x
|
Quarterly
report under Section 13 or 15(d) of the Securities Exchange Act of
1934
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|
For
the quarterly period ended March 31, 2009
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||
o
|
Transition
report under Section 13 or 15(d) of the Exchange
Act
|
HEALTH
DISCOVERY CORPORATION
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||
(Exact name of small business issuer as specified in its charter) |
Georgia
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74-3002154
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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912-443-1987
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||
(Issuer’s
telephone number, including area
code)
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Large
Accelerated Filer o
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Non-Accelerated
Filer o
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||
Accelerated
Filer o
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Smaller
Reporting Company x
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Class
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Outstanding
May 13, 2009
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|
Common
Stock, no par value
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169,522,590
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|
Preferred
Stock Series A, stated value $0.08 per share
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7,437,184
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Preferred
Stock Series B
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3,125,000
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1
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||||
1
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||||
1
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||||
2
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||||
3
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||||
4
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||||
8
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||||
15
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||||
15
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||||
15
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||||
16
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||||
17
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Financial
Statements
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March
31,
2009
(unaudited)
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December
31,
2008
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|||||||
Assets
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||||||||
Current
Assets
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||||||||
Cash
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$ | 310,377 | 325,887 | |||||
Accounts
Receivable, Less Allowance for Doubtful Accounts of $112,500 and
$0
|
— | 112,500 | ||||||
Prepaid
Expenses and Other Assets
|
23,238 | 34,355 | ||||||
Stock
Subscription Receivable
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100,000 | — | ||||||
Total
Current Assets
|
433,615 | 472,742 | ||||||
Equipment,
Less Accumulated Depreciation of $14,347 and $25,947
|
15,914 | 14,888 | ||||||
Other
Assets
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||||||||
Deferred
Charges
|
26,212 | — | ||||||
Patents,
Less Accumulated Amortization of $1,271,373 and $1,205,963
|
2,714,421 | 2,780,101 | ||||||
Total
Assets
|
$ | 3,190,162 | 3,267,731 | |||||
Liabilities and Stockholders’
Equity
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable – Trade
|
$ | 370,164 | 220,972 | |||||
Accrued
Liabilities
|
235,103 | 245,742 | ||||||
Deferred
Revenue
|
50,970 | 57,153 | ||||||
Total
Current Liabilities
|
656,237 | 523,867 | ||||||
Deferred
Revenue – Long Term
|
423,555 | 396,562 | ||||||
Total
Liabilities
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1,079,792 | 920,429 | ||||||
Commitments
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||||||||
Stockholders’
Equity
|
||||||||
Series
A Preferred Stock, Convertible, Stated Value of $0.08 per Share, 7,437,184
Shares Authorized, Issued and Outstanding
|
594,975 | 594,975 | ||||||
Series
B Preferred Stock, Convertible, 13,750,000 Shares Authorized, 3,125,000
Issued and Outstanding
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250,000 | — | ||||||
Common
Stock, No Par Value, 300,000,000 Shares Authorized 169,522,590 Shares
Issued and Outstanding
|
15,815,399 | 15,744,873 | ||||||
Accumulated
Deficit
|
(14,550,004 | ) | (13,992,546 | ) | ||||
Total
Stockholders’ Equity
|
2,110,370 | 2,347,302 | ||||||
Total
Liabilities and Stockholders’ Equity
|
$ | 3,190,162 | 3,267,731 |
Three
Months
Ended
March
31,
2009
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Three
Months
Ended
March
31,
2008
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|||||||
Revenues:
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||||||||
Licensing
|
$ | 16,690 | $ | 15,677 | ||||
Cost of
Revenues:
|
||||||||
Internal
Development
|
3,287 | 3,600 | ||||||
Gross
Profit
|
13,403 | 12,077 | ||||||
Operating
Expenses:
|
||||||||
Amortization
|
65,680 | 65,679 | ||||||
Professional
and Consulting Fees
|
277,554 | 153,850 | ||||||
Compensation
|
167,766 | 197,186 | ||||||
Other
General and Administrative Expenses
|
61,188 | 169,543 | ||||||
Total
Operating Expenses
|
572,188 | 586,258 | ||||||
Loss
From Operations
|
(558,785 | ) | (574,181 | ) | ||||
Other
Income (Expense)
|
||||||||
Interest
Income
|
1,641 | 17,742 | ||||||
Interest
Expense
|
(314 | ) | (312 | ) | ||||
Total
Other Income (Expense)
|
1,327 | 17,430 | ||||||
Net
Loss
|
$ | (557,458 | ) | $ | (556,751 | ) | ||
Weighted
Average Outstanding Shares
|
169,522,590 | 169,007,206 | ||||||
Loss
Per Share
|
$ | (.00 | ) | $ | (.00 | ) |
Three
Months
Ended
March
31, 2009
|
Three
Months
Ended
March
31, 2008
|
|||||||
Cash
Flows From Operating Activities
|
||||||||
Net
Loss
|
$ | (557,458 | ) | $ | (556,751 | ) | ||
Adjustments
to Reconcile Net Loss to Net Cash Used by Operating
Activities:
|
||||||||
Stock-based
Compensation
|
58,340 | 23,169 | ||||||
Services
Exchanged for Warrants
|
38,186 | 105,788 | ||||||
Depreciation
and Amortization
|
67,119 | 66,997 | ||||||
Increase
in Deferred Charges
|
(26,212 | ) | — | |||||
Decrease
in Interest Receivable
|
151 | 251 | ||||||
Increase
(Decrease) in Deferred Revenue
|
133,310 | (15,677 | ) | |||||
Decrease
in Prepaid Expenses and Other Assets
|
10,965 | 6,878 | ||||||
Increase
in Accounts Payable – Trade
|
149,192 | 67,513 | ||||||
Decrease
in Accrued Liabilities
|
(36,638 | ) | (30,766 | ) | ||||
Net
Cash Used by Operating Activities
|
(163,045 | ) | (332,598 | ) | ||||
Cash
Flows From Investing Activities:
|
||||||||
Purchase
of Equipment
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(2,465 | ) | — | |||||
Net
Cash Used by Investing Activities
|
(2,465 | ) | — | |||||
Cash
Flows From Financing Activities:
|
||||||||
Proceeds
from Sales of Preferred B Stock
|
250,000 | — | ||||||
Increase
in Stock Subscriptions Receivable
|
(100,000 | ) | — | |||||
Net
Cash Provided by Financing Activities
|
150,000 | — | ||||||
Net
(Decrease) Increase in Cash
|
(15,510 | ) | (332,598 | ) | ||||
Cash,
at Beginning of Period
|
325,887 | 1,648,439 | ||||||
Cash,
at End of Period
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$ | 310,377 | $ | 1,315,841 | ||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
Paid for Interest
|
$ | 314 | $ | 312 |
Option
and
Warrant
Shares
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding,
January 1, 2008
|
162,599,644 | $ | 0.17 | |||||
Granted
|
8,750,000 | $ | 0.08 | |||||
Exercised
|
— | — | ||||||
Expired
un- exercised
|
(42,572,000 | ) | $ | 0.21 | ||||
Outstanding,
December 31, 2008
|
128,777,644 | $ | 0.16 | |||||
Granted
|
— | — | ||||||
Exercised
|
— | — | ||||||
Expired
un-exercised
|
(2,500,000 | ) | $ | (0.13 | ) | |||
Outstanding,
March 31, 2009
|
126,277,644 | $ | 0.15 |
Exercise
Prices
|
Number
Outstanding
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Weighted-
Average
Remaining
Contractual
Life
(years)
|
Number
Exercisable
|
Weighted
Average
Remaining
Contractual
Life
(years)
of
Exercisable
Warrants
|
|||||||||
$0.08
|
9,300,000
|
|
7.4
|
1,300,000
|
3.2
|
||||||||
$0.10
|
300,000
|
|
0.4
|
300,000
|
0.4
|
||||||||
$0.11
|
500,000
|
|
0.8
|
500,000
|
0.8
|
||||||||
$0.13
|
2,500,000
|
|
2.8
|
2,500,000
|
2.8
|
||||||||
$0.14
|
52,138,822
|
1.4
|
52,138,822
|
1.4
|
|||||||||
$0.16
|
10,000,000
|
0.5
|
10,000,000
|
0.5
|
|||||||||
$0.19
|
51,538,822 |
1.4
|
51,538,822 |
1.4
|
|||||||||
Total
|
126,277,644
|
118,277,644
|
Total
|
1
Year
Or
Less
|
More
than 1 Year
|
||||||||||
Deferred
Compensation
|
$ | 51,500 | $ | 51,500 | $ | — | ||||||
Office
Lease
|
26,115 | 20,892 | 5,223 | |||||||||
Total
|
$ | 77,615 | $ | 72,392 | $ | 5,223 |
Controls
and Procedures.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
Exhibits.
|
10.1
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Amendment
to License Agreement between Health Discovery Corporation and Clarient,
Inc., dated January 13, 2009. Registrant incorporates by reference Exhibit
10.2 to Form 8-K filed February 5, 2009.
|
|
10.2
|
License
Agreement between Health Discovery Corporation and Abbott Molecular Inc.,
dated January 30, 2009. Registrant incorporates by reference Exhibit 10.13
to Form 10-K filed March 31, 2009. **
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10.3
|
License
Agreement between Health Discovery Corporation and Quest Diagnostics
Incorporated, dated January 30, 2009. Registrant incorporates by reference
Exhibit 10.3 to Form 8-K filed February 5, 2009. **
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10.4
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Form
of Securities Purchase Agreement. Registrant incorporates by reference
Exhibit 10.15 to Form 10-K filed March 31, 2009.
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10.5
|
Employment
Agreement between the Company and R. Scott Tobin, dated as of April 15,
2009. Registration incorporates by reference Exhibit 10.1 to Form 8-K
filed May 5, 2009. *
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10.6
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Option
Award to R. Scott Tobin, dated April 29, 2009. Registrant incorporates by
reference Exhibit 10.2 to Form 8-K filed May 5, 2009.*
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|
31.1
|
Rule
13a-14(a)/15(d)-14(a) Certifications of Chief Executive Officer and
Principal Financial Officer.
|
|
32.1
|
Section
1350 Certification of Chief Executive Officer and Principal Financial
Officer.
|
*
|
Management
contract or compensatory plan or arrangement
|
**
|
Portions
of exhibit have been omitted pursuant to a request for confidential
treatment
|
Health
Discovery Corporation
|
||
Registrant
|
||
Date:
May 15, 2009
|
/s/
Stephen D. Barnhill
|
|
Printed
Name: Stephen D. Barnhill M.D.
|
||
Title:
Chief Executive Officer and Principal Financial
Officer
|