Segments. The Company operates in one segment, using one measurement of profitability to manage its business. There were no export sales. The Company maintains two facilities in Pakistan which generate no revenues and are comprised of $1,497,000 and $256,000 of identifiable assets as of December 31, 2000 and 1999, respectively. Net loss and pro forma net loss per share Basic and diluted net loss per share are computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share excludes potential common stock if their effect is anti-dilutive. Potential common stock consists of common stock subject to repurchase, incremental common shares issuable upon the exercise of stock options and warrants and shares issuable upon conversion of the preferred stock. Pro forma net loss per share for the year ended December 31, 2000 was computed using the weighted-average number of shares of common stock outstanding, including the pro forma effect of the automatic conversion of all of the Company's preferred stock into shares of the Company's common stock effective upon the closing of the Company's initial public offering as if such conversion occurred on January 1, 2000 or at the date of original issuance, if later. In accordance with the Company's certificate of incorporation, as amended in connection with the Series D preferred stock sale, as of December 31, 2000, as the Company has issued 1,257,614 shares of common stock in excess of the 3,331,978 shares of common stock permitted, as defined in the certificate of incorporation, the Company will be required to issue additional 419,700 shares of common stock upon the conversion of the preferred stock. The resulting pro forma adjustment includes an increase in the weighted- average shares used to compute pro forma basic net loss per share of total 21,269,000 shares for the year ended December 31, 2000. The calculation of pro forma diluted net loss per share excludes warrants and stock options as their effect would be anti-dilutive. The following is a reconciliation of the numerator (net loss available to common stockholders) and the denominator (number of shares) used in the basic and diluted Earnings per Share ("EPS") calculations (in thousands, except per share data): Year Ended December 31, ---------------------------- 2000 1999 1998 -------- ------- Basic and diluted: Net loss available to common stockholders....... $(142,264) $(15,415) $(3,775) ========= ======== ======= Weighted-average common shares outstanding...... 6,861 5,334 5,620 Less: Weighted-average shares subject to repurchase..................................... 1,313 1,116 2,778 Weighted-average shares used in basic and --------- -------- ------- Net loss per share available to common stockholders................................... $ (25.64) $ (3.65) $ (1.33) ========= ======== ======= Pro forma basic and diluted: Net loss........................................ $ (88,748) ========= Adjustments to reflect weighted-average effect Weighted-average shares used in pro forma basic The following table sets forth potential shares of common stock that are not included in the diluted net loss per share available to common stockholders because to do so would be anti-dilutive for the years indicated (in thousands): Year Ended December 31, ----------------------- 2000 ------- 1999 ------- 1998 ------- Warrants................................................ 646 533 -- ======= ======= ======= Recent accounting pronouncements In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative investments, including certain derivative instruments embedded in other contracts, and for hedging activities. In July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative and Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133." SFAS No. 137 deferred the effective date of SFAS No. 133 until fiscal years beginning after June 15, 2000. The Company will adopt SFAS No. 133 during fiscal 2001. To date, the Company has not engaged in derivative or hedging activities and does not expect SFAS 133 to have a material impact upon financial results. Note 3 Balance Sheet Components Inventories consist of the following (in thousands): December 31, -------------- 2000 1999 Raw materials.................................................. $ 1,183 $ 73 Work in progress............................................... 294 -- Finished goods................................................. 547 293 Other current assets consist of the following (in thousands): December 31, ------------ 2000 1999 Initial Public Offering costs.................................. $1,884 $ -- Prepaid rent................................................... 245 175 Prepaid trade shows............................................ 420 -- Loan to officer................................................ 97 -- Notes receivable from stockholder of preferred stock........... 75 -- Other.......................................................... 1,274 494 Property and equipment consist of the following (in thousands): December 31, --------------- 2000 1999 Clinical and manufacturing equipment........................ $12,372 $1,537 Computer hardware........................................... 4,809 1,580 Computer software........................................... 2,681 302 Furniture and fixtures...................................... 1,648 313 Leasehold improvements...................................... 2,580 275 24,090 4,007 Less: Accumulated depreciation and amortization............. (2,990) (690) $21,100 $3,317 ======= ====== Property and equipment includes $2,220,040 and $18,957 of assets under capital leases at December 31, 2000 and 1999, respectively. Accumulated amortization of assets under capital leases totaled $333,862 and $9,607 at December 31, 2000 and 1999, respectively. Depreciation expense was $2,513,000, $559,000 and $115,000 for the years ended December 31, 2000, 1999 and 1998, respectively. Accrued liabilities consist of the following (in thousands): Accrued marketing expenses...................................... $ 5,592 $ 385 Accrued payroll and benefits.................................... 2,844 744 Accrued loss reserve on product sales........................... -- 351 Accrued Initial Public Offering costs........................... 557 -- Accrued costs for property and equipment acquired............... 5,046 -- Other........................................................... 714 570 Note 4 Commitments and Contingencies Operating leases In October 1999, the Company entered into a non-cancelable operating lease agreement with GE Capital Fleet Services and offers vehicles to all salespeople. The lease term is for 3 years, commencing upon acceptance of delivery. In June 2000, the Company entered into a non-cancelable operating lease to lease a manufacturing facility in Santa Clara, California. The lease term is for five years, commencing July 1, 2000. The Company paid $1,175,000 security deposit upon execution of the lease. In July 2000, the Company entered into an agreement to sublease additional office space in Santa Clara, California. The lease term begins on July 14, 2000 and expires on August 14, 2002. A security deposit of $184,448 was paid by the Company upon execution of the lease. Total rent expense was $2,146,000, $295,000 and $147,000 for the years ended December 31, 2000, 1999 and 1998, respectively. The terms of the facility lease provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. The future minimum lease payments under these leases as of December 31, 2000 are $3,112,000, $2,812,000, $2,268,000, $2,311,000, $1,177,000 and $66,000 for the years ended December 31, 2001, 2002, 2003, 2004, 2005 and thereafter. Advertising Commitments In May 2000, the Company entered into an escrow agreement between TBWA Chiat/Day, Inc. ("TBWA") and Greater Bay Trust Company ("Escrow Agent"). TBWA has been engaged by the Company to procure non-cancelable television and radio media time on behalf of the Company. In consideration of the services provided by TBWA, the Company has agreed to deposit a certain amount with the Escrow Agent for purposes of repaying TBWA. The Company's total commitment will not at any time exceed the total amount held in escrow. At December 31, 2000, the Company had $15,453,000 held in money market funds with the Escrow Agent. This amount has been classified as restricted cash. Software Development Commitments In January 2001, the Company entered into a master software development and services agreement with Raindrop Geomagic, Inc. ("Raindrop"). Under the agreement, the Company will make non-refundable monthly payments of $250,000 to Raindrop in exchange for software development services, software source and object codes, documentation, software and other tangible and intangible work product. Additionally, at any time during the term of the agreement, the Company may obtain three fully paid-up, non-exclusive, non-terminable object code licenses for $240,000. The Company made an initial non-refundable payment of $600,000, of which $220,000 may be applied as a credit towards the $240,000 of license fees. The minimum term of the agreement is four months, after which the agreement may be terminated by either party without cause upon 30 days written notice.
Appears in 1 contract
Sources: Annual Report
Segments. The Company operates in one segment, using one measurement of profitability to manage its business. There were no export sales. The Company maintains two facilities in Pakistan which generate no revenues and are comprised of $1,497,000 and $256,000 of identifiable assets as of December 31, 2000 and 1999, respectively. Net loss and pro forma net loss per share Basic and diluted net loss per share are computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share excludes potential common stock if their effect is anti-dilutive. Potential common stock consists of common stock subject to repurchase, incremental common shares issuable upon the exercise of stock options and warrants and shares issuable upon conversion of the preferred stock. Pro forma net loss per share for the year ended December 31, 2000 was computed using the weighted-average number of shares of common stock outstanding, including the pro forma effect of the automatic conversion of all of the Company's preferred stock into shares of the Company's common stock effective upon the closing of the Company's initial public offering as if such conversion occurred on January 1, 2000 or at the date of original issuance, if later. In accordance with the Company's certificate of incorporation, as amended in connection with the Series D preferred stock sale, as of December 31, 2000, as the Company has issued 1,257,614 shares of common stock in excess of the 3,331,978 shares of common stock permitted, as defined in the certificate of incorporation, the Company will be required to issue additional 419,700 shares of common stock upon the conversion of the preferred stock. The resulting pro forma adjustment includes an increase in the weighted- average shares used to compute pro forma basic net loss per share of total 21,269,000 shares for the year ended December 31, 2000. The calculation of pro forma diluted net loss per share excludes warrants and stock options as their effect would be anti-dilutive. The following is a reconciliation of the numerator (net loss available to common stockholders) and the denominator (number of shares) used in the basic and diluted Earnings per Share ("EPS") calculations (in thousands, except per share data): Year Ended December 31, ---------------------------- 2000 1999 1998 -------- ------- Basic and diluted: Net loss available to common stockholders....... $(142,264) $(15,415) $(3,775) ========= ======== ======= Weighted-average common shares outstanding...... 6,861 5,334 5,620 Less: Weighted-average shares subject to repurchase..................................... 1,313 1,116 2,778 Weighted-average shares used in basic and --------- -------- ------- Net loss per share available to common stockholders................................... $ (25.64) $ (3.65) $ (1.33) ========= ======== ======= Pro forma basic and diluted: Net loss........................................ $ (88,748) ========= Adjustments to reflect weighted-average effect Weighted-average shares used in pro forma basic The following table sets forth potential shares of common stock that are not included in the diluted net loss per share available to common stockholders because to do so would be anti-dilutive for the years indicated (in thousands): Year Ended December 31, ----------------------- 2000 ------- 1999 ------- 1998 ------- -------------------- Warrants................................................ ................................................... 646 533 -- =------ ------ 33,325 18,725 13,798 ====== ======= ======= Recent accounting pronouncements In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative investments, including certain derivative instruments embedded in other contracts, and for hedging activities. In July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative and Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133." SFAS No. 137 deferred the effective date of SFAS No. 133 until fiscal years beginning after June 15, 2000. The Company will adopt SFAS No. 133 during fiscal 2001. To date, the Company has not engaged in derivative or hedging activities and does not expect SFAS 133 to have a material impact upon financial results. Note 3 Balance Sheet Components Inventories consist of the following (in thousands): December 31, -------------- 2000 1999 Raw materials.................................................. $ 1,183 $ 73 Work in progress............................................... 294 -- Finished goods................................................. 547 293 Other current assets consist of the following (in thousands): December 31, ------------ 2000 1999 Initial Public Offering costs.................................. $1,884 $ -- Prepaid rent................................................... 245 175 Prepaid trade shows............................................ 420 -- Loan to officer................................................ 97 -- Notes receivable from stockholder of preferred stock........... 75 -- Other.......................................................... 1,274 494 Property and equipment consist of the following (in thousands): December 31, --------------- 2000 1999 Clinical and manufacturing equipment........................ $12,372 $1,537 Computer hardware........................................... 4,809 1,580 Computer software........................................... 2,681 302 Furniture and fixtures...................................... 1,648 313 Leasehold improvements...................................... 2,580 275 ------- ------ 24,090 4,007 Less: Accumulated depreciation and amortization............. (2,990) (690) ------- ------ $21,100 $3,317 ======= ====== Property and equipment includes $2,220,040 and $18,957 of assets under capital leases at December 31, 2000 and 1999, respectively. Accumulated amortization of assets under capital leases totaled $333,862 and $9,607 at December 31, 2000 and 1999, respectively. Depreciation expense was $2,513,000, $559,000 and $115,000 for the years ended December 31, 2000, 1999 and 1998, respectively. Accrued liabilities consist of the following (in thousands): Accrued marketing expenses...................................... $ 5,592 $ 385 Accrued payroll and benefits.................................... 2,844 744 Accrued loss reserve on product sales........................... -- 351 Accrued Initial Public Offering costs........................... 557 -- Accrued costs for property and equipment acquired............... 5,046 -- Other........................................................... 714 570 Note 4 Commitments and Contingencies Operating leases In October 1999, the Company entered into a non-cancelable operating lease agreement with GE Capital Fleet Services and offers vehicles to all salespeople. The lease term is for 3 years, commencing upon acceptance of delivery. In June 2000, the Company entered into a non-cancelable operating lease to lease a manufacturing facility in Santa Clara, California. The lease term is for five years, commencing July 1, 2000. The Company paid $1,175,000 security deposit upon execution of the lease. In July 2000, the Company entered into an agreement to sublease additional office space in Santa Clara, California. The lease term begins on July 14, 2000 and expires on August 14, 2002. A security deposit of $184,448 was paid by the Company upon execution of the lease. Total rent expense was $2,146,000, $295,000 and $147,000 for the years ended December 31, 2000, 1999 and 1998, respectively. The terms of the facility lease provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. The future minimum lease payments under these leases as of December 31, 2000 are $3,112,000, $2,812,000, $2,268,000, $2,311,000, $1,177,000 and $66,000 for the years ended December 31, 2001, 2002, 2003, 2004, 2005 and thereafter. Advertising Commitments In May 2000, the Company entered into an escrow agreement between TBWA Chiat/Day, Inc. ("TBWA") and Greater Bay Trust Company ("Escrow Agent"). TBWA has been engaged by the Company to procure non-cancelable television and radio media time on behalf of the Company. In consideration of the services provided by TBWA, the Company has agreed to deposit a certain amount with the Escrow Agent for purposes of repaying TBWA. The Company's total commitment will not at any time exceed the total amount held in escrow. At December 31, 2000, the Company had $15,453,000 held in money market funds with the Escrow Agent. This amount has been classified as restricted cash. Software Development Commitments In January 2001, the Company entered into a master software development and services agreement with Raindrop Geomagic, Inc. ("Raindrop"). Under the agreement, the Company will make non-refundable monthly payments of $250,000 to Raindrop in exchange for software development services, software source and object codes, documentation, software and other tangible and intangible work product. Additionally, at any time during the term of the agreement, the Company may obtain three fully paid-up, non-exclusive, non-terminable object code licenses for $240,000. The Company made an initial non-refundable payment of $600,000, of which $220,000 may be applied as a credit towards the $240,000 of license fees. The minimum term of the agreement is four months, after which the agreement may be terminated by either party without cause upon 30 days written notice.
Appears in 1 contract
Sources: Annual Report