Clean Diesel Technologies Inc. (CDTI, Financial) filed Quarterly Report for the period ended 2010-09-30.
Clean Diesel Technologies Inc. has a market cap of $6.7 million; its shares were traded at around $0.8159 with and P/S ratio of 5.49.
Our aggregate non-cash charges for the fair value of stock options and warrants in the nine months ended September 30, 2010 were $84,000. This compares to $579,000 in total non-cash stock-based compensation expense in the nine months ended September 30, 2009, of which $569,000 was included in selling, general and administrative expenses and $10,000 in research and development expenses.
Other income (expense) was ($67,000) in the nine months ended September 30, 2010 and is comprised of foreign currency transaction losses, net of gains of ($20,000) and interest expense of ($47,000). The 2009 other income (expense) of $295,000 consists of foreign currency transaction gains, net of losses of $168,000, interest expense of ($57,000), a net gain on investments of $185,000 and ($1,000) all other. In the nine months ended September 30, 2009, the Company had an unrealized gain on the fair value of its investment in ARS of $441,000 and an unrealized loss of ($256,000) on our ARSR, resulting in an $185,000 net gain.
Net cash used for operating activities was $3.1 million in the nine months ended September 30, 2010 and was used primarily to fund the net loss of $3.8 million, adjusted for non-cash items and changes in working capital items. Included in the non-cash items was stock-based compensation expense of $84,000, a provision for doubtful accounts of $23,000 and depreciation and amortization of $140,000.
After adjusting for the provision for doubtful accounts, trade accounts receivable, net increased $73,000 to $198,000 at September 30, 2010 from $148,000 at December 31, 2009 due primarily to increased sales activity. Inventories, net decreased $152,000, reflecting increased product sales in the retrofit-market. Other current assets and other assets decreased $122,000 at September 30, 2010 from the December 31, 2009 levels, principally reflecting collections of other receivables. Our accounts payable, accrued expenses and other liabilities increased at September 30, 2010 compared to December 31, 2009 reflecting increases in accounts payable that were partially offset by decreases in accrued expenses and other liabilities. The decrease in accrued expenses is principally due to the payment and adjustment of severance liabilities.
Our management believes that our current cash and cash equivalents at September 30, 2010 were sufficient to fund our operations for at least the next twelve months on a standalone basis (pre-Merger). However, on October 15, 2010, we completed the Merger with CSI. CSI has suffered recurring losses and negative cash flows from operations since inception, and prior to the Merger, CSIs working capital was severely limited. As of September 30, 2010, CSI had an accumulated deficit of approximately $152 million and a working capital deficit of $6.3 million. As of December 31, 2009, CSI had an accumulated deficit of approximately $149.3 million and a working capital deficit of $4.4 million. As a result, CSIs auditors report for fiscal year 2009 included an explanatory paragraph that expresses substantial doubt about CSIs ability to continue as a going concern. In addition, CSIs principal credit agreement has been in default since March 31, 2009, although a forbearance agreement is in place that expires on January 13, 2011 (that date that is 90 days after the effective date of the Merger). At September 30, 2010, CSIs outstanding balance on the line of credit was $2.6 million with $2.8 million available. Although the Merger and the respective equity capital raises (CSIs $4.0 million aggregate issuance of secured convertible notes, which converted to equity immediately prior to the Merger, and Clean Diesels $1.0 million Regulation S offering of common stock and warrants, which closed immediately prior to the Merger) provided necessary capital to the combined company, we nevertheless will need to replace CSIs credit facility and may require additional capital in order to conduct our operations for any reasonable length of time. If we are not able to replace CSIs credit facility or otherwise recapitalize the combined company, it would have a material adverse effect on our business, operating results, financial condition and long-term prospects
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Clean Diesel Technologies Inc. has a market cap of $6.7 million; its shares were traded at around $0.8159 with and P/S ratio of 5.49.
Highlight of Business Operations:
Other income (expense) was zero in the three months ended September 30, 2010 compared to ($26,000) in the comparable 2009 period. The 2009 other income (expense) is comprised of foreign currency transaction losses, net of gains of ($24,000), interest expense of ($25,000) and gain, net on the fair value of investments of $23,000.Our aggregate non-cash charges for the fair value of stock options and warrants in the nine months ended September 30, 2010 were $84,000. This compares to $579,000 in total non-cash stock-based compensation expense in the nine months ended September 30, 2009, of which $569,000 was included in selling, general and administrative expenses and $10,000 in research and development expenses.
Other income (expense) was ($67,000) in the nine months ended September 30, 2010 and is comprised of foreign currency transaction losses, net of gains of ($20,000) and interest expense of ($47,000). The 2009 other income (expense) of $295,000 consists of foreign currency transaction gains, net of losses of $168,000, interest expense of ($57,000), a net gain on investments of $185,000 and ($1,000) all other. In the nine months ended September 30, 2009, the Company had an unrealized gain on the fair value of its investment in ARS of $441,000 and an unrealized loss of ($256,000) on our ARSR, resulting in an $185,000 net gain.
Net cash used for operating activities was $3.1 million in the nine months ended September 30, 2010 and was used primarily to fund the net loss of $3.8 million, adjusted for non-cash items and changes in working capital items. Included in the non-cash items was stock-based compensation expense of $84,000, a provision for doubtful accounts of $23,000 and depreciation and amortization of $140,000.
After adjusting for the provision for doubtful accounts, trade accounts receivable, net increased $73,000 to $198,000 at September 30, 2010 from $148,000 at December 31, 2009 due primarily to increased sales activity. Inventories, net decreased $152,000, reflecting increased product sales in the retrofit-market. Other current assets and other assets decreased $122,000 at September 30, 2010 from the December 31, 2009 levels, principally reflecting collections of other receivables. Our accounts payable, accrued expenses and other liabilities increased at September 30, 2010 compared to December 31, 2009 reflecting increases in accounts payable that were partially offset by decreases in accrued expenses and other liabilities. The decrease in accrued expenses is principally due to the payment and adjustment of severance liabilities.
Our management believes that our current cash and cash equivalents at September 30, 2010 were sufficient to fund our operations for at least the next twelve months on a standalone basis (pre-Merger). However, on October 15, 2010, we completed the Merger with CSI. CSI has suffered recurring losses and negative cash flows from operations since inception, and prior to the Merger, CSIs working capital was severely limited. As of September 30, 2010, CSI had an accumulated deficit of approximately $152 million and a working capital deficit of $6.3 million. As of December 31, 2009, CSI had an accumulated deficit of approximately $149.3 million and a working capital deficit of $4.4 million. As a result, CSIs auditors report for fiscal year 2009 included an explanatory paragraph that expresses substantial doubt about CSIs ability to continue as a going concern. In addition, CSIs principal credit agreement has been in default since March 31, 2009, although a forbearance agreement is in place that expires on January 13, 2011 (that date that is 90 days after the effective date of the Merger). At September 30, 2010, CSIs outstanding balance on the line of credit was $2.6 million with $2.8 million available. Although the Merger and the respective equity capital raises (CSIs $4.0 million aggregate issuance of secured convertible notes, which converted to equity immediately prior to the Merger, and Clean Diesels $1.0 million Regulation S offering of common stock and warrants, which closed immediately prior to the Merger) provided necessary capital to the combined company, we nevertheless will need to replace CSIs credit facility and may require additional capital in order to conduct our operations for any reasonable length of time. If we are not able to replace CSIs credit facility or otherwise recapitalize the combined company, it would have a material adverse effect on our business, operating results, financial condition and long-term prospects
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