$XWEL
XWELL Inc

2012 Q1 Form 10-Q Financial Statement

#000114420412029638 Filed on May 15, 2012

View on sec.gov

Income Statement

Concept 2012 Q1 2011 Q1
Revenue $106.0K $147.0K
YoY Change -27.89% 390.0%
Cost Of Revenue $1.251M $25.00K
YoY Change 4904.0% -16.67%
Gross Profit -$1.145M $122.0K
YoY Change -1038.52%
Gross Profit Margin -1080.19% 82.99%
Selling, General & Admin $616.0K $1.286M
YoY Change -52.1% 86.38%
% of Gross Profit 1054.1%
Research & Development $0.00 $519.0K
YoY Change -100.0% -10.52%
% of Gross Profit 425.41%
Depreciation & Amortization $10.00K
YoY Change -50.0%
% of Gross Profit 8.2%
Operating Expenses $616.0K $1.805M
YoY Change -65.87% 42.13%
Operating Profit -$2.656M -$1.683M
YoY Change 57.81% 32.52%
Interest Expense $0.00 $600.0K
YoY Change -100.0% -186.96%
% of Operating Profit
Other Income/Expense, Net $0.00 -$10.00K
YoY Change -100.0% -66.67%
Pretax Income -$5.624M -$1.091M
YoY Change 415.49% -44.9%
Income Tax $20.00K $18.00K
% Of Pretax Income
Net Earnings -$5.644M -$1.109M
YoY Change 408.93% -44.55%
Net Earnings / Revenue -5324.53% -754.42%
Basic Earnings Per Share
Diluted Earnings Per Share -$187.0M -$111.0M
COMMON SHARES
Basic Shares Outstanding
Diluted Shares Outstanding

Balance Sheet

Concept 2012 Q1 2011 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $3.600M $3.600M
YoY Change 0.0% 157.14%
Cash & Equivalents $3.630M $3.567M
Short-Term Investments
Other Short-Term Assets $100.0K $100.0K
YoY Change 0.0% -66.67%
Inventory
Prepaid Expenses
Receivables $152.0K $100.0K
Other Receivables $0.00 $0.00
Total Short-Term Assets $3.926M $3.800M
YoY Change 3.32% 123.53%
LONG-TERM ASSETS
Property, Plant & Equipment $133.0K $200.0K
YoY Change -33.5% 0.0%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $0.00 $0.00
YoY Change -100.0%
Total Long-Term Assets $141.0K $200.0K
YoY Change -29.5% -33.33%
TOTAL ASSETS
Total Short-Term Assets $3.926M $3.800M
Total Long-Term Assets $141.0K $200.0K
Total Assets $4.067M $4.000M
YoY Change 1.68% 100.0%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $600.0K $400.0K
YoY Change 50.0% -20.0%
Accrued Expenses $400.0K $400.0K
YoY Change 0.0% 33.33%
Deferred Revenue
YoY Change
Short-Term Debt $200.0K $0.00
YoY Change -100.0%
Long-Term Debt Due $1.300M
YoY Change 62.5%
Total Short-Term Liabilities $1.210M $2.100M
YoY Change -42.38% -58.82%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $1.600M
YoY Change -100.0% -42.86%
Other Long-Term Liabilities $1.800M $1.200M
YoY Change 50.0% 300.0%
Total Long-Term Liabilities $1.836M $2.800M
YoY Change -34.43% -9.68%
TOTAL LIABILITIES
Total Short-Term Liabilities $1.210M $2.100M
Total Long-Term Liabilities $1.836M $2.800M
Total Liabilities $3.046M $4.900M
YoY Change -37.84% -40.96%
SHAREHOLDERS EQUITY
Retained Earnings
YoY Change
Common Stock $139.0K
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $1.021M -$900.0K
YoY Change
Total Liabilities & Shareholders Equity $4.067M $4.000M
YoY Change 1.68% 100.0%

Cashflow Statement

Concept 2012 Q1 2011 Q1
OPERATING ACTIVITIES
Net Income -$5.644M -$1.109M
YoY Change 408.93% -44.55%
Depreciation, Depletion And Amortization $10.00K
YoY Change -50.0%
Cash From Operating Activities -$1.215M -$1.517M
YoY Change -19.91% -11.8%
INVESTING ACTIVITIES
Capital Expenditures $5.000K $6.000K
YoY Change -16.67% -130.0%
Acquisitions
YoY Change
Other Investing Activities $0.00 $20.00K
YoY Change -100.0% -99.22%
Cash From Investing Activities -$5.000K $14.00K
YoY Change -135.71% -99.45%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net $348.0K
YoY Change
Cash From Financing Activities 3.652M -345.0K
YoY Change -1158.55% 130.0%
NET CHANGE
Cash From Operating Activities -1.215M -1.517M
Cash From Investing Activities -5.000K 14.00K
Cash From Financing Activities 3.652M -345.0K
Net Change In Cash 2.432M -1.848M
YoY Change -231.6% -367.83%
FREE CASH FLOW
Cash From Operating Activities -$1.215M -$1.517M
Capital Expenditures $5.000K $6.000K
Free Cash Flow -$1.220M -$1.523M
YoY Change -19.89% -10.41%

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CY2012Q1 us-gaap Cost Of Revenue
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31000
CY2012Q1 us-gaap Payments To Acquire Property Plant And Equipment
PaymentsToAcquirePropertyPlantAndEquipment
5000
CY2012Q1 us-gaap Nature Of Operations
NatureOfOperations
<div style="FONT: 10pt Times New Roman, Times, Serif"> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"><b>Note 1&#x2014;General</b></p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <b>&#xA0;</b></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">Vringo, Inc. (a Development Stage Company) (the "Parent") was incorporated in Delaware on January&#xA0;9, 2006 and commenced operations during the first quarter of 2006. The Parent formed a wholly-owned subsidiary, Vringo (Israel) Ltd. (the "Subsidiary") in March 2006, primarily for the purpose of providing research and development services, as detailed in the intercompany service agreement. The Parent and the Subsidiary are collectively referred to herein as the "Company".</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">The Company is engaged in developing software platforms and applications for mobile phones. The Company develops and provides a wide variety of mobile video services, including a comprehensive platform that allows users to create, download and share video ringtones. The Company's proprietary ringtone platform includes social networking capability and integration with web systems.</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">The Company is still in the development stage. There is no certainty regarding the Company's ability to complete the development of its products and ensure the success of its marketing. Thej continuation of the stages of development and the realization of assets related to the planned activities depend on future events, including future financings and achieving operational profitability.</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">The high-tech industry in which the Company operates is highly competitive and is characterized by the risks of rapidly changing technologies. Penetration into global markets requires investment of considerable resources and continuous development efforts. The Company's future success depends upon several factors including the technological quality, price and performance of its product relative to those of its competitors.</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">In June 2010, the Company completed an initial public offering (the "IPO") of 2,392,000 units, each containing one share of common stock and two warrants, at an issue price of $4.60 per unit. Each warrant in the IPO unit is exercisable for five years after the IPO at an exercise price of $5.06. Gross proceeds of the IPO totaled approximately $11 million, of which the Company received approximately $9.3 million in net proceeds after deducting underwriting discounts and other offering costs. Immediately prior to the closing of the offering, the Company's outstanding shares of preferred stock were exchanged for shares of common stock and the Company effected a 1 for 6 reverse stock split of its common stock. The Company issued a stock dividend to holders of the preferred stock prior to the split and exchange. Pursuant to the IPO, all share and per-share information in these consolidated financial statements have been adjusted to give effect to the reverse stock split. On July&#xA0;27, 2010, the units were separated into their components and the shares and warrants began to trade separately. Upon separation of the units into shares and warrants, the units ceased trading.</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">&#xA0;&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">In February 2012, the Company entered into agreements with holders (the &#x201C;Holders&#x201D;) of certain of its outstanding Special Bridge and Conversion Warrants, pursuant to which the Holders exercised warrants to purchase 3,828,993 shares of our common stock for aggregate proceeds of $3.65 million (&#x201C;February 2012 warrant exercise&#x201D;). In addition, certain Holders were granted additional warrants to purchase 2,660,922 shares of common stock of the Company, at an exercise price of $1.76 per share. See also Note 3 and 5.&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">On March 13, 2012, the Company entered into an agreement and Plan of Merger Agreement (&#x201C;Merger Agreement&#x201D;), pursuant to which, once the Merger commences, Innovate/Protect, Inc. (&#x201C;I/P&#x201D;) will merge with and into VIP Merger Sub, Inc., which will be a wholly owned subsidiary of the Company (&#x201C;Merger Sub&#x201D;), with Merger Sub being the surviving corporation through an exchange of capital stock of I/P for capital stock of the Company. The consummation of the Merger Agreement is subject to stockholder approval and other closing conditions. In addition, the Company is exploring further opportunities, including merger and acquisitions and/or additional financing necessary to ensure that the Company will continue to operate as a going concern. There can be no assurance, however, that any such opportunities will materialize. This Merger will be accounted for as a reverse acquisition.</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">Despite the foregoing, there is still significant doubt as to the ability of the Company to continue operating as a "going concern". The Company has incurred significant losses since its inception and expects that it will continue to operate at a net loss in the foreseeable future. For the three month period ended March 31, 2012 and for the cumulative period from inception until March 31, 2012, the Company incurred net losses of $5.6 million and $43.2 million, respectively. The Company believes that its current cash levels will be sufficient to support its activity</font> into the first quarter <font style="BACKGROUND-COLOR: white">of 2013.</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> &#xA0;</p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">These financial statements were prepared using principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business for the foreseeable future, and do not include any adjustments to reflect the possible effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result should the Company not be able to continue as a going concern.</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">&#xA0;</font></p> <p style="TEXT-ALIGN: justify; BACKGROUND-COLOR: white; TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <font style="BACKGROUND-COLOR: white">As of March 31, 2012, approximately $521 thousand of the Company's net assets were located outside of the United States.</font></p> </div>
CY2012Q1 us-gaap Increase Decrease In Operating Assets
IncreaseDecreaseInOperatingAssets
-233000
CY2012Q1 us-gaap Depreciation And Amortization
DepreciationAndAmortization
16000
CY2012Q1 us-gaap Operating Income Loss
OperatingIncomeLoss
-2656000
CY2012Q1 us-gaap Other Nonoperating Income
OtherNonoperatingIncome
13000
CY2012Q1 us-gaap Income Tax Expense Benefit
IncomeTaxExpenseBenefit
20000
CY2012Q1 us-gaap Cash And Cash Equivalents Period Increase Decrease
CashAndCashEquivalentsPeriodIncreaseDecrease
2440000
CY2012Q1 us-gaap Effect Of Exchange Rate On Cash And Cash Equivalents
EffectOfExchangeRateOnCashAndCashEquivalents
8000
CY2012Q1 us-gaap Marketing Expense
MarketingExpense
759000
CY2012Q1 us-gaap Unrealized Gain Loss On Derivatives
UnrealizedGainLossOnDerivatives
-411000
CY2012Q1 us-gaap Increase Decrease In Employee Related Liabilities
IncreaseDecreaseInEmployeeRelatedLiabilities
63000
CY2012Q1 us-gaap General And Administrative Expense
GeneralAndAdministrativeExpense
1460000
CY2012Q1 us-gaap Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
3652000
CY2012Q1 us-gaap Earnings Per Share Basic And Diluted
EarningsPerShareBasicAndDiluted
-0.46
CY2012Q1 vrng Stock Issued During Period Value Stock Warrants Exercised
StockIssuedDuringPeriodValueStockWarrantsExercised
5875000
CY2012Q1 vrng Proceeds From Stock Option And Warrant Excercises
ProceedsFromStockOptionAndWarrantExcercises
3652000
CY2012Q1 vrng Issuance Of Warrants
IssuanceOfWarrants
1091000
CY2012Q1 vrng Weighted Average Number Basic Diluted Shares Outstanding
WeightedAverageNumberBasicDilutedSharesOutstanding
12371472 shares
CY2012Q1 vrng Debt Conversion Decrease In Derivative Instruments
DebtConversionDecreaseInDerivativeInstruments
2223000
CY2012Q1 vrng Issuance Of Preferential Reload Warrants
IssuanceOfPreferentialReloadWarrants
1476000
CY2012Q1 vrng Issuance Of Nonpreferential Reload Warrants
IssuanceOfNonpreferentialReloadWarrants
1091000

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