Delaware
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58-1972600
|
|
(State
or other jurisdiction of
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(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
Number)
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Page
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||
PART
I
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FINANCIAL
INFORMATION
|
|||
Item
1.
|
Financial
Statements
|
|||
Condensed
Consolidated Balance Sheets - June 30, 2008 (unaudited) and December
31, 2007
|
1
|
|||
Condensed
Consolidated Statements of Operations (unaudited) - Three and six
months
ended June 30, 2008 and 2007
|
2
|
|||
Condensed
Consolidated Statements of Cash Flows (unaudited) - Six months
ended June
30, 2008 and 2007
|
3
|
|||
Notes
to Unaudited Condensed Consolidated Financial Statements - June
30,
2008
|
4
|
|||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
10
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
13
|
||
Item
4.
|
Procedures
and Controls
|
13
|
||
PART
II
|
OTHER
INFORMATION
|
|||
Item
1A.
|
Risk
Factors
|
14
|
||
Item
4.
|
Submission
of Matters to a Vote of the Security Holders
|
14
|
||
Item
6.
|
Exhibits
|
14
|
||
SIGNATURES
|
15
|
|||
EXHIBIT
INDEX
|
16
|
JUNE 30,
|
DECEMBER 31,
|
||||||
2008
|
2007
|
||||||
(unaudited)
|
|||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
16,929
|
$
|
41,886
|
|||
Marketable
securities
|
69,365
|
45,223
|
|||||
Interest
receivable
|
9
|
15
|
|||||
Prepaids
and other current assets
|
187
|
175
|
|||||
Total
current assets
|
86,490
|
87,299
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
1,204
|
1,381
|
|||||
TOTAL
ASSETS
|
$
|
87,694
|
$
|
88,680
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable and accrued liabilities
|
$
|
428
|
$
|
618
|
|||
Total
current liabilities
|
428
|
618
|
|||||
LONG-TERM
LIABILITIES:
|
|||||||
Deferred
rent
|
377
|
343
|
|||||
Total
liabilities
|
805
|
961
|
|||||
STOCKHOLDERS'
EQUITY:
|
|||||||
Preferred
stock, $.0001 par value; 5,000,000 shares authorized; none
issued
|
—
|
—
|
|||||
Common
stock, $.0001 par value; 100,000,000 shares authorized; 17,441,747
and
17,226,747 shares issued and 17,366,747 and 17,151,747 outstanding
in 2008
and 2007, respectively
|
2
|
2
|
|||||
Additional
paid-in capital
|
370,224
|
369,827
|
|||||
Accumulated
deficit
|
(283,321
|
)
|
(282,121
|
)
|
|||
Treasury
stock, at cost
|
(2
|
)
|
(2
|
)
|
|||
Accumulated
other comprehensive (loss) income
|
(14
|
)
|
13
|
||||
Total
stockholders' equity
|
86,889
|
87,719
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
87,694
|
$
|
88,680
|
THREE MONTHS
|
SIX MONTHS
|
||||||||||||
ENDED JUNE 30,
|
ENDED JUNE 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
REVENUES:
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||
Total
revenues
|
—
|
—
|
—
|
—
|
|||||||||
OPERATING
EXPENSES:
|
|||||||||||||
General
and administrative
|
1,253
|
899
|
2,403
|
1,683
|
|||||||||
Transaction
costs
|
—
|
8
|
—
|
8
|
|||||||||
Depreciation
|
89
|
91
|
178
|
181
|
|||||||||
Total
operating expenses
|
1,342
|
998
|
2,581
|
1,872
|
|||||||||
OPERATING
LOSS
|
(1,342
|
)
|
(998
|
)
|
(2,581
|
)
|
(1,872
|
)
|
|||||
OTHER
EXPENSE
|
—
|
—
|
—
|
(1
|
)
|
||||||||
INTEREST
INCOME
|
559
|
1,079
|
1,381
|
2,156
|
|||||||||
NET
(LOSS) INCOME
|
$
|
(783
|
)
|
$
|
81
|
$
|
(1,200
|
)
|
$
|
283
|
|||
(Loss)
Income per common share:
|
|||||||||||||
Basic
|
$
|
(0.05
|
)
|
$
|
0.00
|
$
|
(0.07
|
)
|
$
|
0.02
|
|||
Diluted
|
$
|
(0.05
|
)
|
$
|
0.00
|
$
|
(0.07
|
)
|
$
|
0.02
|
|||
Weighted
average shares outstanding:
|
|||||||||||||
Basic
|
16,867
|
16,659
|
16,867
|
16,640
|
|||||||||
Diluted
|
16,867
|
17,156
|
16,867
|
17,078
|
SIX MONTHS
|
|||||||
ENDED JUNE 30,
|
|||||||
2008
|
2007
|
||||||
OPERATING
ACTIVITIES:
|
|||||||
Net
(loss) income
|
$
|
(1,200
|
)
|
$
|
283
|
||
Adjustments
to reconcile net (loss) income to net cash used in Operating
activities:
|
|||||||
Depreciation
on property and equipment
|
178
|
181
|
|||||
Amortization
of equity compensation plans
|
397
|
134
|
|||||
Amortization
of discount and premium on securities, net
|
(976
|
)
|
(1,489
|
)
|
|||
Changes
in operating assets and liabilities:
|
|||||||
(Increase)
decrease in interest receivable, prepaids and other current
assets
|
(6
|
)
|
210
|
||||
Decrease
in accounts payable and accrued liabilities
|
(190
|
)
|
(209
|
)
|
|||
Increase
in deferred rent
|
34
|
33
|
|||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(1,763
|
)
|
(857
|
)
|
|||
INVESTING
ACTIVITIES:
|
|||||||
Purchases
of marketable securities
|
(76,293
|
)
|
(71,195
|
)
|
|||
Proceeds
from maturity of marketable securities
|
53,100
|
84,236
|
|||||
Sale
of property and equipment
|
—
|
2
|
|||||
Purchase
of property and equipment
|
(1
|
)
|
(39
|
)
|
|||
NET
CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
(23,194
|
)
|
13,004
|
||||
FINANCING
ACTIVITIES:
|
|||||||
Proceeds
from the exercises of stock options
|
—
|
368
|
|||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
—
|
368
|
|||||
CHANGE
IN CASH AND CASH EQUIVALENTS
|
(24,957
|
)
|
12,515
|
||||
CASH
AND CASH EQUIVALENTS, Beginning of Period
|
41,886
|
1,731
|
|||||
CASH
AND CASH EQUIVALENTS, End of Period
|
$
|
16,929
|
$
|
14,246
|
|||
SUPPLEMENTAL
DISCLOSURE:
|
|||||||
Cash
paid for franchise and property taxes
|
$
|
327
|
$
|
320
|
Three Months Ended
|
Six Months Ended
|
||||||||||||
June 30,
|
June 30,
|
||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||
Basic
earnings per share calculation:
|
|||||||||||||
Net
(loss) income
|
$
|
(783
|
)
|
$
|
81
|
$
|
(1,200
|
)
|
$
|
283
|
|||
Weighted
average common
shares – basic
|
16,867
|
16,659
|
16,867
|
16,640
|
|||||||||
Basic
net (loss) income per
share
|
$
|
(0.05
|
)
|
$
|
0.00
|
$
|
(0.07
|
)
|
$
|
0.02
|
|||
|
|||||||||||||
Diluted
earnings per share calculation:
|
|||||||||||||
Net
(loss) income
|
$
|
(783
|
)
|
$
|
81
|
$
|
(1,200
|
)
|
$
|
283
|
|||
Weighted
average common
shares – basic
|
16,867
|
16,659
|
16,867
|
16,640
|
|||||||||
Effect
of dilutive stock options
|
—
|
245
|
—
|
196
|
|||||||||
Effect
of dilutive restricted stock
|
—
|
252
|
—
|
242
|
|||||||||
Weighted
average common
shares diluted
|
16,867
|
17,156
|
16,867
|
17,078
|
|||||||||
Diluted
net (loss) income per
share
|
$
|
(0.05
|
)
|
$
|
0.00
|
$
|
(0.07
|
)
|
$
|
0.02
|
Weighted
|
|||||||
Average
|
|||||||
Options
|
Exercise Price
|
||||||
Outstanding
at December 31, 2007
|
1,848,750
|
$
|
7.24
|
||||
Granted
|
—
|
—
|
|||||
Exercised
|
—
|
—
|
|||||
Forfeited
|
—
|
—
|
|||||
Outstanding
at June 30, 2008
|
1,848,750
|
$
|
7.24
|
||||
Options
exercisable at June 30, 2008
|
1,568,750
|
$
|
7.47
|
Weighted
|
||||||||||||||
Remaining Life
|
Average
|
|||||||||||||
Exercise Price Range
|
Outstanding
|
Exercisable
|
In Years
|
Exercise Price
|
||||||||||
$
|
5.35 - $ 6.04
|
883,750
|
603,750
|
6.7
|
$
|
5.58
|
||||||||
$
|
6.05 - $10.00
|
965,000
|
965,000
|
6.2
|
$
|
8.65
|
||||||||
Total
|
1,848,750
|
1,568,750
|
6.5
|
$
|
7.47
|
THREE MONTHS ENDED JUNE 30,
|
SIX MONTHS ENDED JUNE 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
(in thousands)
|
|||||||||||||
Net
(loss)/income
|
$
|
(783
|
)
|
$
|
81
|
$
|
(1,200
|
)
|
$
|
283
|
|||
Increase
in unrealized loss on marketable securities
|
(128
|
)
|
(15
|
)
|
(27
|
)
|
(25
|
)
|
|||||
Comprehensive
(loss)/income
|
$
|
(911
|
)
|
$
|
66
|
$
|
(1,227
|
)
|
$
|
258
|
Net Operating
Loss |
Capital Loss
|
||||||
Expiration Dates
December 31 |
Amount
(000’s)
|
Amount
(000’s)
|
|||||
2008
|
$
|
-
|
$
|
1,599
|
|||
2009
|
1,900
|
||||||
2010
|
7,417
|
||||||
2011
|
7,520
|
||||||
2012
|
5,157
|
||||||
2020
|
29,533
|
||||||
2021
|
50,430
|
||||||
2022
|
115,000
|
||||||
2023
|
5,712
|
||||||
2024
|
3,566
|
||||||
2025
|
1,707
|
||||||
2026
|
476
|
||||||
2028
|
633
|
||||||
Total
|
229,051
|
1,599
|
|||||
Section
382 limitation
|
(4,964
|
)
|
-
|
||||
After
Limitations
|
$
|
224,087
|
$
|
1,599
|
FOR
|
WITHHELD
|
||||||
Election
of Directors:
|
|||||||
Burtt
R. Ehrlich
|
10,743,379
|
3,854,321
|
|||||
Donald
L. House
|
10,743,379
|
3,854,321
|
|||||
Warren
B. Kanders
|
10,742,579
|
3,855,121
|
|||||
Nicholas
Sokolow
|
10,763,379
|
3,834,321
|
Exhibit
|
||
Number
|
Exhibit
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification
of Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
Date:
August 4, 2008
|
|
/s/
Warren B. Kanders
|
|
Warren
B. Kanders,
|
|
Executive
Chairman of the Board of
Directors |
|
(Principal
Executive Officer)
|
|
/s/
Philip A. Baratelli
|
|
Philip
A. Baratelli,
|
|
Chief
Financial Officer
|
|
(Principal
Financial Officer)
|
Number
|
Exhibit
|
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification
Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|