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 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 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 May 13, 2005, there were 60,960,624 of the registrant’s Ordinary shares outstanding.
INDEX TO FORM 10-Q
QUARTER ENDED MARCH 31, 2005
2
PART I FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| Revenues: |
||||||||
| Product sales |
$ | 25 | $ | 211 | ||||
| Royalties & Licensing, including $1.5 million settlement in 2004 (Note 7) |
1,214 | 3,034 | ||||||
| Total Revenue |
1,239 | 3,245 | ||||||
| Cost of Sales—Products |
14 | 63 | ||||||
| —Royalties & Licensing |
178 | 170 | ||||||
| Total Cost of Sales |
192 | 233 | ||||||
| Gross Profit |
1,047 | 3,012 | ||||||
| Operating Expenses: |
||||||||
| Research & Development |
350 | 316 | ||||||
| Administration, Sales and Marketing (Note 8) |
1,153 | 1,860 | ||||||
| Total Operating Expenses |
1,503 | 2,176 | ||||||
| Operating Income (Loss) |
(456 | ) | 836 | |||||
| Interest Income |
20 | — | ||||||
| Interest Expense (including amortization of debt discount) |
(184 | ) | (242 | ) | ||||
| Income (Loss) from Continuing Operations Before Income Taxes |
(620 | ) | 594 | |||||
| Provision for Income Taxes |
(8 | ) | (7 | ) | ||||
| Income (Loss) from Continuing Operations |
(628 | ) | 587 | |||||
| Discontinued operations (Note 6): |
||||||||
| Interest income |
8 | 45 | ||||||
| Gain on Sale of Operations |
36 | — | ||||||
| Income from Discontinued Operations |
44 | 45 | ||||||
| Net Income (Loss) attributable to Ordinary Shareholders |
$ | (584 | ) | $ | 632 | |||
| Earnings Per Share (Note 4): |
||||||||
| Basic and Diluted Income (Loss) from Continuing Operations |
$ | (.01 | ) | $ | .01 | |||
| Basic and Diluted Income from Discontinued Operations |
$ | — | $ | — | ||||
| Basic and Diluted Income (Loss) per Ordinary share outstanding |
$ | (.01 | ) | $ | .01 | |||
| Weighted average Basic Ordinary shares outstanding |
60,765 | 59,052 | ||||||
| Weighted average Diluted Ordinary shares Outstanding |
60,765 | 61,448 | ||||||
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)
| March 31 2005 (unaudited) |
December 31, 2004 |
|||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and Cash Equivalents |
$ | 2,696 | $ | 2,938 | ||||
| Short Term Investments (Note 9) |
1,287 | 1,584 | ||||||
| Trade Receivables, net of allowance for doubtful accounts of $10,000 in 2005 and 2004 |
927 | 1,094 | ||||||
| Non-trade Receivables, net of provisions of $0 in 2005 and 2004 |
20 | 121 | ||||||
| Inventory, net of provisions of $404,000 in 2005 and 2004 (Note 2) |
211 | 218 | ||||||
| Prepaids and Deposits |
254 | 295 | ||||||
| Total Current Assets |
5,395 | 6,250 | ||||||
| Property & Equipment—net |
589 | 635 | ||||||
| Asset held for sale |
250 | 250 | ||||||
| Goodwill |
1,308 | 1,308 | ||||||
| Total Assets |
$ | 7,542 | $ | 8,443 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||
| Current Liabilities |
||||||||
| Accounts Payable |
$ | 457 | $ | 806 | ||||
| Accrued Liabilities (Note 8) |
897 | 855 | ||||||
| Deferred Revenue and License Fees |
802 | 802 | ||||||
| Total Current Liabilities |
2,156 | 2,463 | ||||||
| Long Term Liabilities |
||||||||
| Notes Payable, net of discount of $1,534,000 in 2005 and $1,648,000 in 2004 |
1,756 | 1,641 | ||||||
| Other Long Term Liabilities |
30 | 38 | ||||||
| Deferred Revenue and License Fees |
5,463 | 5,662 | ||||||
| Commitments, Contingencies and Subsequent Event (Note 8) |
||||||||
| Stockholders’ Deficit (Notes 4 and 8) |
||||||||
| Ordinary shares |
||||||||
| Authorized shares: $0.08 (5 pence) par value: 100,000,000; Issued and Outstanding shares 2005 and 2004: 60,960,624 and 60,661,698 |
4,919 | 4,892 | ||||||
| Share Premium |
84,754 | 84,701 | ||||||
| Accumulated Deficit |
(91,570 | ) | (90,986 | ) | ||||
| Accumulated Other Comprehensive Income—Currency Translation |
34 | 32 | ||||||
| Total Stockholders’ Deficit |
(1,863 | ) | (1,361 | ) | ||||
| Total Liabilities and Stockholders’ Deficit |
$ | 7,542 | $ | 8,443 | ||||
See accompanying notes to unaudited consolidated financial statements.
4
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT AND
COMPREHENSIVE (LOSS) INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2005
(in thousands, except shares outstanding)
(unaudited)
| Ordinary Shares |
Shares Amount |
Share Premium |
Accumulated Deficit |
Accumulated Other Comprehensive Income– Currency Translation |
Net Stockholder Deficit |
||||||||||||||
| Balances, January 1, 2005 |
60,661,698 | $ | 4,892 | $ | 84,701 | $ | (90,986 | ) | $ | 32 | $ | (1,361 | ) | ||||||
| Stock Based Compensation-Fair value of Options |
— | — | 8 | — | — | 8 | |||||||||||||
| Stock Issued for Deferred Compensation (Note 8) |
298,926 | 27 | 45 | — | — | 72 | |||||||||||||
| Comprehensive (Loss) Income |
|||||||||||||||||||
| Net Loss |
— | — | — | (584 | ) | — | (584 | ) | |||||||||||
| Translation income, net of tax |
— | — | — | — | 2 | 2 | |||||||||||||
| Total Comprehensive Loss |
(584 | ) | 2 | (582 | ) | ||||||||||||||
| Balances, March 31, 2005 |
60,960,624 | $ | 4,919 | $ | 84,754 | $ | (91,570 | ) | $ | 34 | $ | (1,863 | ) | ||||||
For the three months ended March 31, 2004 the translation loss was $7 and total comprehensive income was $625.
See accompanying notes to unaudited consolidated financial statements.
5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net Income (Loss) |
$ | (584 | ) | $ | 632 | |||
| Income from Discontinued Operations |
(44 | ) | (45 | ) | ||||
| Income (Loss) from Continuing Operations |
(628 | ) | 587 | |||||
| Adjustments to reconcile net income (loss) to net cash from operating activities: |
||||||||
| Depreciation and amortization |
161 | 173 | ||||||
| Stock based compensation |
8 | 105 | ||||||
| Changes in assets and liabilities: |
||||||||
| Trade receivables |
167 | (1,921 | ) | |||||
| Non-trade receivables |
101 | 4 | ||||||
| Inventory |
7 | 19 | ||||||
| Prepaids and deposits |
41 | 14 | ||||||
| Accounts payable and accrued liabilities |
(235 | ) | 781 | |||||
| Deferred revenue and license fees |
(199 | ) | (480 | ) | ||||
| Net Cash Used in Continuing Operations |
(577 | ) | (718 | ) | ||||
| Net Cash Provided by Discontinued Operations |
44 | 45 | ||||||
| Net Cash Provided Used in Operating Activities |
(533 | ) | (673 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Proceeds from the sale of short term investments |
297 | — | ||||||
| Net Cash Provided by Investing Activities |
297 | — | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Principal Payment on Debt |
(8 | ) | (8 | ) | ||||
| Net Cash used in Financing Activities |
(8 | ) | (8 | ) | ||||