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þ
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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Delaware
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58-2044990
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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o Large
accelerated filer
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o Accelerated
filer
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o Non-accelerated
filer
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þ Smaller
reporting company
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Page No.
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PART
I FINANCIAL INFORMATION
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|
Item
1. Unaudited Condensed
Consolidated Financial Statements:
|
|
Balance
Sheets as of December 31, 2007 and March 31, 2008
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1
|
Statements
of Operations for the Three Months Ended March 31, 2007 and
2008
|
2
|
Statement
of Stockholders’ Equity for the Three Months Ended March 31,
2008
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3
|
Statements
of Cash Flows for the Three Months Ended March 31, 2007 and
2008
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4
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Notes
to Condensed Consolidated Financial Statements
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5
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Item
2. Management’s Discussion
and Analysis of Financial Condition and Results of
Operations
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14
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Item
3. Quantitative and
Qualitative Disclosures About Market Risk
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17
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Item
4. Controls and
Procedures
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17
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PART
II OTHER INFORMATION
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|
Item
6. Exhibits
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18
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SIGNATURES
|
19
|
(audited)
December 31,
2007
|
(unaudited)
March 31,
2008
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
668
|
$
|
8,601
|
|||
Accounts
receivable, net
|
1,099
|
1,437
|
|||||
Inventory
|
845
|
1,042
|
|||||
Prepaid
expenses and other current assets
|
489
|
810
|
|||||
Total
current assets
|
3,101
|
11,890
|
|||||
Property
and equipment, net
|
5,465
|
6,723
|
|||||
Identifiable
intangible assets, net
|
3,853
|
2,542
|
|||||
Deposits
and other assets
|
521
|
264
|
|||||
TOTAL
ASSETS
|
$
|
12,940
|
$
|
21,419
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
2,040
|
$
|
2,152
|
|||
Accrued
liabilities
|
780
|
546
|
|||||
Current
portion of notes payable,
|
1,474
|
1,091
|
|||||
Current
portion of capital lease obligations
|
463
|
683
|
|||||
Total
current liabilities
|
4,757
|
4,472
|
|||||
Deferred
rent
|
52
|
52
|
|||||
Notes
payable, net of current portion
|
1,044
|
1,364
|
|||||
Capital
lease obligations, net of current portion
|
440
|
1,001
|
|||||
TOTAL
LIABILITIES
|
6,293
|
6,889
|
|||||
Commitments
and Contingencies (see Note 7)
|
|||||||
Shareholders’
equity:
|
|||||||
Preferred
Stock - $0.001 par value per share, 10,000,000 shares authorized,
no
shares issued and outstanding
|
-
|
-
|
|||||
Common
stock and additional paid-in capital - $0.001 par value per share,
500,000,000 shares authorized, 27,758,326 and 36,329,755 shares issued
and
outstanding
|
33,215
|
43,944
|
|||||
Accumulated
deficit
|
(26,568
|
)
|
(29,414
|
)
|
|||
TOTAL
SHAREHOLDERS’ EQUITY
|
6,647
|
14,530
|
|||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
12,940
|
$
|
21,419
|
Three Months Ended
March 31,
|
|||||||
|
|
2007
|
2008
|
||||
Sales
|
$
|
3,618
|
$
|
5,175
|
|||
Cost
of sales
|
1,842
|
1,981
|
|||||
Gross
profit
|
1,776
|
3,194
|
|||||
Operating
expenses
|
3,462
|
4,205
|
|||||
Depreciation
and amortization
|
434
|
1,770
|
|||||
Total
operating expenses
|
3,896
|
5,975
|
|||||
Loss
from operations
|
(2,120
|
)
|
(2,781
|
)
|
|||
Interest
income (expense), net
|
(347
|
)
|
(65
|
)
|
|||
Loss
before income taxes
|
(2,467
|
)
|
(2,846
|
)
|
|||
Income
taxes
|
-
|
-
|
|||||
Net
loss
|
$
|
(2,467
|
)
|
$
|
(2,846
|
)
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|
Basic
and diluted net loss per share
|
$
|
(0.21
|
)
|
$
|
(0.09
|
)
|
|
Weighted
average shares outstanding
|
12,022
|
31,479
|
Common
Stock
|
|
|
|||||||||||
and
Additional
|
|
Total
|
|||||||||||
Paid
In Capital
|
Accumulated
|
Stockholders’
|
|||||||||||
Shares
|
Amount
|
Deficit
|
Equity
|
||||||||||
Balance
at December 31, 2007
|
27,758,326
|
$
|
33,215
|
$
|
(26,568
|
)
|
$
|
6,647
|
|||||
Issuance
of common shares and warrants for cash
|
8,571,429
|
12,000
|
-
|
12,000
|
|||||||||
Stock
issue costs
|
-
|
(1,386
|
)
|
-
|
(1,386
|
)
|
|||||||
Share
based compensation
|
-
|
115
|
-
|
115
|
|||||||||
Net
loss
|
-
|
-
|
(2,846
|
)
|
(2,846
|
)
|
|||||||
Balance
at March 31, 2008
|
36,329,755
|
$
|
43,944
|
$
|
(29,414
|
)
|
$
|
14,530
|
Three Months Ended
March 31,
|
|||||||
|
2007
|
2008
|
|||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(2,467
|
)
|
$
|
(2,846
|
)
|
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
|||||||
Depreciation
and amortization
|
434
|
1,771
|
|||||
Share-based
compensation cost
|
19
|
115
|
|||||
Amortization
of debt issue costs and debt discount included in interest
expense
|
232
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(210
|
)
|
(338
|
)
|
|||
Inventory
|
(91
|
)
|
(197
|
)
|
|||
Prepaid
expenses and other current assets
|
(420
|
)
|
(321
|
)
|
|||
Accounts
payable
|
(251
|
)
|
(38
|
)
|
|||
Accrued
liabilities
|
203
|
(234
|
)
|
||||
Other
|
(72
|
)
|
(19
|
)
|
|||
Net
cash used by operating activities
|
(2,623
|
)
|
(2,107
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Purchases
of property, equipment and other assets
|
(494
|
)
|
(605
|
)
|
|||
Purchase
of intangible assets
|
(580
|
)
|
-
|
||||
Net
cash used in investing activities
|
(1,074
|
)
|
(605
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Principal
payments on notes payables
|
(347
|
)
|
(63
|
)
|
|||
Principal
payments on capital lease obligations
|
(39
|
)
|
(186
|
)
|
|||
Proceeds
from sale of common stock, net of issue costs
|
6,002
|
10,894
|
|||||
Net
cash provided by financing activities
|
5,616
|
10,645
|
|||||
Net
increase in cash and cash equivalents
|
1,919
|
7,933
|
|||||
Cash
and cash equivalents
|
|||||||
Beginning
of period
|
865
|
668
|
|||||
End
of period
|
$
|
2,784
|
$
|
8,601
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid for interest
|
$
|
66
|
$
|
74
|
|||
Cash
paid for income taxes
|
-
|
-
|
|||||
Non-cash
investing and financing activities:
|
|||||||
Fixed
assets acquired though capital lease
|
$
|
-
|
$
|
967
|
|||
Fixed
assets purchased though accounts payable
|
$
|
-
|
$
|
150
|
Inventories
consist of the following (in thousands):
|
December
31,
2007
|
March
31,
2008
|
|||||
Food
and beverages
|
$
|
820
|
$
|
1,014
|
|||
Paper
products
|
25
|
28
|
|||||
Total
inventories
|
$
|
845
|
$
|
1,042
|
Property
and equipment consists of the following (in thousands):
|
December
31,
2007
|
March
31,
2008
|
|||||
Leasehold
improvements
|
$
|
2,389
|
$
|
2,933
|
|||
Furniture,
fixtures and equipment
|
3,878
|
4,090
|
|||||
Vehicles
|
1,156
|
1,156
|
|||||
Leased
equipment
|
686
|
1,648
|
|||||
8,109
|
9,827
|
||||||
Less
accumulated depreciation and amortization
|
2,644
|
3,104
|
|||||
Total
property and equipment, net
|
$
|
5,465
|
$
|
6,723
|
Identifiable
intangible assets consist of the following (in thousands):
|
December
31,
2007
|
March
31,
2008
|
|||||
Customer
based intangible assets
|
$
|
6,303
|
$
|
6,303
|
|||
Non-compete
intangible assets
|
589
|
589
|
|||||
6,892
|
6,892
|
||||||
Less
accumulated amortization
|
(3,039
|
)
|
(4,350
|
)
|
|||
Total
identifiable intangible assets, net
|
$
|
3,853
|
$
|
2,542
|
Notes
payable consist of the following (in thousands):
|
December
31,
2007
|
March
31,
2008
|
|||||
Notes
payable, 6% to 25% interest collateralized by vehicles and
equipment
|
$
|
141
|
$
|
103
|
|||
Convertible
note payable, 8.25% interest, collateralized by substantially all
assets
|
759
|
759
|
|||||
Notes
payable, 7.75% interest, collateralized by certain assets, due
April
2010
|
418
|
418
|
|||||
Note
payable, 9.25% interest, due March 2009
|
97
|
78
|
|||||
Note
payable, 8.0% interest, due October 2009
|
54
|
47
|
|||||
Notes
payable, 18% interest, due May 2008
|
500
|
500
|
|||||
Notes
payable, 10.5% interest, due December 2009
|
549
|
550
|
|||||
Total
notes payable
|
2,518
|
2,455
|
|||||
Less:
current portion of notes payable
|
(1,474
|
)
|
(1,091
|
)
|
|||
Notes
payable, net of current portion
|
$
|
1,044
|
$
|
1,364
|
One
year (4/2008 – 3/2009)
|
$
|
1,091
|
||
Two
years (4/2009 – 3/2010)
|
1,238
|
|||
Three
years (4/2010 – 3/2011)
|
126
|
|||
Total
|
$
|
2,455
|
Exercise
Price
|
Number of warrants
|
||||
$
1.38
|
66,629
|
||||
1.68
|
|
2,151,986
|
|||
2.12
|
2,229,430
|
2.50
|
7,938,563
|
||||
12,386,608
|
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding
at December 31, 2007
|
3,050,938
|
$
|
1.50
|
||||||||||
Grants
|
2,076,000
|
||||||||||||
Cancellations
|
(212,000
|
)
|
3.08
|
||||||||||
Outstanding
at March 31, 2008
|
4,914,938
|
$
|
1.38
|
9.3
years
|
$
|
483,000
|
|||||||
Exercisable
at March 31, 2008
|
834,502
|
$
|
0.90
|
8.6
years
|
$
|
357,000
|
|||||||
Available
for grant at March 31, 2008
|
430,024
|
Outstanding Options
|
Exercisable Options
|
|||||||||||||||
Range of
Exercise Prices
Per Share
|
Number
Outstanding
|
Weighted
Average
Remaining
Life (Years)
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||||||||
$
0.17
|
335,298
|
7.9
|
$
|
0.17
|
282,058
|
$
|
0.17
|
|||||||||
$
0.34
|
132,584
|
8.3
|
$
|
0.34
|
58,005
|
$
|
0.34
|
|||||||||
$
1.37 - $ 1.38
|
2,712,674
|
9.5
|
$
|
1.38
|
363,614
|
$
|
1.38
|
|||||||||
$
1.40 - $ 1.48
|
979,781
|
9.7
|
$
|
1.43
|
130,825
|
$
|
1.41
|
|||||||||
$
1.60 - $ 1.92
|
293,000
|
9.5
|
$
|
1.82
|
-
|
$
|
-
|
|||||||||
$
2.23
|
461,601
|
9.1
|
$
|
2.23
|
-
|
$
|
-
|
|||||||||
$
0.17 - $ 2.23
|
4,914,938
|
9.3
|
$
|
1.38
|
834,502
|
$
|
0.90
|
Operating
Leases
|
Capital
Leases
|
Total
|
||||||||
1
year (April 2008 – March 2009)
|
$
|
1,459
|
$
|
841
|
$
|
2,300
|
||||
2
years (April 2009 – March 2010)
|
1,183
|
568
|
1,751
|
|||||||
3
years (April 2010 – March 2011)
|
1,096
|
476
|
1,572
|
|||||||
4
years (April 2011 – March 2012)
|
917
|
85
|
1,002
|
|||||||
5
years and thereafter (April 2012 and beyond)
|
2,239
|
12
|
2,251
|
|||||||
6,894
|
1,982
|
8,876
|
||||||||
Less
amounts representing interest
|
-
|
(298
|
)
|
(298
|
)
|
|||||
Total
lease obligations
|
$
|
6,894
|
$
|
1,684
|
$
|
8,578
|
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 and Chief Financial Officer under Section
906
of the Sarbanes-Oxley Act of 2002
|
ORGANIC
TO GO FOOD CORPORATION
|
|
Dated: May
15, 2008
|
/s/
Michael Gats
|
Michael
Gats, Chief Financial Officer
|
|
(Principal
Financial and Accounting Officer)
|