<PAGE>
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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
__X_ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1997
____ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1994
Commission File Number. 0-21819
HealthDesk Corporation
(Exact name of Company as specified in charter)
California 94-3165144
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2560 Ninth Street, Suite 220, Berkeley, California 94710
(Address of principal executive offices) (Zip Code)
(510) 883-2160
(Company's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 No X
------ -------
As of August 6, 1997, there were 5,392,845 shares of the Company's Common
Stock outstanding, 1,955,000 Redeemable Warrants outstanding and 340,000
Underwriter's Warrants outstanding.
Transitional Small Business Disclosure Format Yes No X
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<PAGE>
INDEX
Part I Page
Item 1 Financial Statements ......................................... 3
Item 2 Management's Discussion and Analysis or Plan Operation........ 3
Part II
Item 4 Submission of Matters to a Vote of Security Holders........... 5
Item 6 Exhibits and Reports on Form 8-K.............................. 6
2
<PAGE>
Part I
Item 1. Financial Statements.
The following Financial Statements are filed with this report as pages F-1
through F-7 following the signature page:
Index to Interim Financial Statements
Condensed Balance Sheets
Condensed Statements of Operations
Condensed Statements of Shareholders' Equity (Deficit)
Condensed Statements of Cash Flows
Notes to Condensed Financial Statements
Item 2. Management's Discussion and Analysis or Plan Operation.
The Company's operating performance each quarter is subject to various
risks and uncertainties as discussed in the Company's Form 10-KSB for the year
ended December 31, 1996. The following discussion should be read in conjunction
with the section entitled "Factors Affecting the Company's Business, Operating
Results and Financial Condition" in the Form 10-KSB.
The information set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below includes "forward-looking
statements" within the meaning of Section 21E of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), and is subject to the safe harbor
created by the section. Readers are cautioned not to place undue reliance on
these forward-looking statements as they speak only as of the date hereof.
Overview
The Company was organized in August 1992 and is still in the development
stage. Since inception, the Company has been engaged primarily in product
development activities. The Company's initial product was introduced in early
1993 and the Company has not yet proven to be commercially viable.
The Company has not yet generated any meaningful revenues, and will not
generate any meaningful revenues until after the Company successfully completes
development and market testing of HealthDesk OnLine and attracts and retains a
significant number of subscribers. For the period August 28, 1992 (inception)
to June 30, 1997, the Company incurred a cumulative net loss of approximately
$8,631,348. Since June 30, 1997, the Company has continued to incur increasing
and significant losses and anticipates that it will continue to incur
significant losses until, at the earliest, the Company generates sufficient
revenues to offset the substantial up-front expenditures and operating costs
associated with developing and commercializing its proposed products.
In January 1997 the Company completed an Initial Public Offering ("IPO")
raising net proceeds of $7,018,788 through the issuance of 1,700,000 shares of
Common Stock and 1,955,000 Warrants.
The Company's results of operations for the six months ended June 30, 1997
includes a $145,023 charge relating to the amortization of debt discount and
issuance costs related to notes issued in a bridge financing completed in
October 1996 (the "Bridge Financing").
The statements regarding the Company's future cash requirements are
forward looking statements that are subject to risks and uncertainties which
could result in the Company's inability to meet its funding requirements for
the time period indicated.
Software development costs (consisting primarily of salaries and related
expenses) incurred prior to establishing technological feasibility are expensed
in accordance with Financial Accounting Standards Board (FASB) Statement No.
86. In accordance with FASB 86, the Company will capitalize software
development costs at such time as the technological feasibility of the product
has been established.
In February 1997, Statement of Financial Accounting Standards No. 128
"Earnings Per Share" (FAS 128) was issued and is effective for the Company's
year ending December 31, 1997. In March 1997, Statement of Financial Accounting
Standards No. 129, "Disclosure of Information About Capital Structure" was
issued and is effective for the Company's year ending December 31, 1998. In
June 1997, Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income" and Statement of Financial Accounting Standards No. 131
"Disclosures About Segments of An Enterprise and Related Information" were
issued and are also effective for the year ending December 31, 1998. The
Company has not determined the impact of the implementation of these
pronouncements.
3
<PAGE>
Results of Operations
Revenue increased from $5,158 for the three months ended June 30, 1996 to
$25,558 for the three months ended June 30, 1997, and revenue increased from
$6,016 for the six months ended June 30, 1996 to $226,043 for the six months
ended June 30, 1997. These increases were primarily attributable to an increase
in development fee revenue associated with the development of HealthDesk OnLine
for Diabetes. During 1996, the Company had focused its efforts on the initial
development of HealthDesk OnLine and reduced its marketing and sales efforts
relating to its original Desktop HealthDesk product.
Product development costs increased by 42.1% from $427,581 for the three
months ended June 30, 1996 to $607,714 for the three months ended June 30,
1997, and product development costs increased by 75.5% from $743,688 for the
six months ended June 30, 1996 to $1,304,931 for the six months ended June 30,
1997. The increase in expenditures was principally related to the expansion of
the programming staff and associated costs related to the development of
HealthDesk OnLine for Diabetes during the three months and six months ended
June 30, 1997.
Sales and marketing costs increased by 97.4% from $187,790 for the three
months ended June 30, 1996 to $370,691 for the three months ended June 30,
1997, and sales and marketing costs increased by 195.0% from $274,380 for the
six months ended June 30, 1996 to $809,409 for the six months ended June 30,
1997. These increases resulted primarily from the hiring of additional
marketing personnel and associated collateral and travel and entertainment in
connection with the marketing of HealthDesk OnLine for diabetes during the
three months and six months ended June 30, 1997.
General and administrative costs decreased by 44.8% from $305,653 for the
three months ended June 30, 1996 to $168,688 for the three months ended June
30, 1997. This decrease was primarily attributable to a change in the
allocation of resources to marketing and development activities and the
write-off of deferred offering costs of $118,113, in the quarter ended June 30,
1996.
General and administrative costs decreased by 56.3% from $715,756 for the
six months ended June 30, 1996 to $312,605 for the six months ended June 30,
1997. This decrease was primarily attributable to a change in the allocation of
resources to marketing and development activities and the write-off of the
deferred offering costs noted above, in quarter ended June 30, 1996.
Other income (expense), net (including interest expense and interest
income) changed from expense of ($1,934) for the three months ended June 30,
1996 to income of $40,471 for the three months ended June 30, 1997. This change
was primarily attributable to the increased interest expense as a result of
higher levels of borrowings prior to the IPO.
Other income (expense), net (including interest expense, interest income
and amortization of discount and issuance costs) changed from income of $3,154
for the six months ended June 30, 1996 to expense of ($81,604) for the six
months ended June 30, 1997. This change was primarily attributable to the
remaining amortization of the non-recurring bridge discount and deferred debt
issuance costs of $145,023 and increased interest expense as a result of higher
levels of borrowings prior to the IPO.
As a result of the foregoing, the Company incurred a net loss of
$1,081,264 and $2,282,906 for the three months and six months ended June 30,
1997, as compared to a net loss of $917,200 and $1,725,054 for the comparable
periods in 1996.
Liquidity and Capital Resources
In January 1997, the Company consummated an underwritten initial public
offering of 1,700,000 shares of Common Stock at an offering price of $5.00 per
share and 1,955,000 Warrants at an offering price of $.10 per Warrant. The net
proceeds to the Company were $7,018,788 after deducting issuance costs of
$1,676,712. Each Warrant entitles the registered holder thereof to purchase one
share of Common Stock at an price of $5.00, subject to adjustment in certain
circumstances, at any time through and including January 16, 2002. The Warrants
are redeemable by the Company, upon the consent of the Underwriter, at any
time, upon notice of not less than 30 days, at a price of $.10 per Warrant,
provided that the closing bid quotation of Common Stock on all 30 of the
trading days ending on the third day prior to the day which the Company gives
notice has been at least 150% (currently $7.50, subject to adjustment) of the
then effective exercise price of the Warrants.
Upon the closing of the IPO, the Company repaid $2,000,000 principal
amount of bridge notes financing and converted the outstanding convertible
notes into 100,000 shares of Common Stock. In addition, all outstanding shares
of Series A Preferred Stock were converted into 1,059,600 shares of Common
Stock.
4
<PAGE>
At June 30, 1997, the Company had cash and cash equivalents of $2,824,978,
as compared to $232,766 at June 30, 1996.
During the first half of 1996, $1,347,840 of cash was used in operating
activities, principally as a result of the $1,725,054 loss incurred in the
first half of 1996. During the first half of 1997, $2,299,346 of cash was used
in operating activities, principally as a result of the $2,282,906 loss
incurred in the first half of 1997 and a $841,278 decrease in accounts payable
and accrued liabilities as offset by $145,023 in amortization of non cash
discount associated with the Bridge Financing, and a $548,816 decrease in
prepaid expenses and deferred costs. Included in the $841,278 were
non-recurring accounting, legal and printing charges of $466,411 which related
to the IPO and the Bridge Financing and a non-recurring bonus of $80,000 paid
to an officer per the employment agreement. Working capital/(deficit) at June
30, 1997 was $2,469,731, as compared to $(765,337) at June 30, 1996.
The Company expects to incur significant expenses in connection with its
operations, including expenses associated with hiring additional marketing and
sales personnel and the research and development of product lines. The Company
anticipates, based on its current proposed growth plans and assumptions
relating to its growth and operations, that the proceeds from the IPO and
planned revenues will be sufficient to satisfy the Company's contemplated cash
requirements through 1997. However, there can be no assurance that the
Company's funding requirements will not increase significantly as a result of
unforeseen circumstances or that the Company's cash used by operating
activities will not increase. If the Company is required to seek third-party
sources of financing to meet its short-term or long-term funding needs, there
can be no assurance that the Company would be able to obtain public or private
third-party sources of financing or, if obtained, that favorable terms for such
financing would be obtained. In addition, given the trading history of the
Company's common stock since the initial public offering, there can be no
assurance that the Company would be able to raise additional cash through the
warrants or other public and/or private offerings of its common stock.
The Company's capital requirements relating to the development and
commercialization of HealthDesk OnLine have been and will continue to be
significant. Other than as described in this 10-QSB, the Company has no
material commitments for capital expenditures. For the period August 28, 1992
(inception) to June 30, 1997, the Company had capital expenditures of
approximately $1,015,000 relating primarily to computer equipment.
Part II
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders (the "Annual Meeting") was
held on June 25, 1997 at 9:00a.m., local time, at the Berkeley Marina Marriott
at 200 Marina Boulevard, Berkeley, California. The Annual Meeting was held for
the purpose of (a) electing the Board of Directors, (b) ratifying and approving
the Company's independent auditors for the fiscal year ending December 31, 1997
and (c) transacting other business as may properly come before the Annual
Meeting. The two matters below were voted upon and approved:
Matter No. 1 - Election of Board of Directors:
The following persons were duly elected to the Board for the ensuing year and
until their successors are duly elected and qualified:
NOMINATION FOR AGAINST
---------- --- -------
Peter S. O'Donnell 4,216,812 94,400
John Pappajohn 4,216,812 94,400
James A. Gordon 4,216,812 94,400
Dr. Joseph Rudick, Jr. 4,216,812 94,400
David Sengpiel 4,216,812 94,400
Dr. Edward C. Geehr 4,216,812 94,400
Matter No. 2 - Ratification of the Appointment of Coopers & Lybrand L.L.P. as
the Independent Auditors for the Fiscal Year Ending December 31, 1997:
NOMINATION FOR AGAINST ABSTAINED
---------- --- ------- ---------
Coopers & Lybrand L.L.P. 4,204,212 1,000 106,000
5
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
11.1 Statement Regarding computation of earnings per share
27 Financial Data Schedule
b) No reports have been filed on Form 8-K in the Quarter ended June 30, 1997.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
HealthDesk Corporation
By: /s/ Timothy S. Yamauchi Date: August 14, 1997
-----------------------
Timothy S. Yamauchi
Chief Financial Officer
(principal financial and accounting officer)
6
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Condensed Balance Sheets as of December 31, 1996 and June 30, 1997 (unaudited).......................... F-2
Condensed Statements of Operations for the three months and the six months ended June 30, 1996
and 1997, and period from inception to June 30, 1997 (unaudited)..................................... F-3
Condensed Statements of Shareholders' Equity (Deficit) for the years ended December 31, 1992,
1993, 1994, 1995, 1996 and the six months ended June 30, 1997 (unaudited)............................ F-4
Condensed Statements of Cash Flows for the six months ended June 30, 1996 and 1997 and period
from inception to June 30, 1997 (unaudited).......................................................... F-5
Notes to Condensed Financial Statements................................................................. F-6
</TABLE>
F-1
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30
ASSETS 1996 1997
---- ----
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 198,277 $ 2,824,978
Prepaid expenses and other............................. 172,294 115,589
Deferred offering and debt issuance costs.............. 492,109 ----
------------------ ------------------
Total current assets................................ 862,680 2,940,567
Property and equipment, net............................ 568,040 535,429
Other assets........................................... 17,517 16,684
------------------ ------------------
Total assets.................................... $ 1,448,237 $ 3,492,680
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable....................................... $ 857,428 $ 116,396
Accrued liabilities.................................... 441,076 354,440
Notes payable.......................................... 1,851,546 ----
Convertible notes payable and accrued interest......... 517,041 ----
------------------ ------------------
Total liabilities 3,667,091 470,836
------------------ ------------------
Shareholders' equity (deficit):
Convertible preferred stock, no par value; authorized
3,000,000 shares; issued and outstanding 1,059,600
shares at December 31, 1996 and none at June 30, 1997 2,183,036 ----
Common stock, no par value; authorized 17,000,000
shares; issued and outstanding 2,530,120, and
5,392,845 at December 31, 1996, and June 30, 1997,
respectively........................................ 1,946,552 11,457,505
Warrants............................................... ---- 195,687
Deficit accumulated during the development stage....... (6,348,442) (8,631,348)
------------------- -------------------
Total shareholders' equity (deficit)................ (2,218,854) 3,021,844
------------------- ------------------
Total liabilities and shareholders' equity
(deficit)..................................... $ 1,448,237 $ 3,492,680
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
August 28,
1992
(Inception)
Three Months Ended June 30, Six Months Ended June 30, to
--------------------------- --------------------------- June 30,
1996 1997 1996 1997 1997
---- ---- ---- ---- ----
Revenue:
<S> <C> <C> <C> <C> <C>
Software development and licensing............ $ 5,158 $ 25,558 $ 6,016 $ 226,043 $ 969,582
Other......................................... ---- ---- ---- ---- 10,158
----------- ------------ ------------ ------------ ------------
Total revenue............................... 5,158 25,558 6,016 226,043 979,740
----------- ------------ ------------ ------------ ------------
Costs and expenses:
Product development........................... 427,581 607,714 743,688 1,304,931 4,015,048
Sales and marketing........................... 187,790 370,691 274,380 809,409 2,735,899
General and administrative.................... 305,653 168,688 715,756 312,605 1,798,035
----------- ------------ ------------ ------------ ------------
Total costs and expenses................... 921,024 1,147,093 1,733,824 2,426,945 8,548,982
----------- ------------ ------------ ------------ ------------
Loss from operations....................... (915,866) (1,121,535) (1,727,808) (2,200,902) (7,569,242)
Interest expense................................. (8,750) --- (17,998) (14,900) (127,232)
Interest income.................................. 6,816 40,471 21,152 78,319 113,098
Amortization of discount and issuance cost
associated with bridge financing............. ---- ---- ---- (145,023) (1,029,250)
Other expenses................................... ---- ---- ---- ---- (14,322)
----------- ------------ ------------ ------------ -------------
Loss before income taxes.................... (917,800) (1,081,064) (1,724,654) (2,282,506) (8,626,948)
Provision for income taxes....................... (600) 200 400 400 4,400
------------ ------------ ------------ ------------ ------------
Net loss................................... $ (917,200) $ (1,081,264) $ (1,725,054) $ (2,282,906) $ (8,631,348)
============ ============= ============= ============= =============
Net loss per share............................... $ (0.24) $ (0.20) $ (0.45) $ (0.45)
============ ============ ============ ============
Weighted average number of shares of common stock 3,824,907 5,392,845 3,824,887 5,028,279
=========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Preferred Stock Common Stock During the Shareholders'
------------------- -------------------- Development Equity
Shares Amount Warrants Shares Amount Stage (Deficit)
------ ------ -------- ------ ------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at August 28, 1992
(inception)............... ---- ---- ---- ---- ---- ----- ----
Common stock issued for cash
on October 1, 1992 at
$0.003 per share.......... ---- ---- ---- 960,000 $ 2,480 ---- $ 2,480
Net loss..................... ---- ---- ---- ---- ---- $ (92,744) (92,744)
----------- ---------- ---------- ------------ ------------ ------------ ------------
Balances at December 31, 1992 ---- ---- ---- 960,000 2,480 (92,744) (90,264)
Common stock issued for cash
in April and May 1993 at
$1.04 per share........... ---- ---- ---- 240,000 250,000 ---- 250,000
Net loss..................... ---- ---- ---- ---- ---- (190,749) (190,749)
----------- ---------- ---------- ------------ ------------ ------------ ------------
Balances at December 31, 1993 ---- ---- ---- 1,200,000 252,480 (283,493) (31,013)
Common stock issued for cash
on May 2, 1994 at $1.04 per
share..................... ---- ---- ---- 60,000 62,500 ---- 62,500
Net loss..................... ---- ---- ---- ---- ---- (237,022) (237,022)
----------- ---------- ---------- ------------ ------------ ------------ ------------
Balances at December 31, 1994 ---- ---- ---- 1,260,000 314,980 (520,515) (205,535)
Common stock issued in
exchange for convertible
debt on September 29, 1995
at $1.04 per share........ ---- ---- ---- 768,000 800,000 ---- 800,000
Common stock issued upon
exercise of options in June
and December 1995 at $1.04
per share................. ---- ----- ----- 102,000 106,250 ---- 106,250
Preferred stock issued for
cash in November and
December 1995 at $2.08 per
share, net of issuance
costs of $21,693.......... 939,600 $1,935,807 ---- ---- ---- ---- 1,935,807
Net loss..................... ---- ---- ---- ---- ---- (1,436,473) (1,436,473)
----------- ---------- ---------- ------------ ------------ ------------ ------------
Balances on December 31, 1995 939,600 1,935,807 ---- 2,130,000 1,221,230 (1,956,988) 1,200,049
Common stock issued upon
exercise of options on
February 1, 1996 at $1.04
per share................. ---- ---- ---- 120 125 ---- 125
Preferred stock issued for
cash in February 1996 at
$2.08 per share, net of
issuance costs of $2,771.. 120,000 247,229 ---- ---- ---- ---- 247,229
Common Stock issued for cash
in October 1996 at $2.25
per share, net of issuance
cost of $174,803.......... ---- ---- ---- 400,000 725,197 ---- 725,197
Net loss..................... ---- ---- ---- ---- ---- (4,391,454) (4,391,454)
----------- ---------- ---------- ------------ ------------ ------------ ------------
Balances at December 31, 1996 1,059,600 2,183,036 ---- 2,530,120 1,946,552 (6,348,442) (2,218,854)
Common Stock and Warrants
issued in connection with
the initial public offering
on January 23, 1997
(unaudited)............... ---- ---- $195,500 1,700,000 6,823,101 ---- 7,018,601
Preferred Stock converted to
common stock (unaudited).. (1,059,600) (2,183,036) ---- 1,059,600 2,183,036 ---- ----
Convertible notes converted to
common stock (unaudited).. ---- ---- ---- 100,000 500,000 ---- 500,000
Issuance of warrants in
connection with the initial
public offering (unaudited) ---- ---- 187 ---- ---- ---- 187
Common Stock issued upon
exercise of options in
March at $1.04 and $2.08
per share (unaudited)..... ---- ---- ---- 3,125 4,816 ---- 4,816
Net loss (unaudited)......... ---- ---- ---- ---- ---- (2,282,906) (2,282,906)
----------- ---------- ---------- ------------ ------------ ------------ ------------
Balances on June 30, 1997
(unaudited)............... ---- ----- $195,687 5,392,845 $ 11,457,505 $(8,631,348) $ 3,021,844
=========== ========== ========== ============ ============ ============ ===========
</TABLE>
The accompany notes are an integral part of these financial statements.
F-4
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30, August 28, 1992
------------------------- (inception) to
1996 1997 June 30,1997
---- ---- ------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss....................................... $ (1,725,054) $ (2,282,906) $ (8,631,348)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ 99,398 130,166 424,877
Amortization of non cash discount............ ---- 145,023 1,029,250
Other........................................ (7,501) ---- 28,800
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses and
deferred costs............................ (52,832) 548,816 (92,743)
(Increase) decrease in other assets........ 76,300 833 (16,684)
Increase (decrease) in accounts payable.... 91,935 (741,032) 116,396
Increase (decrease) in accrued liabilities. 169,914 (100,246) 357,871
---------------- ------------------- ------------------
Net cash used in operating activities..... (1,347,840) (2,299,346) (6,783,581)
----------------- ------------------- -------------------
Cash flows from investing activities:
Additions to property and equipment............ (308,770) (97,557) (1,015,383)
----------------- ------------------- -------------------
Net cash used in investing activities...... (308,770) (97,557) (1,015,383)
----------------- ------------------- -------------------
Cash flows from financing activities:
Payments of short-term notes payable........... ---- (2,000,000) (2,000,000)
Proceeds of short-term notes payable, net
accrued offering costs........................ ---- ---- 970,750
Repayment of convertible notes payable......... ---- ---- (500,000)
Proceeds from issuance of convertible notes
payable....................................... ---- --- 1,800,000
Proceeds from issuance of common stock and
warrants, net of offering costs............... ---- 7,018,788 8,058,965
Net proceeds from issuance of preferred stock.. 235,217 ---- 2,183,036
Proceeds from shareholders' loans.............. ---- ---- 118,164
Repayment of loans from shareholders........... ---- ---- (118,164)
Proceeds from the exercise of stock options..... 100,125 4,816 111,191
---------------- ------------------ ------------------
Net cash provided by financing activities... 335,342 5,023,604 10,623,942
---------------- ------------------ ------------------
Net increase (decrease) in cash and cash
equivalents................................. (1,321,268) 2,626,701 2,824,978
Cash and cash equivalents at beginning of period.. 1,554,034 198,277 ----
---------------- ------------------ ------------------
Cash and cash equivalents at end of period........ $ 232,766 $ 2,824,978 $ 2,824,978
================ ================== ==================
</TABLE>
The accompany notes are an integral part of these financial statements.
F-5
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting of all normal
recurring adjustments necessary for a fair statement of results for the interim
periods. The financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading. Operating
results for the six months ended June 30, 1997 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1997.
The organization and the business of the Company, accounting policies
followed by the Company and other information are contained in the notes to the
Company's consolidated financial statements filed as part of the Company's
annual report for the fiscal year ended December 31, 1996 on Form 10-KSB. This
quarterly report should be read in conjunction with such annual report.
For comparability, certain June 30, 1996 amounts have been reclassified
where appropriate to conform to the financial statement presentation used at
June 30, 1997.
1. Organization and Basis of Presentation:
HealthDesk Corporation (the Company), a development stage company, is
engaged in designing, developing and marketing HealthDesk(R) OnLine, a
healthcare management and information system which enables consumers to take a
more active role in their personal and family health. HealthDesk OnLine
features easy-to-use Windows-based software designed to develop personal
medical records and health management programs and access educational, health
related information from the Company's private website and over the Internet.
2. Recently Issued Accounting Pronouncements:
In February 1997, Statement of Financial Accounting Standards No. 128
"Earnings Per Share" (FAS 128) was issued and is effective for the Company's
year ending December 31, 1997. In March 1997, Statement of Financial Accounting
Standards No. 129, "Disclosure of Information About Capital Structure" was
issued and is effective for the Company's year ending December 31, 1998. In
June 1997, Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income" and Statement of Financial Accounting Standards No. 131
"Disclosures About Segments of An Enterprise and Related Information" were
issued and are also effective for the year ending December 31, 1998. The
Company has not determined the impact of the implementation of these
pronouncements.
3. Legal Proceedings:
The Company is subject to a complaint filed by a former employee with the
California Department of Fair Employment & Housing and a second from a former
consultant. The claim alleges wrongful termination as a result of alleged
denial of reasonable accommodation for a wrist and neck injury. The second
complaint alleges that a former consultant is entitled to compensation
associated with accelerated vesting of stock options. The Company intends to
defend these matters vigorously. There can be no assurance, however, that such
matters will be resolved in a manner favorable to the Company.
F-6
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
4. Initial Public Offering:
On January 23, 1997, the Company completed an initial public offering of
1,700,000 shares of Common Stock at $5.00 per share, and 1,700,000 warrants at
$0.01 per warrant. Each warrant is exercisable through January 16, 2002 and
allows the purchase of one share of common stock at $5.00, subject to adjustment
in certain circumstances. In January 1997, the underwriters exercised its option
to purchase an additional 255,000 warrants at $0.01 per warrant to cover
over-allotments. The Company sold the securities to the underwriters at a
discount of 10% from the initial public offering price and paid the underwriters
an expense allowance of 3% of the gross proceeds of the public offering. The
Company also sold, pursuant to the underwriting agreement, to the underwriters
for $187, warrants to purchase up to an aggregate of 170,000 shares of Common
Stock, no par value and/or 170,00 warrants to purchase 170,000 Common Shares.
After deducting offering expenses, the Company received net proceeds from the
offering of $7,018,788.
5. Stock Options:
On May 28, 1997, the Company authorized a voluntary stock option repricing
program in which 142,400 stock options originally issued with an exercise price
of $5.00 per share, were reissued with an exercise price of $3.13 per share, the
fair market value of the Company's Common Stock on May 28, 1997.
6. Reclassifications:
Reclassifications have been made to the product development, sales and
marketing, and general and administrative expenses for the three months and six
months ended June 30, 1996 and the three months ended March 31, 1997. These
reclassifications had no effect on total costs and expenses or pretax or
operating losses for the six months periods ended June 30, 1996 as previously
reported.
F-7
<PAGE>
Exhibit Index
Description
-----------
11.1 Statement Regarding computation of earnings per share
27 Financial Data Schedule
<PAGE>
EXHIBIT 11.1
HealthDesk Corporation
Computation of Earnings per Share
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -----------------------------
1996 1997 1996 1997
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Weighted average number of common shares
outstanding .................................. 2,130,119 5,392,845 2,130,099 5,028,279
Shares issuable pursuant to conversion of preferred
stock, warrants and stock options issued during
the twelve month period prior to the filing
of the initial public offering registration
statement, less shares assumed repurchased at
the offering price of $5.00 per share.......... 1,694,788 ---- 1,694,788 ----
------------- ------------- ----------- -------------
Total common and common equivalent shares........ 3,824,907 5,392,845 3,824,887 5,028,279
============= ============= ============= =============
Net Loss......................................... $ (917,200) $ (1,081,264) $ (1,725,054) $ (2,282,906)
============== ============== ============= =============
Loss per common and common equivalent shares $ (0.24) $ (0.20) $ (0.45) $ (0.45)
============== ============== ============== ==============
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001023767
<NAME> HEALTHDESK CORPPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,824,978
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,940,567
<PP&E> 874,005
<DEPRECIATION> 130,166
<TOTAL-ASSETS> 3,492,680
<CURRENT-LIABILITIES> 470,836
<BONDS> 0
11,457,505
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,492,680
<SALES> 226,043
<TOTAL-REVENUES> 226,043
<CGS> 0
<TOTAL-COSTS> 2,426,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,900
<INCOME-PRETAX> (2,282,506)
<INCOME-TAX> 400
<INCOME-CONTINUING> (2,282,906)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,282,906)
<EPS-PRIMARY> (.45)
<EPS-DILUTED> 0
</TABLE>
