<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] 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: 0-28424
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CARDIOGENESIS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0352469
- ------------------------------------ ---------------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
540 OAKMEAD PARKWAY
SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices, including zip code)
(408) 328-8500
(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 [X]
The number of shares of Common Stock outstanding as of July 31, 1996 was
11,935,293.
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CARDIOGENESIS CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Balance Sheets as of June 30, 1996 and December 31, 1995 3
Condensed Statements of Operations for the three months 4
and six months ended June 30, 1996 and 1995
Condensed Statements of Cash Flows for the six months 5
ended June 30, 1996 and 1995
Notes to Condensed Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 7
AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURE 12
INDEX TO EXHIBITS 13
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CARDIOGENESIS CORPORATION
Condensed Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
December 31 June 30
1995 1996
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ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,150 $36,568
Available for sale securities 9,886 27,627
Accounts receivable 870 1,094
Inventories 625 1,224
Other current assets 325 588
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Total current assets 15,856 67,101
Long term assets 367 1,231
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Total assets $16,223 $68,332
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<CAPTION>
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 794 $ 1,773
Deferred revenue 870 265
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Total Liabilities 1,664 2,038
Redeemable convertible preferred stock 22,390 --
Stockholders' (deficit) equity: (7,831) 66,294
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Total liabilities, redeemable convertible preferred stock,
and stockholders' (deficit) equity $16,223 $68,332
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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CARDIOGENESIS CORPORATION
Condensed Statements of Operations
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
1995 1996 1995 1996
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<S> <C> <C> <C> <C>
Sales $ -- $ 1,218 $ -- $ 1,849
Cost of sales -- 888 -- 1,206
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Gross profit -- 330 -- 643
------- ------- ------- -------
Operating expenses
Research and development 712 1,686 1,164 3,261
General and administrative 276 499 519 992
Sales and marketing 71 417 71 720
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Operating expenses 1,059 2,602 1,754 4,973
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Operating loss (1,059) (2,272) (1,754) (4,330)
Interest income 55 389 120 569
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Net loss $(1,004) $(1,883) $(1,634) $(3,761)
======= ======= ======= =======
Net loss per share $ (0.24) $ (0.24) $ (0.39) $ (0.62)
======= ======= ======= =======
Shares used in computing net
loss per share 4,229 7,827 4,229 6,102
======= ======= ======= =======
Proforma net loss per share $ (0.12) $ (0.18) $ (0.19) $ (0.40)
======= ======= ======= =======
Shares used in computing pro forma
net loss per share 8,537 10,286 8,537 9,451
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CARDIOGENESIS CORPORATION
Condensed Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------
1995 1996
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<S> <C> <C>
Cash from operating activities:
Net loss $(1,634) $ (3,761)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 63 78
Amortization of deferred compensation -- 550
Disposal of property and equipment -- 7
Changes in assets and liabilities:
Accounts receivable -- (224)
Inventories -- (599)
Prepaids and other 32 (263)
Accounts payable (12) 58
Accrued expenses -- 790
Accrued compensation 17 131
Deferred revenue -- (605)
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Net cash used in operating activities (1,534) (3,838)
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Cash flows from investing activities:
Purchase of available-for-sale securities (1,251) (77,990)
Maturities of available-for-sale securities 3,753 60,249
Acquisition of property and equipment (376) (965)
Other assets (35) 16
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Net cash used in investing activities 2,091 (18,690)
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Cash flows from financing activities:
Proceeds from issuance of Common Stock, net -- 54,946
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Net cash provided by financing activities -- 54,946
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Not increase in cash and cash equivalents 557 32,418
Cash and cash equivalents, beginning of period 1,802 4,150
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Cash and cash equivalents, end of period $ 2,359 $ 36,568
======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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CARDIOGENESIS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - INTERIM CONDENSED FINANCIAL STATEMENTS
These interim condensed financial statements are unaudited, but have
been prepared in accordance with generally accepted accounting principles for
interim information and with the instructions to Form 10-Q. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of financial position, results of operations
and cash flows at the dates and for the periods presented have been included.
The interim financial information herein is not necessarily indicative of
results for any future period. The interim condensed financial statements should
be read in conjunction with the audited financial statements and the notes
thereto for the fiscal year ended December 31, 1995 included in the Company's
Registration Statement on Form SB-2 (Reg. St. No. 333-3752-LA), declared
effective by the Securities and Exchange Commission on May 21, 1996.
NOTE 2 - INVENTORIES
At December 31, 1995 and June 30, 1996, inventories (in thousands)
consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1995 1996
---------------------------
(unaudited)
<S> <C> <C>
Raw materials $ 73 $ 82
Finished goods 552 1,142
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$625 $1,224
==== ======
</TABLE>
NOTE 3 - INITIAL PUBLIC OFFERING
In May 1996, the Company completed its initial public offering. The
Company sold 3,000,000 shares of Common Stock at a price to the public of $20.00
per share, resulting in net proceeds to the Company (after deducting
underwriting discounts and commissions and offering expenses) of approximately
$54.9 million.
NOTE 4 - NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of
shares of Common Stock outstanding. Common equivalent shares from stock options
and Preferred Stock are excluded from the computation as their effect is
antidilutive, except that, pursuant to the Securities and Exchange Commission
Staff Accounting Bulletins, Common and Common equivalent shares issued at prices
below the public offering price during the 12 months immediately preceding the
effective date have been included in the calculation as if they were outstanding
for all periods presented (using the treasury stock method).
Pro forma net loss per shares has been presented to depict what the net
loss per share would have been had the Common Stock issuable upon the conversion
of all the outstanding Preferred Stock been outstanding during the periods
presented. The pro forma net loss per share data corresponds to the net loss per
share information provided in the Company's July 15, 1996 press announcement of
results for the second quarter ended June 30, 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
This Form 10-Q contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve a number of risks and uncertainties,
including: acceptance of transmyocardial revascularization ("TMR") as a safe and
efficacious treatment for coronary artery disease; results of the Company's
ongoing clinical trials of its intraoperative TMR ("ITMR(R)") System and any
future clinical trials of the Company's TMR Systems; approval by the Food and
Drug Administration ("FDA") of the Company's ITMR System for further clinical
trials and of its thoracoscopic TMR ("TTMR(R)") System and percutaneous
myocardial revascularization ("PMR(R)") System for initial clinical trials; the
ability to respond to rapid and significant technological change; the ability to
comply with regulatory requirements in foreign countries; the ability to obtain
patent protection for its products and processes, to preserve its trade secrets
and proprietary technology and to operate without infringing upon the patents or
proprietary rights of third parties; the ability to compete successfully against
other producers of TMR systems, including PLC Systems, Inc., Eclipse Surgical
Technologies, Inc., and United States Surgical Corporation, and against others
that provide therapies that may treat the medical indications that may be
treatable with TMR; the ability to obtain third-party reimbursement for use of
the Company's TMR System; continuing, timely availability of components used in
the Company's TMR Systems, including the Ho:YAG laser and the ECG monitor; the
ability to retain and attract in the future key scientific, technical,
marketing, sales, managerial and finance personnel; the ability to increase
production of the Company's TMR Systems and to comply with good manufacturing
practices and other manufacturing regulations; the ability to establish a sales
and marketing organization and establish relationships with distributors
internationally; the ability to minimize exposure to product liability risks or
product recalls and the sufficiency of the Company's insurance coverage; and
other factors described throughout this Form 10-Q, and in the Company's
Registration Statement on Form SB-2 (File No. 333-3752-LA) declared effective by
the Securities and Exchange Commission on May 21, 1996, particularly the section
entitled "RISK FACTORS."
The actual results that the Company achieves may differ materially from
any forward-looking statements due to such risks and uncertainties. The Company
has identified by an asterisk (*) various sentences within this Form 10-Q which
contain such forward-looking statements, and words such as "believes",
"anticipates", "expects", "intends" and similar expressions are intended to
identify forward-looking statements, but are not the exclusive means of
identifying such statements. The Company undertakes no obligation to revise any
forward-looking statements in order to reflect events or circumstances that may
arise after the date of this report. Readers are urged to carefully review and
consider the various disclosures made by the Company in this report and in the
Company's other reports filed with the Securities and Exchange Commission that
attempt to advise interested parties of the risks and factors that may affect
the Company's business.
OVERVIEW
Since its inception, CardioGenesis has been primarily engaged in the
design and development of its TMR Systems. The Company has a limited history of
operations and has experienced significant operating losses since inception.
*Operating losses are expected to continue at least through 1997 as the Company
continues to perform research and development, to fund clinical trials in
support of regulatory and reimbursement approvals, and to expand its marketing,
sales, and operational activities.
*The research, manufacture, sale, and distribution of medical devices
such as the Company's TMR Systems are subject to numerous regulations imposed by
governmental authorities, principally the FDA and corresponding state and
foreign agencies. *The regulatory process is lengthy, expensive, and uncertain.
FDA approval of a Pre Market Approval ("PMA") application is required before any
TMR System can be marketed in the United States. *Securing FDA approvals and
clearances will require submission to the FDA of extensive clinical data and
technical information.
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<PAGE> 8
The Company commenced Phase I clinical trials of its ITMR System in
patients with severe coronary artery disease for whom existing therapies cannot
be used ("no option" patients) in October 1995. In July 1996, the Company
received Investigational Device Exemption ("IDE") approval to begin a Phase II
clinical trial using its ITMR System in no option patients. In August 1996, the
Company received authorization from the FDA to begin a Phase II clinical trial
to evaluate the Company's ITMR System as an adjunctive therapy to coronary
artery bypass graft ("CABG") surgery in patients with angina (severe chest pain)
who are only partially treatable by CABG. The Company has not initiated clinical
trials of either its thoracoscopic TMR System or PMR System. *Substantial
additional clinical testing of its TMR Systems is required. *The Company does
not believe it will be able to complete clinical trials of, obtain regulatory
approval for, and begin commercial sales of its TMR Systems in the United States
for several years, if ever.
To date, the Company has shipped and recognized revenue on a limited
number of ITMR Systems for clinical trials, both in Europe and the United
States, and for anticipated commercial use in Europe. The Company recognizes
revenues upon shipment of its products to customers and fulfillment of
acceptance terms, if any, and when no significant contractual obligations remain
outstanding. Deferred revenue consists of shipments made which are subject to
limited rights of return primarily associated with finalizing terms of
definitive distributor agreements.
In July 1996, the Company received the European CE mark approval for
commercialization of its ITMR products, which will enable the Company to begin
marketing its ITMR products in European Union States. The CE mark is awarded to
companies whose products meet the essential requirements of the European Medical
Device Directive and provides the regulatory approval necessary for
commercialization. *The Company anticipates most of its revenues from product
sales over the next several years will be derived from international sales
through distributors, primarily in Europe. *Any such international sales will be
subject to a number of risks, including reimbursement approval, foreign currency
fluctuations, economic or political instability, foreign tax laws, shipping
delays, various tariffs and trade regulations and restrictions and foreign
medical regulations, any of which could have a significant impact on the
Company's ability to deliver products on a competitive and timely basis.
*There can be no assurance that the Company's research and development
efforts will be successful. *Given that clinical testing is at an early stage,
there can be no assurance that any of the Company's TMR Systems will be shown to
be safe or effective. *Accordingly, the Company is unable to predict the
likelihood that its products will be approved for marketing by the FDA or, with
the exception of the existing European CE mark for the Company's ITMR products,
any other foreign government agency, and there can be no assurance that such
approvals will be obtained or that any of the TMR Systems or any other product
development by the Company will be successfully introduced or achieve any
significant degree of market acceptance. *There can be no assurance that the
Company will ever achieve either significant revenues from sales of any of its
TMR Systems or ever achieve or sustain profitability.
*Results of the Company's operations have varied and are expected to
fluctuate significantly from quarter to quarter depending on numerous factors,
including: (1) demand for the Company's products, new product introductions by
the Company or its competitors or transitions to new products; (2) the timing of
orders and shipments; (3) the mix of sales between distributors and the
Company's potential direct sales force; (4) competition, including pricing
pressures; (5) the timing of regulatory and third-party reimbursement approvals;
(6) expansion of the Company's manufacturing capacity and the Company's ability
to manufacture its products efficiently; (7) the timing of research and
development expenses, including clinical trial-related expenditures; and (8)
seasonal factors affecting the number of procedures performed.
RESULTS OF OPERATIONS
Sales. Sales of the Company's ITMR System for use in clinical trials
and commercial use in Europe increased 90% to $1.2 million for the three months
ended June 30, 1996 from $631,000 for the three months ended March 31, 1996. The
increase resulted from the continuing efforts to establish clinical sites at
medical centers and hospitals. Sales were first recognized in the three months
ended March 31, 1996. Thus, no sales were recorded during 1995.
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<PAGE> 9
Cost of Sales. Cost of sales consists of direct and indirect costs of
providing the ITMR System to customers. Cost of sales increased 179% to
$888,000, or 74% of sales, for the three months ended June 30, 1996 from
$318,000, or 50% of sales, for the three months ended March 31, 1996. *The
increase in cost of sales resulted from growth in the Company's manufacturing
and quality departments in preparation for the anticipated commercialization of
the ITMR System in Europe later this year. *The Company's ability to
commercialize its products in Europe is subject to a number of risks, including
the willingness of the medical community to adopt TMR, and TMR's safety and
efficacy as a treatment for coronary artery disease, compliance with regulatory
requirements, and various other factors referenced above.
Research and Development Expenses. Research and development expenses
increased 6% to $1.7 million for the three months ended June 30, 1996 from $1.6
million for the three months ended March 31, 1996, and 139% from $712,000 for
the three months ended June 30, 1995. For the six months ended June 30, 1996,
research and development expenses increased 175% to $3.3 million from $1.2
million for the same period in 1995. These increases were primarily a result of
the Company's Phase I clinical trials of the ITMR System, which were initiated
in late 1995. *The Company expects research and development expenses to
substantially increase in the future as the Company initiates Phase II clinical
trials of its ITMR System in no option patients, initiates the ITMR adjunct to
CABG clinical trial, and as the Company prepares to initiate clinical trials
with the PMR System and TTMR System. *There can be no assurance that the TTMR or
PMR systems will be approved for clinical trials or that any of the Company's
TMR Systems will prove to be safe or effective.
General and Administrative Expenses. General and administrative
expenses increased 1% to $499,000 for the three months ended June 30, 1996 from
$494,000 for the three months ended March 31, 1996, and 81% from $276,000 for
the three months ended June 30, 1995. For the six months ended June 30, 1996,
general and administrative expenses increased 91% to $992,000 from $519,000 for
the same period in 1995. These increases from 1995 in general and administrative
expenses were primarily a result of increased general and administrative
personnel *The Company expects general and administrative expenses to increase
in the future in support of a higher level of operations and to support
obligations from being a public company. *Any such increases are dependent on
the factors discussed above and there can be no assurance that any such
increases will occur.
Sales and Marketing Expenses. Sales and marketing expenses increased
38% to $417,000 for the three months ended June 30, 1996 from $303,000 for the
three months ended March 31, 1996, and 487% from $71,000 for the three months
ended June 30, 1995. For the six months ended June 30, 1996, sales and marketing
expenses increased 914% to $720,000 from $71,000 for the same period in 1995.
These increases from 1995 in sales and marketing expenses were primarily a
result of hiring sales and marketing personnel and expenses incurred for
contractor services. *As the Company prepares for marketing approval in the
United States and prepares for product commercialization internationally,
following regulatory approval in Europe, the Company anticipates the number of
sales and marketing personnel will increase significantly, resulting in higher
sales and marketing expenses. *However, the process of obtaining regulatory
approvals is lengthy, expensive and uncertain, and, as discussed above, such
approval and commercialization processes are subject to various risks.
Interest Income. Interest income increased 116% to $389,000 for the
three months ended June 30, 1996 from $180,000 for the three months ended March
31, 1996, and 607% from $55,000 for the three months ended June 30, 1995. For
the six months ended June 30, 1996, interest income increased 374% to $569,000
from $120,000 for the same period in 1995. The increases in interest income were
primarily due to the completion of the Company's initial public offering
resulting in larger cash, cash equivalents, and available-for-sale securities
balances.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations since inception primarily through
the private and public sale of capital stock and interest income on proceeds
from such financings. Through June 30, 1996, the Company had raised
approximately $76 million, net of issuance costs, through the sale of capital
stock.
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Cash used in the Company's operations was $3.8 million and $1.5 million
for the six months ended June 30, 1996 and 1995, respectively. The increases in
cash used in the Company's operations were primarily a result of higher research
and development, sales and marketing, and administrative activities resulting in
higher net losses, and to increases in accounts receivable and inventories
associated with initial sales of the Company's ITMR Systems. The Company's
capital expenditures were $965,000 and $376,000 for the six months ended June
30, 1996 and 1995, respectively. The increase was primarily due to the costs of
relocating the Company's facility to Sunnyvale, California. *The Company expects
capital expenditures to increase primarily in connection with the anticipated
international commercialization of the ITMR System, discussed above, general
increases in business operations.
At June 30, 1996, the Company had cash, cash equivalents, and
available-for-sale securities of $64.2 million. *The Company plans to finance
its operations and capital needs principally from cash, cash equivalents,
available-for-sale securities, and interest thereon and believes these funds
will be sufficient to fund its operations at least through 1997. *However, the
Company's future liquidity and capital requirements will depend upon numerous
factors, including the progress of the Company's clinical research and product
development programs; the receipt of and the time required to obtain regulatory
clearances and approvals; the resources required to gain reimbursement
approvals; the resources the Company devotes to the development, manufacture and
marketing of its products; the resources required to hire and develop a direct
sales force in the United States, develop a network of distributors
internationally, and to expand manufacturing capacity; facilities requirements;
market acceptance and demand for its products; and other factors. *The timing
and amount of such capital requirements cannot be accurately predicted.
*Consequently, although the Company believes that cash, cash equivalents and
available-for-sale securities will provide adequate funding for its operations
and capital requirements through at least 1997, the Company may be required to
raise additional funds through public or private debt or equity financings,
collaborative relationships, bank facilities or other arrangements. *There can
be no assurance that the Company will not require additional funding sooner or
that such additional funding, if needed, will be available on terms attractive
to the Company, or at all. *Any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants.
RECENT ACCOUNTING PRONOUNCEMENTS
During October 1995, the Financial Accounting Standards Board issued
Statement No. 123 ("SFAS No. 123"), "Accounting of Stock-Based Compensation,"
which establishes a fair value method of accounting for stock-based compensation
plans, and requires additional disclosures for those companies that elect not to
adopt the new method of accounting. The Company has elected not to adopt the new
method of accounting as contained in the statement and will include additional
disclosures in the financial statements for the year ending December 31, 1996.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On two separate occasions in April 1996, CardioGenesis Corporation, a
California corporation and the predecessor of the Company ("CardioGenesis
California"), solicited the written consent of its shareholders to approve the
following matters: (i) a 4.1-for-5 reverse split of CardioGenesis California's
outstanding capital stock; and (ii) certain other changes to the Company's
Articles of Incorporation in anticipation of the Company's initial public
offering, including changes related to the automatic conversion of Preferred
Stock into Common Stock upon the closing of the offering and changes excluding
certain related party mergers from the definition of a liquidation. With respect
to the reverse split, CardioGenesis California received consents from the
holders of 256,476 shares of its outstanding Common Stock (55.8%) and 7,802,467
shares of its outstanding Preferred Stock (74.8%). CardioGenesis California
received no written consent from the holders of the remaining 203,554 shares of
its outstanding Common Stock or 2,633,852 shares of its outstanding Preferred
Stock. With respect to the other changes to the Articles of Incorporation,
CardioGenesis California received consents from the holders of 256,476 shares of
its outstanding Common Stock (55.8%) and 9,870,467 shares of its outstanding
Preferred Stock. CardioGenesis California received no written consent from the
holders of the remaining 203,554 shares of its outstanding Common Stock and
565,852 shares of its outstanding Preferred Stock.
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In May 1996, CardioGenesis California solicited the written consent of
its shareholders to approve the following matters: (iii) the reincorporation of
CardioGenesis California in Delaware, in which CardioGenesis California merged
with and into the Company; (iv) the form of Indemnity Agreement to be entered
into between the Company and each of its officers and directors; (v) the
adoption of the Company's 1996 Equity Incentive Plan and the reservation of
820,000 shares of Common Stock for issuance thereunder; (vi) the adoption of the
Company's 1996 Directors Stock Option Plan and the reservation of 98,400 shares
of Common Stock for issuance thereunder; (vii) the adoption of the Company's
1996 Employee Stock Purchase Plan and the reservation of 123,000 shares of
Common Stock for issuance thereunder; and (viii) the amendment and restatement
of the Company's Certificate of Incorporation, to be effected following the
Company's initial public offering of Common Stock, in order to reduce the number
of shares of Preferred Stock authorized for issuance to 2,000,000 and to
increase the number of authorized shares of Common Stock to 40,000,000.
With respect to matters (iii), (v), (vii) and (viii) above,
CardioGenesis California received consents from the holders of 350,268 shares of
its outstanding Common Stock (76.1%) and 10,411,319 shares of its outstanding
Preferred Stock (99.8%). The holders of 44 shares of Common Stock abstained from
voting on these matters.
With respect to matter (iv) above, CardioGenesis California received
consents from the holders of 350,268 shares of its outstanding Common Stock
(76.1%) and 8,343,319 shares of its outstanding Preferred Stock (79.9%). The
holders of 44 shares of Common Stock and 2,068,000 shares of Preferred Stock
abstained from voting on this matter.
With respect to matter (vi) above, CardioGenesis California received
consents from the holders of 348,084 shares of its outstanding Common Stock
(75.7%) and 10,411,319 shares of its outstanding Preferred Stock (99.8%). The
holders of 2,228 shares of Common Stock abstained from voting on this matter.
With respect to matters (iii) through (viii) submitted for shareholder
approval in May 1996, CardioGenesis California received no written consent from
the holders of the remaining 109,762 shares of its outstanding Common Stock and
25,000 shares of its outstanding Preferred Stock.
In May 1996, the Company solicited the written consent of its then sole
stockholder, CardioGenesis California, to approve the matters set forth in items
(iii) through (viii) above. The Company received the consent from CardioGenesis
California as the holder of 1,000 shares (100%) of the Company's outstanding
Common Stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number Description
- ------ -----------
3.01 Registrant's Restated Certificate of Incorporation
11.01 Statement Regarding Computation of Net Loss Per Share
27.01 Financial Data Schedules
(b) Reports on Form 8-K
none
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARDIOGENESIS CORPORATION
(Registrant)
Date: August 13, 1996 By: /s/ Richard P. Powers
-------------------------------
Richard P. Powers
Chief Financial Officer, Vice
President of Finance and
Administration, and Secretary
(Duly Authorized Officer, Principal
Financial Officer, and Principal
Accounting Officer)
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<PAGE> 13
INDEX TO EXHIBITS
EXHIBIT
- -------
3.01 Registrant's Restated Certificate of Incorporation
11.01 Statement Regarding Computation of Net Loss Per Share
27.01 Financial Data Schedules
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<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF
CARDIOGENESIS CORPORATION
(Originally incorporated on April 11, 1996)
CardioGenesis Corporation, a Delaware corporation, hereby certifies
that the Restated Certificate of Incorporation of the corporation attached
hereto as Exhibit A, which is incorporated herein by this reference, and which
restates, integrates and further amends the provisions of the Certificate of
Incorporation of this corporation, has been duly adopted by the corporation's
Board of Directors and stockholders in accordance with Sections 228, 242 and 245
of the Delaware General Corporation Law.
IN WITNESS WHEREOF, said corporation has caused this Restated
Certificate of Incorporation to be signed by its duly authorized officers this
28th day of May, 1996.
CARDIOGENESIS CORPORATION,
a Delaware corporation
By: /s/ Allen W. Hill
---------------------------------
Allen W. Hill, President
ATTEST:
/s/ Richard P. Powers
- ----------------------------
Richard P. Powers, Secretary
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
CARDIOGENESIS CORPORATION
ARTICLE I
The name of the corporation is CardioGenesis Corporation.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 15 E. North Street, City of Dover, 19901, County of Kent. The name
of its registered agent at that address is Incorporating Services, Ltd.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV
A. Authorization of Shares
The total number of shares of all classes of stock which the corporation
has authority to issue is Forty-two million (42,000,000) shares, consisting of
two classes: Forty Million (40,000,000) shares of Common Stock, $0.001 par value
per share, and Two Million (2,000,000) shares of Preferred Stock, $0.001 par
value per share.
B. Designation of Future Series of Preferred Stock
The Board of Directors is authorized, subject to any limitations
prescribed by the law of the State of Delaware, to provide for the issuance of
the shares of Preferred Stock in one or more series, and, by filing a
certificate of designation pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be included in
each such series, to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof and to increase or decrease the number of shares of any such series (but
not below the number of shares of such series then outstanding). The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the stock of the corporation entitled to vote,
unless a vote of any other holders is required pursuant to a certificate or
certificates establishing a series of Preferred Stock.
Except as expressly provided in any certificate of designation
designating any series of Preferred Stock pursuant to the foregoing provisions
of this Article IV, any new series of Preferred Stock may be designated, fixed
and determined as provided herein by the Board of Directors without approval of
the holders of Common Stock or the holders of Preferred Stock, or any series
thereof, and any such new series may have powers, preferences and rights,
including, without limitation, voting rights, dividend rights, liquidation
rights, redemption rights and conversion rights senior to, junior to or pari
passu with the rights of the Common Stock, the Preferred Stock, or any future
class or series of Preferred Stock or Common Stock.
<PAGE> 3
CardioGenesis Corporation
Restated Certificate of Incorporation
ARTICLE V
The Board of Directors of the corporation shall have the power to adopt,
amend or repeal the Bylaws of the corporation.
ARTICLE VI
Election of directors need not be by written ballot unless the Bylaws of
the corporation shall so provide.
ARTICLE VII
To the fullest extent permitted by law, no director of the corporation
shall be personally liable for monetary damages for breach of fiduciary duty as
a director. Without limiting the effect of the preceding sentence, if the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Neither any amendment nor repeal of this Article VII, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article VII, shall eliminate, reduce or otherwise adversely affect any
limitation on the personal liability of a director of the corporation existing
at the time of such amendment, repeal or adoption of such an inconsistent
provision.
ARTICLE VIII
Actions shall be taken by the Corporation's stockholders only at annual
or special meetings of stockholders, and the Corporation's stockholders shall
not be able to act by written consent.
-3-
<PAGE> 1
EXHIBIT 11.01
CARDIOGENESIS CORPORATION
COMPUTATION OF NET LOSS PER SHARE(1)
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common shares outstanding
for the period -- 3,598 -- 1,873
Common equivalent shares pursuant to Staff
Accounting Bulletin No. 83 4,229 4,229 4,229 4,229
------- ------- ------- -------
Shares used in per share calculation 4,229 7,827 4,229 6,102
======= ======= ======= =======
Net loss $(1,004) $(1,883) $(1,634) $(3,761)
======= ======= ======= =======
Net loss per share $ (0.24) $ (0.24) $ (0.39) $ (0.62)
======= ======= ======= =======
</TABLE>
- ----------
(1) There is no difference between primary and fully diluted net loss per share
for all periods presented.
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001013465
<NAME> CARDIOGENESIS
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 36,568
<SECURITIES> 27,627
<RECEIVABLES> 1,094
<ALLOWANCES> 0
<INVENTORY> 1,224
<CURRENT-ASSETS> 67,101
<PP&E> 1,231
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,332
<CURRENT-LIABILITIES> 2,038
<BONDS> 0
0
0
<COMMON> 66,294
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 68,332
<SALES> 1,849
<TOTAL-REVENUES> 1,849
<CGS> 1,206
<TOTAL-COSTS> 1,206
<OTHER-EXPENSES> 4,973
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (569)
<INCOME-PRETAX> (3,761)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,761)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,761)
<EPS-PRIMARY> (0.62)
<EPS-DILUTED> (0.62)
</TABLE>
