SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | 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
| ¨ | 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 001-16537
ORASURE TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 36-4370966 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) | |
| 220 East First Street, Bethlehem, Pennsylvania | 18015 | |
| (Address of Principal Executive Offices) | (Zip code) | |
(610) 882-1820
(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 x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Number of shares of Common Stock, par value $.000001 per share, outstanding as of October 29, 2004: 44,549,167
|
Page No. | ||||
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. Financial Statements (unaudited) | 3 | |||
| Balance Sheets at September 30, 2004 and December 31, 2003 | 3 | |||
| Statements of Operations for the three months and nine months ended September 30, 2004 and 2003 | 4 | |||
| Statements of Cash Flows for the nine months ended September 30, 2004 and 2003 | 5 | |||
| Notes to Financial Statements | 6 | |||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | |||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 28 | |||
| Item 4. Controls and Procedures | 28 | |||
| PART II. OTHER INFORMATION | ||||
| Item 1. Legal Proceedings | 29 | |||
| Item 6. Exhibits | 29 | |||
2
BALANCE SHEETS
(Unaudited)
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 13,314,755 | $ | 30,695,177 | ||||
| Short-term investments |
52,141,341 | 33,328,610 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $292,614 and $359,158 |
7,098,339 | 8,233,869 | ||||||
| Inventories |
4,663,500 | 4,003,519 | ||||||
| Prepaid expenses and other |
725,974 | 922,820 | ||||||
| Total current assets |
77,943,909 | 77,183,995 | ||||||
| PROPERTY AND EQUIPMENT, net of accumulated depreciation of $16,120,215 and $14,862,075 |
5,940,706 | 6,471,209 | ||||||
| PATENTS AND PRODUCT RIGHTS, net of accumulated amortization of $2,681,524 and $2,162,486 |
2,267,424 | 1,886,171 | ||||||
| OTHER ASSETS |
577,900 | 609,932 | ||||||
| $ | 86,729,939 | $ | 86,151,307 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Current portion of long-term debt |
$ | 1,125,515 | $ | 1,126,423 | ||||
| Accounts payable |
1,625,154 | 3,511,148 | ||||||
| Accrued expenses |
6,976,143 | 5,375,851 | ||||||
| Total current liabilities |
9,726,812 | 10,013,422 | ||||||
| LONG-TERM DEBT |
1,612,085 | 2,456,454 | ||||||
| OTHER LIABILITIES |
219,638 | 172,142 | ||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Preferred stock, par value $.000001, 25,000,000 shares authorized, none issued |
— | — | ||||||
| Common stock, par value $.000001, 120,000,000 shares authorized, 44,549,167 and 44,260,931 shares issued and outstanding |
45 | 44 | ||||||
| Additional paid-in capital |
209,608,434 | 204,867,765 | ||||||
| Deferred compensation |
(3,254,608 | ) | (614,515 | ) | ||||
| Accumulated other comprehensive loss |
(298,004 | ) | (173,704 | ) | ||||
| Accumulated deficit |
(130,884,463 | ) | (130,570,301 | ) | ||||
| Total stockholders’ equity |
75,171,404 | 73,509,289 | ||||||
| $ | 86,729,939 | $ | 86,151,307 | |||||
The accompanying notes are an integral part of these statements.
3
STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| REVENUES: |
||||||||||||||||
| Product |
$ | 14,086,266 | $ | 10,221,656 | $ | 39,497,173 | $ | 28,002,175 | ||||||||
| Licensing and product development |
89,746 | 109,615 | 302,160 | 568,590 | ||||||||||||
| 14,176,012 | 10,331,271 | 39,799,333 | 28,570,765 | |||||||||||||
| COSTS OF PRODUCTS SOLD |
5,721,750 | 4,002,032 | 16,437,016 | 11,403,023 | ||||||||||||
| Gross profit |
8,454,262 | 6,329,239 | 23,362,317 | 17,167,742 | ||||||||||||
| COSTS AND EXPENSES: |
||||||||||||||||
| Research and development |
1,464,918 | 2,201,946 | 4,745,692 | 6,221,932 | ||||||||||||
| Sales and marketing |
3,956,266 | 2,512,999 | 11,387,748 | 7,485,533 | ||||||||||||
| General and administrative |
3,513,828 | 1,601,819 | 8,085,973 | 5,124,809 | ||||||||||||
| 8,935,012 | 6,316,764 | 24,219,413 | 18,832,274 | |||||||||||||
| Operating income (loss) |
(480,750 | ) | 12,475 | (857,096 | ) | (1,664,532 | ) | |||||||||
| INTEREST EXPENSE |
(32,157 | ) | (44,520 | ) | (103,551 | ) | (140,333 | ) | ||||||||
| INTEREST INCOME |
228,877 | 78,360 | 664,659 | 247,306 | ||||||||||||
| FOREIGN CURRENCY GAIN (LOSS) |
(5,057 | ) | 8,977 | (3,726 | ) | 5,181 | ||||||||||
| Income (loss) before income taxes |
(289,087 | ) | 55,292 | (299,714 | ) | (1,552,378 | ) | |||||||||
| INCOME TAXES |
4,987 | 2,674 | 14,448 | 18,117 | ||||||||||||
| NET INCOME (LOSS) |
$ | (294,074 | ) | $ | 52,618 | $ | (314,162 | ) | $ | (1,570,495 | ) | |||||
| EARNINGS (LOSS) PER SHARE: |
||||||||||||||||
| BASIC |
$ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | $ | (0.04 | ) | |||||
| DILUTED |
$ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | $ | (0.04 | ) | |||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: |
||||||||||||||||
| BASIC |
44,538,745 | 38,665,545 | 44,425,625 | 38,444,062 | ||||||||||||
| DILUTED |
44,538,745 | 39,777,279 | 44,425,625 | 38,444,062 | ||||||||||||
The accompanying notes are an integral part of these statements.
4
STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (314,162 | ) | $ | (1,570,495 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Stock-based compensation expense |
536,057 | 33,900 | ||||||
| Depreciation and amortization |
1,824,782 | 1,914,022 | ||||||
| Loss on disposition of property and equipment, net |
4,339 | — | ||||||
| Write-off of inventory |
737,396 | 438,069 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
1,135,530 | (1,827,011 | ) | |||||
| Inventories |
(1,397,377 | ) | (362,028 | ) | ||||
| Prepaid expenses and other assets |
196,846 | 378,015 | ||||||
| Accounts payable and accrued expenses |
(503,534 | ) | 1,929,835 | |||||
| Net cash provided by operating activities |
2,219,877 | 934,307 | ||||||
| INVESTING ACTIVITIES: |
||||||||
| Purchases of short-term investments |
(48,535,983 | ) | (13,995,647 | ) | ||||
| Proceeds from maturities and redemptions of short-term investments |
29,613,090 | 10,358,896 | ||||||
| Purchases of property and equipment |
(785,618 | ) | (862,186 | ) | ||||
| Proceeds from the sale of property and equipment |
2,260 | — | ||||||
| Purchase of patents and product rights |
(600,000 | ) | (250,000 | ) | ||||
| (Increase) decrease in other assets |
847 | (1,360 | ) | |||||
| Net cash used in investing activities |
(20,305,404 | ) | (4,750,297 | ) | ||||
| FINANCING ACTIVITIES: |
||||||||
| Borrowings of long-term debt |
— | 211,590 | ||||||
| Repayments of long-term debt |
(845,277 | ) | (822,482 | ) | ||||
| Proceeds from issuance of common stock |
1,564,520 | 3,558,093 | ||||||
| Net cash provided by financing activities |
719,243 | 2,947,201 | ||||||
| EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH |
(14,138 | ) | 27,603 | |||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS |
(17,380,422 | ) | (841,186 | ) | ||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
30,695,177 | 4,364,308 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 13,314,755 | $ | 3,523,122 | ||||
The accompanying notes are an integral part of these statements.
5
Notes to Financial Statements (Unaudited)
1. The Company
We develop, manufacture and market oral specimen collection devices using our proprietary oral fluid technologies, diagnostic products including in vitro