x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
|
06-1393453
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
300
Atlantic Street - Suite 702, Stamford, CT
|
06901-3522
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
Accelerated Filer¨
|
Accelerated
Filer ¨
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Non-Accelerated
Filer x
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Page
|
||
PART
I.
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
||
2
|
||
|
||
3
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||
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4
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||
|
||
5
|
||
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Item
2.
|
14
|
|
|
||
Item
3.
|
19
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|
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||
Item
4.
|
19
|
|
|
||
PART
II.
|
OTHER
INFORMATION
|
|
|
||
Item
2.
|
20
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|
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||
Item
6.
|
20
|
|
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||
21
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PART
I.
|
Item
1.
|
Condensed
Consolidated Financial
Statements
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
1,251
|
$ |
5,314
|
||||
Investments
|
11,825
|
─
|
||||||
Accounts
receivable, net of allowance of $49 and $34, respectively
|
1,899
|
100
|
||||||
Inventories,
net
|
726
|
365
|
||||||
Other
current assets
|
124
|
96
|
||||||
Subscriptions
receivable, net
|
─
|
2,412
|
||||||
Total
current assets
|
15,825
|
8,287
|
||||||
Patents,
net
|
765
|
603
|
||||||
Fixed
assets, net of accumulated depreciation of $400 and $350,
respectively
|
112
|
91
|
||||||
Other
assets
|
37
|
37
|
||||||
Total
assets
|
$ |
16,739
|
$ |
9,018
|
||||
Liabilities
and stockholders’ equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ |
174
|
$ |
330
|
||||
Accrued
expenses
|
708
|
740
|
||||||
Total
current liabilities
|
882
|
1,070
|
||||||
Stockholders’
equity:
|
||||||||
Preferred
Stock, par value $0.01 per share; authorized 100,000 shares; no
shares issued and outstanding
|
─
|
─
|
||||||
Common
Stock, par value $0.01 per share; authorized 12,000,000 shares;
issued
and outstanding 7,390,829 and 5,964,493 shares,
respectively
|
74
|
60
|
||||||
subscribed
and to be issued 0 and 667,998 shares, respectively
|
─
|
7
|
||||||
Additional
paid-in capital, net of subscriptions receivable of $0 and $1,901,
respectively
|
62,429
|
52,854
|
||||||
Accumulated
other comprehensive income
|
14
|
4
|
||||||
Accumulated
deficit
|
(46,660 | ) | (44,977 | ) | ||||
Total
stockholders’ equity
|
15,857
|
7,948
|
||||||
Total
liabilities and stockholders’ equity
|
$ |
16,739
|
$ |
9,018
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue:
|
||||||||||||||||
Product
sales
|
$ |
223
|
$ |
235
|
$ |
567
|
$ |
648
|
||||||||
Technology
licensing fees and royalties
|
2,237
|
48
|
3,352
|
50
|
||||||||||||
Consulting
and other
|
─
|
56
|
─
|
189
|
||||||||||||
Total
revenue
|
2,460
|
339
|
3,919
|
887
|
||||||||||||
Costs
and expenses:
|
||||||||||||||||
Cost
of revenue
|
167
|
206
|
388
|
478
|
||||||||||||
Selling,
general and administrative
|
1,659
|
1,157
|
4,957
|
3,872
|
||||||||||||
Research
and development
|
100
|
52
|
292
|
447
|
||||||||||||
Patent
amortization and other expense
|
86
|
53
|
262
|
146
|
||||||||||||
Operating
costs and expenses
|
2,012
|
1,468
|
5,899
|
4,943
|
||||||||||||
Income
(loss) from operations
|
448
|
(1,129 | ) | (1,980 | ) | (4,056 | ) | |||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income
|
204
|
8
|
298
|
56
|
||||||||||||
Other
income (expense)
|
(1 | ) |
7
|
(1 | ) |
113
|
||||||||||
Income
(loss) before provision/benefit for income taxes
|
651
|
(1,114 | ) | (1,683 | ) | (3,887 | ) | |||||||||
Provision/benefit
for income taxes
|
─
|
─
|
─
|
─
|
||||||||||||
Net
income (loss)
|
$ |
651
|
$ | (1,114 | ) | $ | (1,683 | ) | $ | (3,887 | ) | |||||
Income
(loss) per common share:
|
||||||||||||||||
Basic
|
$ |
0.09
|
$ | (0.21 | ) | $ | (0.25 | ) | $ | (0.75 | ) | |||||
Diluted
|
$ |
0.09
|
$ | (0.21 | ) | $ | (0.25 | ) | $ | (0.75 | ) | |||||
Weighted-average
number of common shares outstanding:
|
||||||||||||||||
Basic
|
7,377
|
5,232
|
6,685
|
5,197
|
||||||||||||
Diluted
|
7,580
|
5,232
|
6,685
|
5,197
|
Nine
Months Ended September 30,
|
||||||||
2007
|
2006
|
|||||||
Operating
activities
|
||||||||
Net
loss
|
$ | (1,683 | ) | $ | (3,887 | ) | ||
Adjustments
to reconcile net loss to cash used for operating
activities:
|
||||||||
Depreciation
and amortization
|
100
|
116
|
||||||
Provision
for doubtful accounts, net
|
28
|
26
|
||||||
Compensation
expense for stock options
|
733
|
155
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(1,827 | ) | (76 | ) | ||||
Inventories
|
(361 | ) | (149 | ) | ||||
Other
current assets and other assets
|
(28 | ) | (31 | ) | ||||
Accounts
payable and accrued expenses
|
(47 | ) |
196
|
|||||
Net
cash used for operating activities
|
(3,085 | ) | (3,650 | ) | ||||
Investing
activities
|
||||||||
Purchases
of investments
|
(11,825 | ) |
─
|
|||||
Patent
costs
|
(212 | ) | (93 | ) | ||||
Purchase
of fixed assets
|
(71 | ) | (20 | ) | ||||
Net
cash used for investing activities
|
(12,108 | ) | (113 | ) | ||||
Financing
activities
|
||||||||
Proceeds
from issuance of common stock, net
|
4,313
|
488
|
||||||
Proceeds
from exercise of warrants, net
|
6,867
|
─
|
||||||
Proceeds
from exercise of stock options
|
83
|
14
|
||||||
Stockholder-related
charges
|
(143 | ) |
─
|
|||||
Net
cash provided by financing activities
|
11,120
|
502
|
||||||
Effects
of exchange rate changes on cash and cash equivalents
|
10
|
─
|
||||||
Net
decrease in cash and cash equivalents
|
$ | (4,063 | ) | $ | (3,261 | ) | ||
Cash
and cash equivalents at beginning of the period
|
5,314
|
4,513
|
||||||
Cash
and cash equivalents at end of the period
|
$ |
1,251
|
$ |
1,252
|
||||
Supplemental
non-cash activities:
|
||||||||
Payment
of accrued directors’ fees in common stock
|
$ |
140
|
$ |
94
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Non-cash
stock-based compensation
|
$ |
91
|
$ |
49
|
$ |
733
|
$ |
155
|
||||||||
Severance
|
─
|
─
|
─
|
357
|
||||||||||||
Compensation
and benefits
|
843
|
572
|
2,097
|
1,746
|
||||||||||||
Total
compensation and benefits
|
$ |
934
|
$ |
621
|
$ |
2,830
|
$ |
2,258
|
||||||||
Professional
fees and services
|
228
|
178
|
816
|
610
|
||||||||||||
Travel
|
145
|
125
|
441
|
384
|
||||||||||||
Occupancy
|
120
|
100
|
355
|
296
|
||||||||||||
Sales
and marketing expenses
|
182
|
97
|
342
|
186
|
||||||||||||
Depreciation
and all other
|
50
|
36
|
173
|
138
|
||||||||||||
Total
selling, general and administrative expense
|
$ |
1,659
|
$ |
1,157
|
$ |
4,957
|
$ |
3,872
|
(in
thousands)
|
||||||||
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
Finished
Platinum Plus
|
$ |
101
|
$ |
144
|
||||
Platinum
concentrate/metal
|
481
|
103
|
||||||
Hardware
|
79
|
119
|
||||||
Other
|
80
|
26
|
||||||
$ |
741
|
$ |
392
|
|||||
Less: inventory
reserves
|
(15 | ) | (27 | ) | ||||
Inventories,
net
|
$ |
726
|
$ |
365
|
|
Number
of Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term in Years
|
Aggregate
Intrinsic Value
|
||||||||||||
Options
outstanding as of December 31, 2006
|
648,087
|
$ |
10.082
|
|
|
|||||||||||
Granted
|
125,000
|
$ |
9.100
|
|
|
|||||||||||
Exercised
|
(42,201 | ) | $ |
6.195
|
|
|
||||||||||
Forfeited/cancelled
|
(11,134 | ) | $ |
5.
819
|
||||||||||||
Expired
|
(20,333 | ) | $ |
23.018
|
|
|
||||||||||
Options
outstanding as of September 30, 2007
|
699,419
|
$ |
9.833
|
6.14
|
$ |
2,188,556
|
||||||||||
Options
exercisable as of September 30, 2007
|
597,620
|
$ |
10.136
|
5.64
|
$ |
1,736,121
|
Expected
term in years
|
8.64
|
||
Risk-free
interest rate
|
4.67%
|
||
Expected
volatility
|
104.7%
|
||
Dividend
yield
|
0%
|
||
Forfeiture
rate
|
5.0%
|
Number
of Shares
|
Weighted
Average Exercise Price
|
|||||||
Warrants
outstanding and to be issued as of December 31, 2006
|
1,557,424
|
$ |
10.98
|
|||||
Issued
|
74,142
|
8.44
|
||||||
Exercised
|
(709,383 | ) |
10.03
|
|||||
Forfeited
|
(27 | ) |
11.49
|
|||||
Expired
|
(107 | ) |
10.00
|
|||||
Warrants
outstanding and exercisable as of September 30, 2007
|
922,049
|
$ |
11.51
|
|||||
Weighted-average
remaining contractual term in years
|
1.25
|
|||||||
Aggregate
intrinsic value
|
$ |
916,567
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||
2007
|
2006
|
2007
|
2006
|
||||
Customer
A
|
*
|
*
|
*
|
*
|
|||
Customer
B
|
*
|
16.5%
|
*
|
19.5%
|
|||
Customer
C
|
*
|
10.3%
|
*
|
13.0%
|
|||
Customer
D
|
*
|
*
|
29.1%
|
*
|
|||
Customer
E
|
61.0%
|
*
|
38.3%
|
*
|
|||
Customer
F
|
24.3%
|
*
|
18.2%
|
*
|
(in
thousands)
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
income (loss)
|
$ |
651
|
$ | (1,114 | ) | $ | (1,683 | ) | $ | (3,887 | ) | |||||
Other
comprehensive income:
|
||||||||||||||||
Foreign
currency translation adjustment
|
10
|
|
10
|
|
||||||||||||
Comprehensive
income (loss)
|
$ |
661
|
$ | (1,114 | ) | $ | (1,673 | ) | $ | (3,887 | ) |
(in
thousands)
|
||||||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue:
|
||||||||||||||||
U.S.
|
$ |
1,370
|
$ |
221
|
$ |
2,239
|
$ |
565
|
||||||||
U.K./Europe
|
1,034
|
23
|
1,603
|
95
|
||||||||||||
Asia
|
56
|
95
|
77
|
227
|
||||||||||||
Total
|
$ |
2,460
|
$ |
339
|
$ |
3,919
|
$ |
887
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
(in
thousands)
|
||||||||
Three
Months Ended
|
||||||||
September
30,
|
||||||||
2007
|
2006
|
|||||||
Non-cash
stock-based compensation
|
$ |
91
|
$ |
49
|
||||
Compensation
and benefits
|
843
|
572
|
||||||
Total
compensation and benefits
|
$ |
934
|
$ |
621
|
||||
Professional
fees and services
|
228
|
178
|
||||||
Travel
|
145
|
125
|
||||||
Occupancy
|
120
|
100
|
||||||
Sales
and marketing expenses
|
182
|
97
|
||||||
Depreciation
and all other
|
50
|
36
|
||||||
Total
selling, general and administrative expense
|
$ |
1,659
|
$ |
1,157
|
(in
thousands)
|
||||||||
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2007
|
2006
|
|||||||
Non-cash
stock-based compensation
|
$ |
733
|
$ |
155
|
||||
Severance
|
|
357
|
||||||
Compensation
and benefits
|
2,097
|
1,746
|
||||||
Total
compensation and benefits
|
$ |
2,830
|
$ |
2,258
|
||||
Professional
fees and services
|
816
|
610
|
||||||
Travel
|
441
|
384
|
||||||
Occupancy
|
355
|
296
|
||||||
Sales
and marketing expenses
|
342
|
186
|
||||||
Depreciation
and all other
|
173
|
138
|
||||||
Total
selling, general and administrative expense
|
$ |
4,957
|
$ |
3,872
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market
Risk
|
Item
4.
|
Controls
and Procedures
|
PART
II.
|
OTHER
INFORMATION
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
Exhibits
|
(a)
|
Exhibits
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Exchange
Act
|
|
|
|
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Exchange
Act
|
|
|
|
|
|
|
|
Certification
Pursuant to 18 U.S.C. Section 1350
|
|
CLEAN
DIESEL TECHNOLOGIES, INC.
|
||
(Registrant)
|
||
Date: November
14, 2007
|
By:
|
/s/
Bernhard Steiner
|
Bernhard
Steiner
|
||
Director,
President and Chief
Executive Officer
|
||
Date: November
14, 2007
|
By:
|
/s/
Ann B. Ruple
|
Ann
B. Ruple
|
||
Chief
Financial Officer, Vice
President and Treasurer
|