<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 31, 1998.
[ ] 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 0-28440
CARDIOVASCULAR DYNAMICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 68-0328265
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
13700 Alton Parkway, Suite 160, Irvine, California 92618
(Address of principal executive offices)
Registrant's telephone number, including area code (949) 457-9546
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 [X] No [ ]
On May 5, 1998, the Registrant had outstanding approximately 9,476,000 shares of
Common Stock (including 645,000 treasury shares) of $.001 par value, which is
the Registrant's only class of Common Stock.
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CARDIOVASCULAR DYNAMICS, INC.
Form 10-Q
March 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed consolidated balance sheets at March 31, 1998 and
December 31, 1997 3
Condensed consolidated statements of operations for the three
months ended March 31, 1998 and 1997 4
Condensed consolidated statements of cash flows for the three
months ended March 31, 1998 and 1997 5
Notes to condensed consolidated financial statements 6
Item 2. Management's discussion and analysis of financial condition
and results of operations 9
Part II. Other Information
Items 1 through 6. 14
Signatures 15
Exhibit Index 16
</TABLE>
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CARDIOVASCULAR DYNAMICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 1,849 $ 6,141
Marketable securities available-for-sale 25,801 24,773
Trade accounts receivable, net 2,413 2,752
Other receivables 489 282
Inventories 3,151 3,205
Other current assets 157 163
-------- --------
Total current assets 33,860 37,316
Property and equipment, net 1,483 1,550
Notes receivable from officers 122 273
Goodwill 1,714 1,809
Other assets 237 413
-------- --------
Total Assets $ 37,416 $ 41,361
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,163 $ 1,374
Accrued payroll and related expenses 837 1,162
Other accrued expenses 615 952
-------- --------
Total current liabilities 2,615 3,488
STOCKHOLDERS' EQUITY
Convertible preferred stock, $.001 par value;
7,560,000 shares authorized, no shares issued and
outstanding -- --
Common stock, $.001 par value; 30,000,000 authorized,
9,416,000 shares and 9,389,000 shares outstanding as of
March 31, 1998 and December 31, 1997, respectively 9 9
Additional paid-in capital 60,448 60,371
Deferred compensation (576) (634)
Accumulated deficit (21,795) (19,821)
Treasury stock at cost, 645,000 and 345,000 common shares
as of March 31, 1998 and December 31, 1997, respectively (3,480) (2,205)
Unrealized gains on available-for-sale securities 251 176
Unrealized exchange rate loss (56) (23)
-------- --------
Total stockholders' equity 34,801 37,873
-------- --------
Total Liabilities and Stockholders' Equity $ 37,416 $ 41,361
======== ========
</TABLE>
See accompanying notes
3
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CARDIOVASCULAR DYNAMICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenue:
Sales $ 2,466 $ 3,019
Cost of sales 1,352 1,416
------------ ------------
Gross profit 1,114 1,603
Operating expenses:
Research, development and clinical 1,483 993
Marketing and sales 1,364 1,350
General and administrative 589 443
------------ ------------
Total operating expenses 3,436 2,786
------------ ------------
Loss from operations (2,322) (1,183)
Other income:
Interest income 420 572
Distributorship fees and other income
(expense) (72) 13
------------ ------------
Total other income 348 585
------------ ------------
Net loss ($ 1,974) ($ 598)
============ ============
Basic and diluted net loss per share ($ 0.22) ($ 0.07)
============ ============
Shares used in computing basic and
diluted net loss per share 8,896 9,081
============ ============
</TABLE>
See accompanying notes
4
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CARDIOVASCULAR DYNAMICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($ 1,974) ($ 598)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 202 72
Amortization of deferred compensation 58 31
Bad debt expense 30 12
Changes, net of effects from purchase of Clinitec:
Trade accounts receivable, net 309 (478)
Inventories 54 (1,000)
Other assets (132) (256)
Accounts payable and accrued expenses (906) 50
------------ ------------
Net cash used in operating activities (2,359) (2,167)
Cash flows provided by (used in) investing activities:
Purchase of available-for-sale securities (6,817) (10,884)
Sales of available-for-sale securities 5,864 12,802
Capital expenditures for property and equipment
and other assets (40) (202)
------------ ------------
Net cash provided by (used in) investing activities (993) 1,716
Cash flows provided by (used in) financing activities:
Proceeds from sale of common stock 66 136
Proceeds from exercise of stock options 11 94
Proceeds from repayment of affiliate debt 258 --
Purchase of treasury stock (1,275) --
------------ ------------
Net cash provided by (used in) financing activities (940) 230
------------ ------------
Net decrease in cash and equivalents (4,292) (221)
Cash and equivalents, beginning of period 6,141 17,192
------------ ------------
Cash and equivalents, end of period $ 1,849 $ 16,971
============ ============
</TABLE>
See accompanying notes
5
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CARDIOVASCULAR DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
1. Basis of Presentation
Cardiovascular Dynamics, Inc. and subsidiaries ("CVD" or the "Company") design,
develop, manufacture and market catheters and stents used to treat certain
vascular diseases. The accompanying condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1998 is not necessarily indicative of results that may be
expected for the year ending December 31, 1998. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
2. Net Loss Per Share
As of December 31, 1997, the Company adopted the Financial Accounting Standards
Board Statement No. 128, Earnings per Share. Statement No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share.
3. Inventories
Inventories are stated at the lower of cost, determined on an average cost
basis, or market value. Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- --------------
<S> <C> <C>
Raw materials $ 1,476,000 $ 1,285,000
Work-in-process 379,000 165,000
Finished goods 1,296,000 1,755,000
-------------- --------------
$ 3,151,000 $ 3,205,000
============== ==============
</TABLE>
6
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CARDIOVASCULAR DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Recent Accounting Pronouncements
For the year beginning January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income
("Statement No. 130"). Statement No. 130 establishes standards for reporting and
displaying comprehensive income and its components with the same prominence as
other financial statement information. For the periods ending March 31, 1997 and
1998, the changes in the components of comprehensive income were not materially
different than reported net loss.
For the year beginning January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, which concerns disclosures about
Segments of an Enterprise and Related Information ("Statement No. 131").
Statement No. 131 establishes standards for the way that public business
enterprises report selected information about operating segments in annual and
interim financial statements. However, as the Company operates in one business
segment, no additional interim reporting is required under Statement No. 131.
In March 1998, the AICPA issued SOP 98-1, Accounting for the Costs of Computer
Software Developed for or Obtained for Internal Use. The SOP is effective
beginning January 1, 1999 and requires the capitalization of certain costs
incurred after the date of adoption in connection with developing or obtaining
software for internal use. The Company currently expenses such costs. The
Company anticipates that the impact of the SOP will not be material on its
results of operations or financial position for the forseeable future as amounts
expended to develop or obtain software have not been and are not expected to be
material.
5. Acquisition
In July 1997, the Company acquired its independent distributor in Germany and
Switzerland, Clinitec GmbH ("Clinitec"). In exchange for the assumption of the
assets and liabilities of Clinitec, including bank debt of $0.3 million, the
Company acquired all of the common stock of Clinitec. At the time of the
acquisition, Clinitec had a deficiency in stockholder's equity of approximately
$0.5 million.
7
<PAGE> 8
CARDIOVASCULAR DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Acquisition (continued)
Proforma combined results of the Company and Clinitec for the three month period
ended March 31, 1997 on the basis that the acquisition had taken place at the
beginning of 1997, would have reported the following:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1997
---------------
<S> <C>
Proforma Revenues $ 3,150,000
Proforma Net Loss (877,000)
Proforma Net Loss
Per Share (0.10)
</TABLE>
6. Other Significant Events
In July 1996, the Company and Medtronic, Inc. ("Medtronic") entered into a
written OEM agreement ("Agreement") pursuant to which Medtronic was to purchase
certain angioplasty balloon catheters and related components from the Company.
In May 1997, Medtronic advised the Company of its election to not make minimum
purchases of product for the second year of the Agreement. This dispute
adversely affected the Company's financial results for the quarter ended March
31, 1998.
8
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All statements other than statements of historical fact included in this
Report on Form 10-Q are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Company intends that such forward-looking statements be subject to
the safe harbors created thereby. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable at this
time, it can give no assurance that such expectations will prove to have been
correct. The Company makes no undertaking to correct or update any such
statements in the future. Important factors that could cause actual results to
differ materially from the Company's expectations ("Cautionary Statements") are
set forth in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" as well as in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
Overview
Since its inception in 1992, Cardiovascular Dynamics, Inc. has engaged
primarily in the research and development of products for the treatment of
cardiovascular disease. The Company currently designs, develops, manufacturers
and markets catheters, stents and related products used to treat certain
vascular diseases. The Company's financial results will be affected in the
future by several factors, including the timing of any FDA approval to market
the Company's products, FDA approval of Investigational Device Exemption ("IDE")
clinical sites and the number of patients permitted to be treated, future
changes in government regulations and third party reimbursement policies
applicable to the Company's products, the progress of competing technologies and
the ability of the Company to develop the manufacturing and marketing
capabilities necessary to support commercial sales. As a result of these
factors, revenue levels, gross margins and operating results may fluctuate
significantly from quarter to quarter.
On July 15, 1996, the Company entered into co-distribution agreements
with Medtronic, providing for the co-distribution of the Company's FACT, CAT and
ARC balloon angioplasty catheters. Under the terms of these agreements,
Medtronic was to purchase a minimum number of angioplasty catheters manufactured
by the Company for distribution worldwide for a period of up to three years. The
initial term of the Medtronic agreements was for a period of three years from
the date of first delivery of a product. In May 1997, Medtronic advised the
Company of its election not to make
9
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
minimum purchases of product for the second year of the agreement. In June 1997,
Medtronic informed CVD that it would not fulfill its commitment for the first
year of the agreement and that it did not believe it was required to fulfill
such commitment. This dispute adversely affected the Company's financial results
for the first quarter of 1998.
Results of Operations
First quarter of 1998 compared to the same period in 1997
Sales Revenue. Sales revenue for the first quarter of 1998 decreased 18%
to $2.5 million compared to $3.0 million for the first quarter of 1997. The
decrease resulted primarily from a $1.5 million decrease in sales of the
Company's catheters. This decrease was partially offset by a $0.7 million
increase in sales of the Company's stents and a $0.2 increase in sales of
vascular access products. Revenues for the first quarter in 1997 included $1.0
million in sales of catheters to a large international distributor. Excluding
sales to this former distributor, CVD product revenues from sales through its
direct sales force and distribution network increased 23 percent during the
quarter.
Cost of Sales. Cost of Sales, as a percent to sales revenue, increased
for the first quarter of 1998 to 55% compared to 47% for the same period of
1997. This increase was due primarily to an increase in the Company's provision
for inventory obsolescence.
Research, Development and Clinical. Research, development and clinical
expenses increased by 49% to $1.5 million in the quarter ended March 31, 1998
from $1.0 million in the quarter ended March 31, 1997. The increase was
primarily due to additional spending on development of the Company's line of
peripheral and coronary stent products.
Marketing and Sales. Marketing and sales expenses remained constant at
$1.4 million, for the quarter ended March 31, 1998 compared with same period of
1997. While sales and marketing costs increased internationally for the first
quarter of 1998 compared with the same period of 1997, primarily due to
operational costs of the German sales operation acquired in July of 1997, this
increase was offset by reductions in domestic marketing and sales expenses.
10
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
General and Administrative. General and administrative expenses increased by 33%
to $0.6 million for the quarter ended March 31, 1998 from $0.4 million for the
same quarter in 1997. The increase was due primarily to the addition of
administrative staff and the acquisition of the German sales operation in July
1997.
Other Income. Interest income decreased by 27% to $0.4 million in the
first quarter of 1998 compared with $0.6 million in the same period of 1997. The
decrease was primarily due to the use of funds for operations and for the
purchase of property and equipment and treasury stock, resulting in a reduction
in cash, cash equivalents, and marketable securities of 32% ($13.1 million) from
March 31, 1997 to March 31, 1998.
The Company has experienced operating losses for each of the last four
years and the Company expects to continue to incur operating losses through at
least 1998. There can be no assurance that the Company will ever be able to
achieve or sustain profitability in the future. CVD's results of operations have
varied significantly from quarter to quarter. Quarterly operating results depend
upon several factors, including the timing and amount of expenses associated
with expanding the Company's operations, the conduct of clinical trials and the
timing of regulatory approvals, new product introductions both in the United
States and international markets, the mix between pilot production of new
products and full-scale manufacturing of existing products, the mix between
domestic and export sales, variations in foreign exchange rates, changes in
third-party payors' reimbursement policies and healthcare reform. The Company
does not operate with a significant backlog of customer orders, and therefore
revenues in any quarter are significantly dependent on orders received within
that quarter. In addition, the Company cannot predict ordering rates by
distributors, some of whom place infrequent stocking orders. The Company's
expenses are relatively fixed and difficult to adjust in response to fluctuating
revenues. As a result of these and other factors, the Company expects to
continue to experience significant fluctuations in quarterly operating results,
and there can be no assurance that the Company will be able to achieve or
maintain profitability, once it is achieved, in the future.
Liquidity and Capital Resources
Since inception, the Company has financed its operations primarily
through the sale of its equity securities. Prior to the Company's initial public
offering on June 19, 1996, the Company raised approximately $11.4 million from
the private
11
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
sales of preferred and common stock and $2.7 million in working capital advances
from Endosonics Corporation (CVD's former parent company). The Company repaid
Endosonics Corporation during the third quarter of 1996.
On June 19, 1996, the Company closed its initial public offering which
consisted of the sale of 3,400,000 shares of common stock at $12.00 per share.
On July 17, 1996, the Company's underwriters exercised their over allotment
option to purchase an additional 510,000 shares of common stock at $12.00 per
share. CVD received net offering proceeds from the sale of common stock of
approximately $42.8 million after deducting underwriting discounts and
commissions and other expenses of the offering.
On March 31, 1998, the Company had cash, cash equivalents and marketable
securities available for sale of $27.7 million, compared to $30.1 million at
December 31, 1997, attributable to the operating losses and $1.3 million in
treasury stock purchases. Net cash used in operating activities was $2.4 million
for the first three months of 1998 as compared to $2.2 million for the same
period of 1997. The Company expects to incur substantial costs related to, among
other things, clinical testing, product development, marketing and sales
expenses, and working capital, prior to achieving positive cash flow from
operations. The Company anticipates that its existing capital resources will be
sufficient to fund its operations through 1999. CVD's future capital
requirements will depend on many factors, including its research and development
programs, the scope and results of clinical trials, the regulatory approval
process, the costs involved in intellectual property rights enforcement or
litigation, competitive products, the establishment of manufacturing capacity,
the establishment of sales and marketing capabilities, and the establishment of
collaborative relationships with other parties. The Company may need to raise
additional funds through financings, including private or public equity
offerings and collaborative arrangements with existing or new corporate
partners. There can be no assurance that funds will be raised on favorable
terms, or at all. If adequate funds are not available, the Company may be
required to delay, scale back or eliminate one or more of its development
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to grant rights to certain technologies or
products that the Company would not otherwise grant.
Trade accounts receivable, net, decreased 12% to $2.4 million as of
March 31, 1998, compared with $2.8 million at December 31, 1997. The decrease
stemmed from collection of receivables during the quarter ended March 31, 1998.
12
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (Continued)
Including a $0.2 million provision for inventory obsolescence recorded
during the quarter ended March 31, 1998, the inventories remained constant at
approximately $3.2 million comparing the inventories at the end of the quarters
ended March 31, 1998 and December 31, 1997. Accounts payable decreased 15% to
$1.2 million at March 31, 1998, compared with $1.4 million at the end of 1997,
due primarily to a decrease in purchases of raw materials as existing inventory
levels, including a lower level of purchases, were sufficient to meet production
demands.
Property and equipment, net, decreased 4% from $1.6 million at December
31, 1997 to $1.5 million at March 31, 1998. The decrease was primarily due to
depreciation and amortization which was in excess of additions.
13
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Part II.
OTHER INFORMATION
Items 1 and 3 through 5. Not applicable
Item 2. Changes in Securities and Use of Proceeds
(d) Use of Proceeds
The Company has used approximately $2.7 million of the net proceeds from its
initial public offering on June 19, 1996, SEC file number 333-04560, the IPO for
repayment of certain outstanding indebtedness to Endosonics, Inc., a holder of
in excess of ten percent of the Common Stock of the Company. From the date of
the IPO until March 31, 1998, in the normal course of business, the Company has
paid salaries and bonuses in excess of $0.1 million each to six officers of the
Company and used $6.1 million for working capital. The Company has also used
approximately $1.4 million of the net proceeds for machinery and equipment and
leasehold improvement purchases. In February, 1998, the Company used
approximately $1.3 million to purchase 300,000 shares of the Company's Common
Stock from Endosonics, bringing the total expended since the IPO for treasury
stock purchases to $3.5 million. At March 31, 1998, approximately $27.4 million
was held in temporary investments, of which approximately $5.0 million was
invested in U.S. Treasury debt securities and $22.4 million was invested in
corporate debt securities.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith:
Exhibit 10 Stock Repurchase Agreement with Endosonics, Inc.
Exhibit 11 Statement Regarding the Computation of Net Loss Per Share
Exhibit 27 Financial Data Schedule
- ---------------------
(b) No reports on Form 8-K were filed during the quarter.
14
<PAGE> 15
SIGNATURES
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 undersigned
thereto duly authorized.
CARDIOVASCULAR DYNAMICS, INC.
Date: May 12, 1998 /s/ Michael R. Henson
---------------------
Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 1998 /s/ Stephen R. Kroll
--------------------
Vice President-Finance and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
15
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EXHIBIT INDEX
10 Stock Repurchase Agreement with Endosonics, Inc.
11 Statement Regarding the Computation of Net Loss Per Share
27 Financial Data Schedule
- ---------------
16
<PAGE> 1
EXHIBIT 10
STOCK REPURCHASE AGREEMENT
This Stock Repurchase Agreement ("Agreement") is entered into as of the
10th day of February, 1998, by and between Endosonics, a Delaware corporation,
("Seller") and CardioVascular Dynamics, Inc., a Delaware corporation
("Purchaser").
WHEREAS, Seller owns 300,000 shares of Common Stock of the Purchaser
(the "Shares") and desires to sell the Shares to Purchaser pursuant to the terms
and conditions set forth in this Agreement; and
WHEREAS, Purchaser accepts Seller's offer to sell the Shares pursuant to
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
1. Purchase and Sale of Shares. Purchaser hereby accepts Seller's offer
to sell the Shares at a purchase price of $4.25 per share, for a total purchase
price of $1,275,000 (the "Purchase Price"). Upon execution of this Agreement,
Purchaser shall deliver by wire transfer to an account designated by Seller, the
full Purchase Price. Concurrently therewith, Seller shall deliver certificate(s)
evidencing the Shares, together with stock assignments separate from
certificate, duly executed in blank, affecting the transfer thereof.
2. Representations and Warranties of Seller. Seller hereby represents
and warrants to Purchaser as follows:
2.1 Title. Seller owns the Shares free and clear of all liens,
charges, claims, encumbrances, security interests, equities, restrictions on
transfer or other defects in title of any kind or description. Seller has not
granted any option, warrant, right to purchase or any similar right or interest
in or to the Shares.
2.2 Validity. This agreement is a legal, valid and binding
agreement of Seller enforceable in accordance with its terms.
2.3 Authority No Conflict. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Seller. This Agreement has been duly executed and delivered by Seller.
The execution and delivery by Seller of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement will not, (i)
conflict with, or result in any violation or breach of any provisions of the
Certificate of Incorporation or Bylaws of Seller, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Seller is a party or by which it or
any of its properties or assets may be bound, or (iii) conflict or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Seller or any of its properties or
assets.
-1-
<PAGE> 2
3. Representations and Warranties. Purchaser hereby represents and
warrants to Seller that:
3.1 Validity. This Agreement is a legal, valid and binding
agreement of Purchaser enforceable in accordance with its terms.
3.2 Authority No Conflict. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser. The execution and delivery by Purchaser of this Agreement does not,
and the consummation of the transactions contemplated by this Agreement will
not, (i) conflict with, or result in any violation or breach of any provision of
the Certificate of Incorporation or Bylaws of Purchaser, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or given rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, contract
or other agreement, instrument or obligation to which Purchaser is a party or by
which it or any of its properties or assets may be bound, or (iii) conflict or
violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Purchaser or any of
its properties or assets.
4. Miscellaneous.
4.1 Severability. Should any provision or portion of this
Agreement be held to be unenforceable or invalid for any reason, the remaining
provisions and portions of this Agreement shall be unaffected by such holding.
4.2 No Brokers. Each party represents and warrants to the other
that it has engaged no broker or finder in connection with this transaction and
agrees to indemnify and to hold harmless the other party from any liability for
any commission or compensation in the nature of a brokerage or finder's fee.
4.3 Counterparts: Delivery. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument. This Agreement may be delivered by
facsimile.
4.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understanding, negotiations and discussions,
whether oral or written. No supplements, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such a waiver constitute a continuing waiver unless
otherwise expressly provided.
4.5 Further Assurances. Each party hereto shall, from time to
time at and after the date hereof, execute and deliver such instruments,
documents and assurances and take such further actions as the other party may
reasonably request in order to carry out the purpose and intent of this
Agreement
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER: PURCHASER:
ENDOSONICS CORPORATION CARDIOVASCULAR DYNAMICS, INC.
a Delaware corporation a Delaware corporation
By: /s/ Richard L. Fischer By: /s/ Dana P. Nickell
--------------------------- ---------------------------
Its: Vice President Its: Vice President
-3-
<PAGE> 1
EXHIBIT 11
CARDIOVASCULAR DYNAMICS, INC.
STATEMENT REGARDING THE COMPUTATION OF NET LOSS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------
1998 1997
-------- -------
<S> <C> <C>
Numerator:
Net loss ........................................... ($ 1,974) ($ 598)
-------- -------
Net loss used for basic and diluted loss per share--
loss attributable to common stockholders ......... ($ 1,974) ($ 598)
======== =======
Denominator:
Denominator for basic and diluted loss per share--
weighted average common shares outstanding ....... 8,896 9,081
======== =======
Basic and diluted net loss per share ............... ($ 0.22) ($ 0.07)
======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,849
<SECURITIES> 25,801
<RECEIVABLES> 2,923
<ALLOWANCES> 510
<INVENTORY> 3,151
<CURRENT-ASSETS> 33,860
<PP&E> 2,233
<DEPRECIATION> 750
<TOTAL-ASSETS> 37,416
<CURRENT-LIABILITIES> 2,615
<BONDS> 0
0
0
<COMMON> 9
<OTHER-SE> 34,792
<TOTAL-LIABILITY-AND-EQUITY> 37,416
<SALES> 2,466
<TOTAL-REVENUES> 2,466
<CGS> 1,352
<TOTAL-COSTS> 1,352
<OTHER-EXPENSES> 3,478
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,974)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,974)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,974)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
