Management had been exploring new business opportunities for the Company and on February 6, 2003, the Company appointed Mark Weinreb as a member of the Board of Directors and as its President and Chief Executive Officer. The Company and Mr. Weinreb had been exploring business plans for the Company that may involve, under the name "Phase III Medical, Inc.", entering the medical sector by acquiring or participating in one or more biotech and/or medical companies or technologies, owning one or more drugs or medical devices that may or may not yet be available to the public, or acquiring rights to one or more of such drugs or medical devices or the royalty streams therefrom. Mr. Weinreb was appointed to finalize and execute the Company's new business plan. The Company will need to recruit management, business development and technical personnel, and develop its business model. Accordingly, it will be necessary for the Company to raise new capital. There can be no assurance that any such business plan developed by the Company will be successful, that the Company will be able to acquire such new business or rights or raise new capital, or that the terms of any transaction will be favorable to the Company.
The Company's "Significant Accounting Policies" are described in Note 2 to the audited consolidated financial statements and notes thereto, included in Item 8 of this report. The Company recognizes revenue from its warranty service contracts ratably over the length of the contracts executed. Additionally, the Company purchased insurance to fully cover any losses under the service contracts from a domestic carrier. The insurance premium expense and other costs related to the sale are amortized ratably over the life of the contracts.
General and administrative expenses totaled $912,000 during the year ended December 31, 2002 as compared to $1,643,000 for fiscal 2001, a decrease of $731,000 or 44.5%. Costs generally were significantly lower as the Company wound down its operations and closed its office facilities in Texas in July 2002. As a result, selling,
general and administrative expenses in fiscal 2002 are not comparable to fiscal 2001 when the Company incurred operating expenses such as advertising and significantly higher payroll costs. One time employee termination and general closure costs totaling approximately $150,000 were incurred in fiscal 2002 and an impairment charge of $55,000 was recorded in June 2002 to adjust property and equipment to its net realizable value.
The Company provided an allowance for the unsecured, un-guaranteed note receivable from StrandTek of $250,000 plus accrued interest of $8,103.
The Company incurred a net loss attributable to common stockholders of $1,208,000 in fiscal 2002. This loss adjusted for non-cash items such as depreciation, provision for note receivable and accrued interest and property and equipment impairment charges $330,000, deferred revenues (net of deferred acquisition costs) ($25,000), sale of marketable securities $1,503,000, preferred stock dividend accrual $48,000 and other non-cash items totaling $10,000, resulted in cash provided by operating activities totaling $1,005,000 for the year ended December 31, 2002, net of working capital movements of $347,000.
This information is submitted in a separate section of this Report. See pages, et. seq.