þ
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
|
|
For the quarterly period
ended March 31, 2009
|
o
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
|
For the transition period
from
to
|
New
York
|
14-1760865
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
Accelerated
filer ¨
|
||||||||
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
|||||||
Page
|
|||||
No.
|
|||||
Part I.
Financial Information
|
3
|
||||
Item
1.
|
Financial
Statements
|
||||
Condensed
Balance Sheets March 31, 2009 (Unaudited) and December 31,
2008
|
3
|
||||
Condensed
Statements of Operations Three months ended March 31, 2009 and 2008
(Unaudited)
|
4
|
||||
Condensed
Statements of Changes in Stockholders’ Deficit Three months ended March
31, 2009 (Unaudited)
|
5
|
||||
Condensed
Statements of Cash Flows Three months ended March 31, 2009 and 2008
(Unaudited)
|
6
|
||||
Notes
to Condensed Financial Statements (Unaudited)
|
7
|
||||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
15
|
|||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
19
|
|||
Item
4T.
|
Controls
and Procedures
|
19
|
|||
Part
II. Other Information
|
19
|
||||
Item
1.
|
Legal
Proceedings
|
19
|
|||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
20
|
|||
Item
3.
|
Default
Upon Senior Securities
|
20
|
|||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
20
|
|||
Item
5.
|
Other
Information
|
20
|
|||
Item
6.
|
Exhibits
|
21
|
|||
Signatures
|
22
|
Dais
Analytic Corporation
|
Condensed
Balance Sheets
|
March
31, 2009
|
December
31,
|
|||||||
(Unaudited)
|
2008
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 11,757 | $ | 26,867 | ||||
Accounts
receivable
|
73,778 | 188,970 | ||||||
Inventory
|
154,411 | 147,128 | ||||||
Loan
costs, net of accumulated amortization
|
- | 1,004 | ||||||
Prepaid
expenses and other current assets
|
44,519 | 31,181 | ||||||
Total
current assets
|
284,465 | 395,150 | ||||||
Property
and equipment, net of accumulated depreciation of $309,510 and $307,286
at March 31, 2009 and December 31, 2008,
respectively
|
24,710 | 26,933 | ||||||
Other
assets:
|
||||||||
Deposits
|
2,280 | 2,280 | ||||||
Patents,
net of accumulated amortization of $98,731 and $96,389 at March 31,
2009 and December 31, 2008, respectively
|
41,787 | 44,129 | ||||||
Total
other assets
|
44,067 | 46,409 | ||||||
$ | 353,242 | $ | 468,492 | |||||
Liabilities and Stockholders’
Deficit
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable, including related party payables of $118,123 and $105,925 at
March 31, 2009 and December 31, 2008, respectively
|
$ | 439,232 | $ | 380,022 | ||||
Accrued
compensation and related benefits, related party
|
1,206,939 | 1,147,389 | ||||||
Current
portion of deferred revenue
|
84,145 | 84,145 | ||||||
Current
portion of notes payable, net of unamortized discount of $0
and $30,137 at March 31, 2009 and December 31, 2008, respectively,
including related party payable of $5,624 and $624 at March 31,
2009 and December 31, 2008, respectively
|
2,280,624 | 2,245,488 | ||||||
Accrued
expenses, other
|
315,644 | 340,115 | ||||||
Total
current liabilities
|
4,326,584 | 4,197,159 | ||||||
Long-term
liabilities:
|
||||||||
Long-term
portion of notes payable, net of unamortized discount of
$6,965
|
- | 675,000 | ||||||
Deferred
revenue, net of current portion
|
272,733 | 293,769 | ||||||
Total
long-term liabilities
|
272,733 | 968,769 | ||||||
Stockholders’
deficit:
|
||||||||
Series
A preferred stock; $.01 par value; 10,000,000 shares authorized; 0 shares
issued and outstanding
|
- | - | ||||||
Common
stock; $.01 par value; 100,000,000 and 50,000,000 shares authorized;
16,739,945 and 12,162,398 shares issued; 16,482,732 and 11,905,185
shares outstanding at March 31, 2009 and December 31, 2008,
respectively
|
167,399 | 121,624 | ||||||
Capital
in excess of par value
|
26,308,318 | 25,253,196 | ||||||
Prepaid
services paid for with common stock
|
(24,125 | ) | (23,375 | ) | ||||
Accumulated
deficit
|
(29,425,555 | ) | (28,776,769 | ) | ||||
Treasury
stock at cost, 257,213
|
(1,272,112 | ) | (1,272,112 | ) | ||||
Total
stockholders’ deficit
|
(4,246,075 | ) | (4,697,436 | ) | ||||
$ | 353,242 | $ | 468,492 |
Dais
Analytic Corporation
|
Condensed
Statements of Operations
|
(Unaudited)
|
Three
Months Ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
Revenue:
|
||||||||
Sales
|
$ | 136,317 | $ | 192,474 | ||||
License fees
|
21,036 | 21,037 | ||||||
157,353 | 213,511 | |||||||
Expenses:
|
||||||||
Cost of goods sold
|
106,600 | 159,933 | ||||||
Selling, general and administrative
|
543,378 | 1,405,749 | ||||||
649,978 | 1,565,682 | |||||||
Loss
from operations
|
(492,625 | ) | (1,352,171 | ) | ||||
Other
expense (income):
|
||||||||
Interest
expense
|
156,197 | 859,220 | ||||||
Interest
income
|
(36 | ) | (10,756 | ) | ||||
156,161 | 848,464 | |||||||
Net
loss
|
$ | (648,786 | ) | $ | (2,200,635 | ) | ||
Net
loss per common share, basic and diluted
|
$ | (0.05 | ) | $ | (0.24 | ) | ||
Weighted
average number of common shares, basic and diluted
|
13,098,367 | 9,174,764 |
Dais
Analytic Corporation
|
Condensed
Statements of Changes in Stockholders’ Deficit
|
For
the Three Months Ended March 31,
2009
|
Series
A
Preferred
Stock
|
Common
Stock
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
in Excess of Par Value
|
Accumulated
Deficit
|
Prepaid
Services
Paid
for with
Common
Stock
|
Treasury
Stock
|
Stockholders’
Deficit
|
||||||||||||||||||||||||||||
Balance,
December 31, 2008
|
- | $ | - | 12,162,398 | $ | 121,624 | $ | 25,253,196 | $ | (28,776,769 | ) | $ | (23,375 | ) | $ | (1,272,112 | ) | $ | (4,697,436 | ) | ||||||||||||||||
Issuance
of common stock for conversion of notes payable and
related accrued interest (unaudited)
|
- | - | 3,739,778 | 37,398 | 710,557 | - | - | - | 747,955 | |||||||||||||||||||||||||||
Issuance
of common stock for services, net of amortization of
$53,875 (unaudited)
|
- | - | 160,846 | 1,608 | 33,372 | - | (750 | ) | - | 34,230 | ||||||||||||||||||||||||||
Stock
compensation expense (unaudited)
|
- | - | - | - | 78,715 | - | - | - | 78,715 | |||||||||||||||||||||||||||
Issuance
of warrants (unaudited)
|
- | - | - | - | 63,247 | - | - | - | 63,247 | |||||||||||||||||||||||||||
Issuance
of common stock and warrants for cash (unaudited)
|
- | - | 676,923 | 6,769 | 169,231 | - | - | - | 176,000 | |||||||||||||||||||||||||||
Net
loss for the three months ended March 31, 2009 (unaudited)
|
- | - | - | - | - | (648,786 | ) | - | - | (648,786 | ) | |||||||||||||||||||||||||
Balance,
March 31, 2009 (unaudited)
|
- | $ | - | 16,739,945 | $ | 167,399 | $ | 26,308,318 | $ | (29,425,555 | ) | $ | (24,125 | ) | $ | (1,272,112 | ) | $ | (4,246,075 | ) |
The
accompanying notes are an integral part of the financial
statements.
|
Dais
Analytic Corporation
|
Condensed
Statements of Cash Flows
|
(Unaudited)
|
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities
|
||||||||
Net
loss
|
$ | (648,786 | ) | $ | (2,200,635 | ) | ||
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
||||||||
Depreciation
and amortization
|
4,565 | 3,517 | ||||||
Amortization
of deferred loan costs
|
1,004 | 23,854 | ||||||
Amortization
of discount on convertible notes
|
144 | 374,506 | ||||||
Amortization
of the beneficial conversion feature on convertible notes
|
29,992 | 329,467 | ||||||
Issuance
of common stock for future services and amortization of common stock
issued for future services
|
34,230 | 3,766 | ||||||
Issuance
of common stock warrants for conversion of notes payable
|
63,247 | 43,111 | ||||||
Stock
compensation expense
|
78,715 | 184,886 | ||||||
Value
of beneficial conversion feature for conversion of notes payable and
related accrued interest
|
- | 21,708 | ||||||
(Increase)
decrease in:
|
||||||||
Accounts
receivable
|
115,192 | (118,447 | ) | |||||
Inventory
|
(7,283 | ) | (44,594 | ) | ||||
Prepaid
expenses and other current assets
|
(13,338 | ) | 13,547 | |||||
Increase
(decrease) in:
|
||||||||
Accounts
payable and accrued expenses
|
107,694 | (39,903 | ) | |||||
Accrued
compensation and related benefits
|
59,550 | 844,644 | ||||||
Deferred
revenue
|
(21,036 | ) | (21,037 | ) | ||||
Net
cash used by operating activities
|
(196,110 | ) | (581,610 | ) | ||||
Financing
activities
|
||||||||
Proceeds
from issuance of notes payable
|
5,000 | 500,000 | ||||||
Proceeds
received from escrow
|
- | 1,000,000 | ||||||
Payments
on notes payable
|
- | (100,000 | ) | |||||
Payments
for loan costs
|
- | (34,000 | ) | |||||
Issuance
of common stock for cash
|
176,000 | - | ||||||
Net
cash provided by financing activities
|
181,000 | 1,366,000 | ||||||
Net (decrease) increase in cash
and cash
equivalents
|
(15,110 | ) | 784,390 | |||||
Cash and cash equivalents,
beginning of period
|
26,867 | 504,232 | ||||||
Cash and cash equivalents, end
of period
|
$ | 11,757 | $ | 1,288,622 | ||||
Cash
paid during the year for interest
|
$ | 73,006 | $ | 15,028 |
Supplemental
disclosures of cash flow information and noncash financing
activities:
|
During
the three months ended March 31, 2009, the Company issued 160,846 shares
of common stock valued at $34,980 for future services.
|
During
the three months ended March 31, 2009, the Company issued 3,739,778 shares
of common stock in conversion of $675,000 of notes payable and $72,955 of
accrued interest.
|
During
the three months ended March 31, 2008, the Company issued 434,164 shares
of common stock in conversion of $100,000 of notes payable and $8,540 of
accrued interest.
|
During
the three months ended March 31, 2008, the Company issued 140,000 shares
of common stock for future services value at
$35,000.
|
The
accompanying notes are an integral part of the financial
statements.
|
Three
Months Ended
March
31, 2009
|
Three
Months Ended
March
31, 2008
|
|||||||
Dividend
rate
|
0 | % | 0 | % | ||||
Risk
free interest rate
|
1.65% – 1.92 | % | 2.64% - 3.45 | % | ||||
Term
|
5 –
10 years
|
5 –
10 years
|
||||||
Volatility
|
92% – 93 | % | 80% – 114 | % |
·
|
Level
1—Quoted prices in active markets for identical assets or
liabilities.
|
·
|
Level
2—Inputs other than quoted prices included within Level 1 that are either
directly or indirectly observable.
|
·
|
Level
3—Unobservable inputs that are supported by little or no market activity,
therefore requiring an entity to develop its own assumptions about the
assumptions that market participants would use in
pricing.
|
Convertible
notes payable; interest at 9%; maturing from
December 2008 to October 2009, collateralized by the
Company’s patents and patent applications
|
$
|
2,275,000
|
||
Note
payable to a related party; non-interest bearing;
due on demand; unsecured
|
5,624
|
|||
Current
portion of notes payable
|
$
|
2,280,624
|
Principal
balance of convertible notes
|
$
|
2,950,000
|
||
Relative
fair value of the warrants
|
(1,566,563
|
)
|
||
Beneficial
conversion feature
|
(1,383,437)
|
|||
Amortization
of the discount
|
1,566,563
|
|||
Amortization
of the beneficial conversion
feature
|
1,383,437
|
|||
Conversion
of notes payable into common stock
|
(675,000)
|
|||
Carrying
value at March 31, 2009
|
$
|
2,275,000
|
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual
Term
in years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Shares
under option at December 31, 2008
|
8,606,556 | $ | 0.27 | |||||||||||||
Granted
|
- | - | ||||||||||||||
Exercised
|
- | - | ||||||||||||||
Forfeited
or expired
|
(16,732 | ) | $ | 5.00 | ||||||||||||
Outstanding
at March 31, 2009
|
8,589,824 | $ | 0.25 | 7.60 | $ | 57,590 | ||||||||||
Exercisable
at March 31, 2009
|
7,471,067 | $ | 0.25 | 6.46 | $ | 53,857 |
Number
of
Options
|
Weighted
Average
Grant
Date
Fair
Value
|
||||||
Nonvested
options - December 31, 2008
|
1,276,563
|
$ |
0.37
|
||||
|
|
||||||
Granted
|
-
|
-
|
|||||
Vested
|
(157,809
|
)
|
$ |
0.30
|
|||
Forfeited
|
-
|
-
|
|||||
Nonvested
options – March 31, 2009
|
1,118,754
|
$ |
0.26
|
Warrants
|
Remaining
Number Outstanding
|
Weighted Average
Remaining
Life
(Years)
|
Weighted Average
Exercise
Price
|
|||||||||
Warrants-Daily
Financing
|
197,055 | 2.74 | $ | 0.55 | ||||||||
Warrants-Additional
Financing
|
428,637 | 3.46 | $ | 0.40 | ||||||||
Warrants-Robb
Trust Note
|
50,000 | 3.20 | $ | 0.55 | ||||||||
Warrants-Financing
|
14,750,000 | 2.08 | $ | 0.25 | ||||||||
Warrants-Placement
Agent Warrants
|
1,792,308 | 3.91 | $ | 0.25 | ||||||||
Warrants-Tangredi
|
3,000,000 | 4.01 | $ | 0.36 | ||||||||
Warrants-Ehrenberg
|
250,000 | 4.35 | $ | 0.30 | ||||||||
Warrants-Note
Conversions
|
1,123,875 | 4.94 | $ | 0.25 | ||||||||
Warrants-Stock
Purchases 2009
|
338,462 | 4.94 | $ | 0.26 | ||||||||
Total
|
21,930,337 |
Three
Months Ended
March
31,
|
||||||||
2009
|
2008
|
|||||||
Revenues
|
$
|
157,354
|
$
|
224,267
|
||||
Percentage
of revenues
|
100.0
|
%
|
100.0
|
%
|
||||
Cost
of goods sold
|
$
|
106,600
|
$
|
159,933
|
||||
Percentage
of revenues
|
67.7
|
%
|
71.3
|
%
|
||||
Selling,
general and administrative expenses
|
$
|
543,378
|
$
|
1,405,749
|
||||
Percentage
of revenues
|
345.3
|
%
|
560.1
|
%
|
||||
Interest
Expense
|
$
|
156,197
|
$
|
859,220
|
||||
Percentage
of revenues
|
99.2
|
%
|
383.1%
|
%
|
||||
Net
loss
|
$
|
(648,786
|
)
|
$
|
(2,200,635
|
)
|
||
Percentage
of revenues
|
(412.3)
|
%
|
(981.3)
|
%
|
|
Three Months
Ended
March
31,
|
|||||||
2009
|
2008
|
|||||||
Cash
flows used in operating activities
|
$
|
(196,110)
|
$
|
(581,610)
|
||||
Cash
flows used in investing activities
|
-
|
-
|
||||||
Cash
flows provided by financing activities
|
181,000
|
1,366,000
|
||||||
Net
(decrease) increase in cash and cash equivalents
|
$
|
(15,110)
|
$
|
784,390
|
No.
|
||
3.1
|
Certificate
of Incorporation of The Dais Corporation filed April 8,
1993*
|
|
3.2
|
Certificate
of Amendment of the Certificate of Incorporation of The Dais Corporation
filed February 21, 1997*
|
|
3.3
|
Certificate
of Amendment of the Certificate of Incorporation of The Dais Corporation
filed June 25, 1998*
|
|
3.4
|
Certificate
of Amendment of the Certificate of Incorporation of Dais Analytic
Corporation filed December 13, 1999*
|
|
3.5
|
Certificate
of Amendment of the Certificate of Incorporation of Dais Analytic
Corporation filed September 26, 2000*
|
|
3.6
|
Certificate
of Amendment of the Certificate of Incorporation of Dais Analytic
Corporation filed September 28, 2000*
|
|
3.7
|
Certificate
of Amendment of the Certificate of Incorporation of Dais Analytic
Corporation filed August 28, 2007*
|
|
3.8
|
Certificate
of Amendment of the Certificate of Incorporation of Dais Analytic
Corporation filed March 20, 2008*
|
|
3.9
|
Bylaws
of The Dais Corporation*
|
|
4.1
|
Form
of Non-Qualified Stock Option Agreement*
|
|
4.2
|
Form
of Non-Qualified Option Agreement*
|
|
4.3
|
Form
of Warrant (Daily Financing)*
|
|
4.4
|
Form
of Warrant (Financing)*
|
|
4.5
|
Form
of Warrant (Robb Trust Note and Additional
Financing)*
|
|
4.6
|
Form
of Placement Agent Warrant (Financing)*
|
|
4.7
|
Form
of 9% Secured Convertible Note (Financing)*
|
|
4.8
|
Form
of Note (Robb Trust Note)*
|
|
4.9
|
Form
of Amendment to Note (Robb Trust Note)*
|
|
4.10
|
Form
of Warrant (Note Conversion)**
|
|
4.11
|
Form
of Warrant (Gostomski and Weston)**
|
|
10.1
|
2000
Equity Compensation Plan*
|
|
10.2
|
Form
of Employee Non-Disclosure and Non-Compete
Agreement*
|
|
10.3
|
Amended
and Restated Employment Agreement between Dais Analytic Corporation and
Timothy N. Tangredi dated July 29, 2008*
|
|
10.4
|
Amended
and Restated Employment Agreement between Dais Analytic Corporation and
Patricia K. Tangredi dated July 29, 2008*
|
|
10.5
|
Commercial
Lease Agreement between Ethos Business Venture LLC and Dais Analytic
Corporation dated March 18, 2005*
|
|
10.6
|
First
Amendment of Lease Agreement between Ethos Business Venture LLC and Dais
Analytic Corporation dated November 15, 2005*
|
|
10.7
|
Form
of Subscription Agreement (Daily Financing)*
|
|
10.8
|
Form
of Subscription Agreement (Financing)*
|
|
10.9
|
Form
of Registration Rights Agreement (Financing)*
|
|
10.10
|
Form
of Secured Patent Agreement (Financing)*
|
|
10.11
|
Placement
Agent Agreement between Dais Analytic Corporation and Legend
Merchant Group, Inc., dated October 5, 2007*
|
|
14.1
|
Code
of Ethics***
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley
Act of 2002
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
*
|
Incorporated
by reference to the exhibits included with the Registration Statement on
Form S-1, File No. 333-152940, as filed August 11,
2008.
|
**
|
Incorporated
by reference to the exhibits included with the Current Report on Form 8-K,
as filed March 13, 2009.
|
***
|
Incorporated
by reference to the exhibits included with the Annual Report on Form 10-K,
as filed March 31, 2009.
|
DAIS
ANALYTIC CORPORATION
(Registrant)
|
||||
/s/
TIMOTHY N. TANGREDI
|
Dated:
May 20, 2009
|
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Timothy
N. Tangredi
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President
and Chief Executive Officer
(Principal
Executive Officer)
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/s/
HAROLD MANDELBAUM
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Dated: May
20, 2009
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Harold
Mandelbaum
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Chief
Financial Officer
(Principal
Financial and Accounting Officer)
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