UNITED STATES
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 0-14691
SENETEK PLC
(Exact name of registrant as specified in its charter)
| England | 77-0039728 | |
| (State or other jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 620 Airpark Road, Napa, California | 94558 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number including area code: (707) 226-3900
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
At November 10, 2004, there were 60,661,698 of the registrant’s Ordinary shares outstanding.
SENETEK PLC AND SUBSIDIARIES
INDEX TO FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2004
2
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues |
||||||||||||||||
| Product Sales |
$ | 158 | $ | 1,115 | $ | 391 | $ | 2,383 | ||||||||
| Royalties and Licensing (Note 7) |
1,365 | 1,095 | 5,819 | 3,397 | ||||||||||||
| Total Revenue |
1,523 | 2,210 | 6,210 | 5,780 | ||||||||||||
| Cost of Sales |
||||||||||||||||
| Products |
45 | 295 | 131 | 641 | ||||||||||||
| Royalties & Licensing |
182 | 100 | 573 | 356 | ||||||||||||
| Total Cost of Sales |
227 | 395 | 704 | 997 | ||||||||||||
| Gross Profit |
1,296 | 1,815 | 5,506 | 4,783 | ||||||||||||
| Operating Expenses: |
||||||||||||||||
| Research & Development |
367 | 665 | 1,007 | 1,286 | ||||||||||||
| Administration, Sales and Marketing (Note 10) |
1,092 | 1,669 | 3,917 | 4,195 | ||||||||||||
| Total Operating Expenses |
1,459 | 2,334 | 4,924 | 5,481 | ||||||||||||
| Income (Loss) from operations |
(163 | ) | (519 | ) | 582 | (698 | ) | |||||||||
| Interest Income |
12 | 1 | 21 | 11 | ||||||||||||
| Interest Expense (including amortization of debt discount) |
(259 | ) | (576 | ) | (759 | ) | (1,305 | ) | ||||||||
| Other income (expense), net (Note 7 ) |
168 | (3 | ) | 168 | (3 | ) | ||||||||||
| Income (Loss) from continuing operations before income taxes |
(242 | ) | (1,097 | ) | 12 | (1,995 | ) | |||||||||
| Provision for income taxes |
(10 | ) | (5 | ) | (19 | ) | (8 | ) | ||||||||
| Income (Loss) from continuing operations |
(252 | ) | (1,102 | ) | (7 | ) | (2,003 | ) | ||||||||
| Discontinued operations (Note 6): |
||||||||||||||||
| Royalty and License fee, net |
— | — | — | (39 | ) | |||||||||||
| Interest Income |
200 | — | 275 | — | ||||||||||||
| Net Income (Loss) available to Ordinary Shareholders |
$ | (52 | ) | $ | (1,102 | ) | $ | 268 | $ | (2,042 | ) | |||||
| Basic and Diluted Income (Loss) from Continuing Operations |
$ | — | $ | (.02 | ) | $ | — | $ | (.03 | ) | ||||||
| Basic and Diluted Income (Loss) from Discontinued Operations |
— | — | — | — | ||||||||||||
| Basic Income (Loss) per Ordinary share outstanding |
$ | — | $ | (.02 | ) | $ | — | $ | (.03 | ) | ||||||
| Weighted average Basic Ordinary shares outstanding |
60,662 | 59,052 | 59,913 | 59,052 | ||||||||||||
| Weighted average Diluted Ordinary shares outstanding |
60,662 | 59,052 | 59,913 | 59,052 | ||||||||||||
See accompanying notes to unaudited consolidated financial statements.
3
CONSOLIDATED BALANCE SHEETS
SENETEK PLC
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share and per share amounts)
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | (unaudited) | |||||||
| Current Assets |
||||||||
| Cash and Cash Equivalents |
$ | 1,952 | $ | 1,187 | ||||
| Short Term Investments (Note 9) |
2,079 | — | ||||||
| Trade Receivables, net of allowance for doubtful accounts of $10,000 in 2004 and 2003 |
1,581 | 660 | ||||||
| Non-trade Receivables, net of provisions of $0 in 2004 and 2003 |
9 | 22 | ||||||
| Inventory, net of provisions of $266,000 in 2004 and $320,000 in 2003 |
299 | 386 | ||||||
| Prepaids and Deposits |
433 | 304 | ||||||
| Total Current Assets |
6,353 | 2,559 | ||||||
| Property & Equipment—net |
420 | 510 | ||||||
| Asset held for sale |
250 | 250 | ||||||
| Goodwill |
1,308 | 1,308 | ||||||
| Total Assets |
$ | 8,331 | $ | 4,627 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||
| Current Liabilities |
||||||||
| Accounts Payable |
$ | 965 | $ | 1,287 | ||||
| Accrued Liabilities |
936 | 688 | ||||||
| Deferred Revenue and License Fees (Note 8) |
641 | 970 | ||||||
| Notes Payable – Current (Note 8) |
— | 500 | ||||||
| Total Current Liabilities |
2,542 | 3,445 | ||||||
| Long Term Liabilities |
||||||||
| Notes Payable, net of current portion and discount of $1,805,000 in 2004 and $1,795,000 in 2003 (Note 8) |
1,541 | 2,594 | ||||||
| Other Long Term Liabilities |
45 | 68 | ||||||
| Deferred License Fees (Note 8) |
5,861 | 1,449 | ||||||
| Commitments and Contingencies (Note 8) |
||||||||
| Stockholders’ Deficit |
||||||||
| Ordinary shares |
||||||||
| Authorized shares: $0.08 (5 pence) par value: 100,000,000; Issued and Outstanding shares 2004 and 2003: 60,661,698 and 59,052,153 |
4,892 | 4,763 | ||||||
| Share Premium |
84,699 | 83,806 | ||||||
| Accumulated Deficit |
(91,284 | ) | (91,552 | ) | ||||
| Accumulated Other Comprehensive Income—Currency Translation |
35 | 54 | ||||||
| Total Stockholders’ Deficit |
(1,658 | ) | (2,929 | ) | ||||
| Total Liabilities and Stockholders’ Deficit |
$ | 8,331 | $ | 4,627 | ||||
See accompanying notes to unaudited consolidated financial statements.
4
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT AND
COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(in thousands, except shares outstanding)
(unaudited)
| Ordinary Shares |
Shares Amount |
Share Premium |
Accumulated Deficit |
Accumulated Other Comprehensive Income– Currency Translation |
Net Stockholder Equity |
|||||||||||||||
| Balances, January 1, 2004 |
59,052,153 | $ | 4,763 | $ | 83,806 | $ | (91,552 | ) | $ | 54 | $ | (2,929 | ) | |||||||
| Fair value of options issued to consultants |
27 | 27 | ||||||||||||||||||
| Proceeds from warrant exercise |
1,609,545 | 129 | 499 | 628 | ||||||||||||||||
| Fair value of warrant modification related to debt refinancing |
367 | 367 | ||||||||||||||||||
| Comprehensive income (loss): |
||||||||||||||||||||
| Net Income |
268 | 268 | ||||||||||||||||||
| Translation loss, net of tax |
(19 | ) | (19 | ) | ||||||||||||||||
| Total Comprehensive Income (Loss) |
268 | (19 | ) | 249 | ||||||||||||||||
| Balances, September 30, 2004 |
60,661,698 | $ | 4,892 | $ | 84,699 | $ | (91,284 | ) | $ | 35 | $ | (1,658 | ) | |||||||