UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the quarterly period ended March 31, 201 7 |
|
☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the transition period from ________ to ________. |
|
Commission file number 1-12711
DIGITAL POWER CORPORATION
( Exact name of registrant as specified in its charter )
California | 94-1721931 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
48430 Lakeview Blvd
Fremont, CA 94538-3158
(Address of principal executive offices)
(510) 657-2635
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
|
|
| Accelerated filer ☐ | |||
Non-accelerated filer ☐ |
| (Do not check if a smaller reporting company) |
|
| Smaller reporting company ☑ | ||
Emerging growth company ☐ |
|
|
| ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes ☐ No ☑
At May 15, 2017 the registrant had outstanding 9,216,853 shares of common stock.
DIGITAL POWER CORPORATION
TABLE OF CONTENTS
|
| Page | |
PART I – FINANCIAL INFORMATION |
| ||
|
|
|
|
| Item 1. | Financial Statements | |
|
|
|
|
|
| Condensed Consolidated Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016 | 1-2 |
|
|
|
|
|
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2017 and 2016 (Unaudited) | 3 |
|
|
|
|
|
| Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016 (Unaudited) | 4-5 |
|
|
|
|
|
| Notes to Interim Condensed Consolidated Financial Statements (Unaudited) | 6 - 26 |
|
|
|
|
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 27 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 30 |
| Item 4. | Controls and Procedures | 30 |
|
|
| |
PART II – OTHER INFORMATION | |||
|
|
| |
| Item 1. | Legal Proceedings | 31 |
| Item 1A. | Risk Factors | 31 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
| Item 3. | Defaults Upon Senior Securities | 31 |
| Item 4. | Reserved | 31 |
| Item 5. | Other Information | 31 |
| Item 6. | Exhibits | 32 |
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipates," "expects," "intends," "goals," "plans," "believes," "seeks," "estimates," "continues," "may," "will," "would," "should," "could," and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management's expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this report and our Annual Report on Form 10-K for the year ended December 31, 2016, particularly the "Risk Factors" sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission that disclose risks and uncertainties that may affect our business. The forward-looking statements in this Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of May 16, 2017. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaims any duty, to update such statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
DIGITAL POWER CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
March 31, 2017 (Unaudited) | December 31, 2016 | |||||||
ASSETS: | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 1,138 | $ | 996 | ||||
Accounts receivable, net | 1,030 | 1,439 | ||||||
Inventories, net | 937 | 1,122 | ||||||
Prepaid expenses and other current assets | 272 | 285 | ||||||
Total current assets | 3,377 | 3,842 | ||||||
Property and equipment, net | 543 | 570 | ||||||
Investments - related parties, net of original issue discount of $68 and $45, respectively | 1,653 | 1,036 | ||||||
Other investments | 20 | - | ||||||
Deposits and loans | 112 | 24 | ||||||
TOTAL ASSETS | $ | 5,705 | $ | 5,472 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
DIGITAL POWER CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
U.S. dollars in thousands, except shares and per share data
March 31, 2017 (Unaudited) | December 31, 2016 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 896 | $ | 1,231 | ||||
Accounts payable – related parties | 28 | - | ||||||
Notes payable – related parties | 250 | 250 | ||||||
Notes payable | 220 | - | ||||||
Other current liabilities | 448 | 398 | ||||||
Total current liabilities | 1,842 | 1,879 | ||||||
Convertible notes – related party, net of unamortized issuance discount of $453 and $497, respectively. | 78 | 34 | ||||||
Total liabilities | 1,920 | 1,913 | ||||||
COMMITMENTS: | ||||||||
STOCKHOLDERS' EQUITY: | ||||||||
Preferred Stock – 1,000,000 shares authorized; 25,000 shares issued and outstanding in the following designated issues: | ||||||||
Series A Redeemable Convertible Preferred Stock, no par value – 500,000 shares authorized; nil shares issued and outstanding at March 31, 2017 and December 31, 2016 | - | - | ||||||
Series B Redeemable Convertible Preferred Stock, $10 stated value per share, no par value – 500,000 shares authorized; 25,000 and nil shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively (Liquidation preference of $250 and nil at March 31, 2017 and December 31, 2016, respectively) | ||||||||
Preferred Stock, no par value – 1,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2017 and December 31, 2016. | - | - | ||||||
Common Stock, no par value – 30,000,000 shares authorized; 8,856,853 and 7,677,637 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively. | - | - | ||||||
Additional paid-in-capital | 17,736 | 16,537 | ||||||
Accumulated deficit | (13,152 | ) | (12,158 | ) | ||||
Accumulated other comprehensive loss | (799 | ) | (820 | ) | ||||
Total stockholder's equity | 3,785 | 3,559 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 5,705 | $ | 5,472 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.