||||
| Restructuring charges and asset impairment |
2,114,026 | — | 2,114,026 | — | |||||||||
| Stock-based charges |
491,404 | 1,062,451 | 1,110,251 | 1,649,744 | |||||||||
| Total operating expenses |
7,130,144 | 5,706,004 | 17,674,020 | 10,110,893 | |||||||||
| Loss from operations |
(7,061,620 | ) | (4,105,253 | ) | (17,134,749 | ) | (8,039,207 | ) | |||||
| Interest income |
51,115 | 62,638 | 124,169 | 137,486 | |||||||||
| Interest expense |
(1,575 | ) | (2,793 | ) | (3,466 | ) | (5,868 | ) | |||||
| Net loss |
$ | (7,012,080 | ) | (4,045,408 | ) | (17,014,046 | ) | (7,907,589 | ) | ||||
| Basic and diluted loss per common share: |
$ | (0.36 | ) | (0.55 | ) | (0.87 | ) | (1.08 | ) | ||||
| Basic and diluted weighted average number of common shares outstanding |
19,615,292 | 7,314,735 | 19,601,706 | 7,311,238 | |||||||||
The accompanying notes are an integral part of these unaudited financial statements.
2
Statements of Cash Flows
Unaudited
| Six months ended June 30, 2003 |
Six months ended June 30, 2002 |
||||||
| Cash flows from operating activities: |
|||||||
| Net loss |
$ | (17,014,046 | ) | (7,907,589 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
|||||||
| Depreciation and amortization |
1,097,325 | 796,777 | |||||
| Intangible asset impairment |
1,584,600 | — | |||||
| Inventory reserves & write-offs |
294,072 | — | |||||
| Loss on disposal of property and equipment |
— | 87,586 | |||||
| Stock-based charges |
1,114,957 | 1,657,960 | |||||
| Change in deposits and other |
1,050 | 478,648 | |||||
| Provision for doubtful accounts |
65,000 | 53,000 | |||||
| Change in assets and liabilities: |
|||||||
| Receivables |
2,329,027 | 198,728 | |||||
| Inventory |
(139,105 | ) | 473,907 | ||||
| Prepaid expenses and other current assets |
2,724,198 | 34,442 | |||||
| Accounts payable |
(1,337,676 | ) | 598,703 | ||||
| Accrued and other liabilities |
(39,236 | ) | 1,191,763 | ||||
| Deferred revenue |
(319,693 | ) | 1,756,161 | ||||
| Net cash used in operating activities |
(9,639,527 | ) | (579,914 | ) | |||
| Cash flows from investing activities: |
|||||||
| Purchase of property and equipment |
(307,019 | ) | (1,000,714 | ) | |||
| Proceeds from the sale of marketable securities |
3,836,711 | 1,550,992 | |||||
| Purchase of intangible assets |
(166,225 | ) | (348,412 | ) | |||
| Proceeds from the sale of assets |
— | 46,563 | |||||
| Net change in restricted cash |
(252 | ) | 36,222 | ||||
| Net cash provided by investing activities |
3,363,215 | 284,651 | |||||
| Cash flows from financing activities: |
|||||||
| Stock offering costs |
— | (2,005,572 | ) | ||||
| Payments on note payable to related party |
(10,000 | ) | (30,000 | ) | |||
| Proceeds from preferred stock offering |
— | 2,900,000 | |||||
| Preferred stock issuance costs |
— | (8,067 | ) | ||||
| Proceeds from common stock issuances |
106,135 | 45,065 | |||||
| Net cash provided by financing activities |
96,135 | 901,426 | |||||
| Net increase (decrease) in cash and cash equivalents |
(6,180,177 | ) | 606,163 | ||||
| Cash and cash equivalents, beginning of period |
16,878,263 | 12,898,164 | |||||