SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
- ------- Exchange Act of 1934
For the quarterly period ended June 30, 1997
or
- ------- 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: 0-28748
CLOSURE MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 56-1959623
- ---------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
5265 Capital Boulevard, Raleigh, North Carolina 27616
(Address of principal executive offices) (Zip Code)
(919) 876-7800
(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 __X__ No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 8, 1997
Common Stock, par value $0.01 per share 13,197,274
<PAGE>
CLOSURE MEDICAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of June 30, 1997 (unaudited) and December 31, 1996............................3
Statement of Operations (unaudited) for the three months ended June 30,
1997 and 1996 and for the six months ended June 30, 1997 and 1996..........................4
Statement of Cash Flows (unaudited) for the six months ended June 30,
1997 and 1996..............................................................................5
Notes to Financial Statements (unaudited)......................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..........................................................................8
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders......................................11
Item 6. Exhibits and Reports on Form 8-K.........................................................11
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Closure Medical Corporation
Balance Sheet
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14,866 $ 13,024
Short-term investments 10,772 4,627
Accounts receivable 87 67
Inventories 129 112
Prepaid expenses 336 388
-------- --------
Total current assets 26,190 18,218
-------- --------
Furniture, fixtures and equipment 1,456 851
Less - accumulated depreciation and amortization (245) (179)
-------- --------
1,211 672
-------- --------
Long-term investments 1,487 409
-------- --------
Intangible assets, net of accumulated amortization 282 213
-------- --------
Total assets $ 29,170 $ 19,512
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 744 $ 566
Accrued expenses 378 396
Deferred revenue 2,054 2,069
Capital lease obligations 36 12
-------- --------
Total current liabilities 3,212 3,043
Capital lease obligations 448 14
-------- --------
Total liabilities 3,660 3,057
-------- --------
Stockholders' Equity:
Preferred Stock, $.01 par value. Authorized 2,000,000 shares; none -- --
issued or outstanding.
Common Stock, $.01 par value. Authorized 35,000,000 shares;
issued and outstanding 13,190,577 shares. 132 122
Additional paid-in capital 45,667 33,579
Accumulated deficit (19,441) (16,246)
Deferred compensation on stock options (848) (1,000)
-------- --------
Total stockholders' equity 25,510 16,455
-------- --------
Total liabilities and stockholders' equity $ 29,170 19,512
======== ========
</TABLE>
3
<PAGE>
Closure Medical Corporation
Statement of Operations
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Product sales $ 140 $ 30 $ 348 $ 193
License and product development revenues -- -- -- 3,500
--------- ------- ------- --------
Total revenues 140 30 348 3,693
--------- ------- ------- --------
Cost of products sold 271 37 422 173
--------- ------- ------- --------
Gross profit and license and product development revenues (131) (7) (74) 3,520
--------- ------- ------- --------
Research, development and regulatory affairs expenses 746 688 1,496 1,339
Selling and administrative expenses 1,220 388 2,282 1,014
Payments to Caratec, L.L.C -- -- -- 288
--------- ------- ------- --------
Total operating expenses 1,966 1,076 3,778 2,641
--------- ------- ------- --------
Income (loss) from operations (2,097) (1,083) (3,852) 879
Interest expense (7) (1) (8) (140)
Investment and interest income 405 41 665 46
--------- ------- ------- --------
Net income (loss) $(1,699) $ (1,043) $(3,195) $ 785
========= ======== ======= ========
Shares used in computation of net income
(loss) per share 13,186 10,150 12,701 10,150
========= ======== ======= ========
Net income (loss) per share $ (0.13) $ (0.10) $ (0.25) $ 0.08
========= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Closure Medical Corporation
Statement of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (3,195) $ 785
Adjustments to reconcile net income (loss) to net cash provided (used) by
operating activities:
Amortization expense 5 5
Depreciation expense 66 25
Amortization of deferred compensation on stock options 152 -
Net loss on disposals of fixed assets 4 12
Change in accounts receivable (20) 251
Change in inventories (17) (22)
Change in prepaid expenses 52 (613)
Change in accounts payable and accrued expenses 160 624
Change in deferred revenue (15) 992
Change in accrued payable to Caratec, L.L.C. - (195)
Change in accrued interest due to Sharpoint
Development Corporation - 138
----------- -----------
Net cash provided (used) by operating activities (2,808) 2,002
----------- -----------
Cash flows from investing activities:
Additions to furniture, fixtures and equipment (609) (117)
Additions to intangible assets (74) (30)
Purchases of investments (18,813) -
Proceeds from the sale of investments 11,590 -
----------- -----------
Net cash used by investing activities (7,906) (147)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable to Sharpoint
Development Corporation - 440
Net proceeds from sale of common stock 12,098 -
Proceeds from capital lease obligation 491 -
Payments under capital lease obligation (33) (6)
----------- -----------
Net cash provided by financing activities 12,556 434
----------- -----------
Increase in cash and cash equivalents 1,842 2,289
Cash and cash equivalents at beginning of period 13,024 20
----------- -----------
Cash and cash equivalents at end of period $ 14,866 $ 2,309
=========== ===========
</TABLE>
Non-Cash Transactions:
On March 29, 1996, notes payable of $10,502 and related accrued interest of $980
was converted to partners' capital.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CLOSURE MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Operations
Closure Medical Corporation ("Closure" or the "Company"), formerly named
Tri-Point Medical Corporation, develops, commercializes and manufactures medical
tissue cohesive products based on its proprietary cyanoacrylate technology
utilized for human and veterinary wound closure. The Company was incorporated in
Delaware on February 20, 1996. From May 10, 1990 to February 29, 1996, the
business of the Company was conducted by Tri-Point Medical L. P. (the
"Partnership"). On March 1, 1996, substantially all of the assets and
liabilities of the Partnership, except for the indebtedness to Sharpoint
Development Corporation ("Sharpoint"), the Partnership's general partner, were
transferred to the Company in exchange for one share of Common Stock. On the
effective date of the Company's initial public offering, September 25, 1996,
obligations of and interests in the Partnership were contributed to the Company
in exchange for an aggregate of 9,600,000 shares of Common Stock.
In April 1997, the Company completed its follow-on public offering. An aggregate
of 1,725,000 shares (including the over-allotment option) were sold at $12.875
per share, of which 1,025,000 shares were sold by the Company and 700,000 shares
were sold by a shareholder, generating net proceeds to the Company of
approximately $12,020,000.
2. Significant Accounting Policies
The significant accounting policies followed by the Company for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. These unaudited financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X, and in management's
opinion, all adjustments of a normal recurring nature necessary for a fair
presentation have been included. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 1996
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996.
The results of operations for the three and six month periods ended June 30,
1997 are not necessarily indicative of the results to be expected for the full
year ending December 31, 1997.
Statement of Financial Accounting Standards No. 128, "Accounting for Earnings
Per Share" ("EPS") ("SFAS 128"), was issued in February 1997. SFAS 128
establishes and simplifies the standards for computing earnings per share
previously found in APB Opinion No. 15, "Earnings Per Share," and makes them
comparable to international EPS standards. SFAS 128 is effective for financial
statements for fiscal years ending after December 15, 1997, including interim
periods. Closure believes that the adoption of SFAS 128 will not have a material
impact on the Company's financial position or results of operations.
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), was issued in June 1997. SFAS 130 establishes standards
for reporting and display of comprehensive income and its components in a full
set of general-purpose financial statements. SFAS 130 is effective for financial
statements for fiscal years beginning after December 31, 1997. The Company
believes that the adoption of SFAS 130 will not have a material impact on the
Company's financial position or results of operations.
3. Taxes
No federal or state income tax provision has been provided for income tax
purposes, as the Company does not expect to have a tax liability for the year
ending December 31, 1997. Additionally, the deferred tax asset that might be
recorded as a result of net operating losses under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," would be offset by
a related valuation allowance because realization of the asset is not likely.
Accordingly, no benefit has been recorded.
6
<PAGE>
Closure Medical Corporation
Notes to Financial Statements
(Unaudited)
4. Inventories
Inventories included the following:
June 30, December 31,
1997 1996
(In thousands)
Packaging $ 31 $ 25
Raw materials 15 23
Work-in-process 33 25
Finished goods 50 39
------------ -------------
$ 129 $ 112
------------ ------------
5. Net Income (loss) Per Share
Net income (loss) per share is computed using the weighted average number of
common and common equivalent shares outstanding during the periods. Common
equivalent shares consist of stock options using the treasury stock method.
Common equivalent shares from stock options are excluded from the computation if
their effect is antidilutive, except that pursuant to the requirements of the
Securities and Exchange Commission, common and common equivalent shares issued
from January 1, 1995 through the effective date of the Company's initial public
offering on September 25, 1996 (see Note 1 above) have been included in the
computation using the treasury stock method as if they were outstanding for all
periods prior to June 30, 1996.
6. Stockholders' Equity
On March 29, 1996, the Partnership's long-term debt and accrued interest held by
Sharpoint was contributed to the Partnership as $11,483,000 of partners'
capital. On September 25, 1996, the effective date of the Company's initial
public offering, obligations of and interests in the Partnership were
contributed to the Company in exchange for an aggregate of 9,600,000 shares of
Common Stock. Included in this exchange was the contribution by Caratec, L.L.C.
("Caratec"), a limited partner of the Partnership, of its right to receive
various payments from the Partnership and its limited partnership interest for
1,776,250 shares of Common Stock. The transaction with Caratec resulted in a
non-cash expense of $14,210,000, which equaled the difference between the value
of Common Stock issued to Caratec and its basis in the Partnership. The
resulting charge to accumulated deficit was offset by a credit to additional
paid-in capital.
7. Contingencies
In March 1997, the Company was served with a complaint filed in the Superior
Court Department of the Trial Court of the Commonwealth of Massachusetts
alleging personal injury as a result of negligence by the Company in the design,
testing and distribution of Avacryl, an n-butyl cyanoacrylate used in a medical
procedure in 1993 as part of a clinical trial conducted by the Company pursuant
to an Investigational Device Exemption. The Company's insurer has assumed the
defense of this lawsuit. The Company has provided certain information in
response to the discovery process. Accordingly, the Company is not yet able to
assess its potential exposure in this case. Based on the limited information
available to it, the Company intends to vigorously defend the lawsuit and
management believes the outcome of this case will not have a material adverse
effect on the Company's financial position or results of operations.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included in Part I--Item 1 of this Form
10-Q and the audited financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended December 31, 1996 contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
This report contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. These forward-looking
statements include statements regarding the Company's development, growth and
expansion plans and the sufficiency of the Company's liquidity and capital. Such
statements are based on management's current expectations and are subject to a
number of uncertainties and risks that could cause actual results to differ
materially from those described in the forward-looking statements. Factors that
may cause such a difference include, but are not limited to, the early stage of
commercialization of the Company's products, the need for regulatory approval
and effects of governmental regulation, technological uncertainties, dependence
on marketing partners and dependence on patents and trade secrets, as well as
those described under "Factors Affecting the Company's Business, Operating
Results and Financial Condition" in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 filed with the Securities and Exchange
Commission.
OVERVIEW
Since its inception in May 1990, the Company has been developing,
commercializing and manufacturing medical tissue cohesive products for use in
wound closure in humans and animals. The Company's products are based on its
proprietary cyanoacrylate technology and a substantial portion of the Company's
historical expenses has consisted of research and development and clinical trial
expenses. Through September 25, 1996, the effective date of the Company's
initial public offering, the Company had funded its operations with cash
borrowed from Sharpoint Development Corporation ("Sharpoint"), sales of
Octyldent(R) and Nexaband(R) products, and license and product development
revenues from marketing partners. On September 30, 1996, the Company completed
its initial public offering, issuing 2,550,000 shares of Common Stock and
generating net proceeds of approximately $17,926,000. On April 2, 1997, the
Company completed its follow-on public offering, issuing 1,025,000 shares of
Common Stock and generating net proceeds of approximately $12,020,000.
The Company has been unprofitable since its inception and has incurred net
losses in each year, including a net loss of approximately $16,814,000 for the
year ended December 31, 1996, or $2,604,000 excluding a one-time non-cash charge
of $14,210,000 (see Note 6 to Notes to Financial Statements in Item 1 of this
Form 10-Q). The Company anticipates that its recurring operating expenses will
increase for the next several years, as it expects its research and development
expenses to increase in order to develop new products and fund additional
clinical trials. The Company also expects to incur additional capital
expenditures to expand its manufacturing capabilities. The Company expects to
continue to incur a loss in 1997 and may incur losses in subsequent years,
although the amount of future net losses and time required by the Company to
reach profitability are highly uncertain. The Company's ability to generate
significant revenue and become profitable will depend on its success in
commercializing Dermabond(TM), the trade name selected by Ethicon, Inc.
("Ethicon") and referred to as TraumaSeal(TM) in previous filings, including the
receipt of all regulatory clearances and approvals, expanding its manufacturing
capabilities, developing new products and entering into additional marketing
agreements and on the ability of its marketing partners to commercialize
successfully products incorporating the Company's technologies. No assurance can
be given that the Company will generate significant revenue or become profitable
on a sustained basis, if at all.
RESULTS OF OPERATIONS
Total revenues were $140,000 for the three months ended June 30, 1997, compared
to $30,000 for the three months ended June 30, 1996. For the six months ended
June 30, 1997, total revenues were
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
$348,000 compared to $3,693,000 for the same period in 1996. Revenues from
product sales for the six months ended June 30, 1997 were $348,000, compared to
$193,000 for the same period in 1996. License and product development revenues
were $0 for the six months ended June 30, 1997, compared to $3,500,000 for the
same period in 1996. In March 1996, the Company received $3,500,000 in license
and product development revenues under the supply and distribution agreement for
Dermabond(TM) entered into with Ethicon. The increase in product sales was
primarily a result of increased sales volume of Octyldent(R).
Cost of products sold were $271,000 for the three months ended June 30, 1997,
compared to $37,000 for the three months ended June 30, 1996, an increase of
632%. Cost of products sold as a percentage of product sales increased to 194%
in the three months ended June 30, 1997, compared to 123% during the same period
of 1996. For the six months ended June 30, 1997, cost of products sold were
$422,000 compared to $173,000 for the same period of 1996. Cost of products sold
as a percentage of product sales increased to 121% in the six months ended June
30, 1997, compared to 90% during the same period of 1996. The increase in cost
of product sold was primarily a result of increased sales volume of
Octyldent(R). The increase in cost of products sold as a percentage of product
sales was primarily a result of the increase in the fixed portion of cost of
products sold as the Company was preparing for the product launch of
Dermabond(TM). Most of this increase was related to additional personnel and
manufacturing process improvements.
Operating expenses were $1,966,000 for the three months ended June 30, 1997,
compared to $1,076,000 for the three months ended June 30, 1996, an increase of
83%. For the six months ended June 30, 1997 and June 30, 1996, operating
expenses were $3,778,000 and $2,641,000, respectively, primarily due to
increased staffing, as well as the additional administrative costs associated
with supporting a public company, such as directors' and officers' liability
insurance, investor relations and amortization of deferred compensation related
to employee and director stock options.
Interest expense was $7,000 for the three months ended June 30, 1997, compared
to $1,000 for the three months ended June 30, 1996. For the six months ended
June 30, 1997 and June 30, 1996, interest expense was $8,000 and $140,000,
respectively. This decrease primarily was a result of the long-term debt,
including accrued interest, of the Partnership held by Sharpoint being
contributed to the Partnership as $11,483,000 of partners' capital as of March
29, 1996. On September 25, 1996, this partners' capital was exchanged for shares
of Common Stock of the Company.
Investment and interest income was $405,000 for the three months ended June 30,
1997, compared to $41,000 for the same period of 1996. For the six months ended
June 30, 1997 and June 30, 1996, investment and interest income was $665,000 and
$46,000, respectively. These increases resulted from interest earned from higher
average cash and investment balances resulting from the Company's receipt of net
proceeds of its initial and follow-on public offerings in September 1996 and
April 1997, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents and short-term investments totaled
$25,638,000 at June 30, 1997, compared to $17,651,000 at December 31, 1996. On
April 2, 1997, the Company completed its follow-on offering of 1,725,000 shares
of Common Stock, of which 1,025,000 shares were sold by the Company generating
net proceeds to the Company of approximately $12,020,000. On September 30, 1996,
the Company completed its initial public offering of 3,000,000 shares of Common
Stock, of which 2,550,000 shares were sold by the Company, generating net
proceeds to the Company of approximately $17,926,000. In March 1996, the Company
received $4,500,000 related to the supply and distribution agreement for
Dermabond(TM) entered into with Ethicon. Since September 1996, Ethicon has
advanced the Company approximately $1,000,000 for direct costs incurred in
connection with clinical studies of Dermabond(TM), which have been classified as
deferred revenue and will be credited against future royalties expected to be
paid by Ethicon.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Cash used by operating activities was $2,808,000 for the six months ended June
30, 1997, compared to cash provided by operating activities of $2,002,000 during
the same period of 1996, primarily due to the receipt of $4,500,000 under the
supply and distribution agreement for Dermabond(TM) in March 1996.
Cash used for investing activities was $7,906,000 and $147,000 for the six
months ended June 30, 1997 and 1996, respectively. For the six months ended June
30, 1997, cash was used to purchase investments, acquire capital equipment and
to obtain and establish patents. During the same period of 1996, cash was used
primarily to acquire capital equipment.
Cash provided by financing activities was $12,556,000 and $434,000 for the six
months ended June 30, 1997 and 1996, respectively. The Company's primary
financing activity during the six months ended June 30, 1997 was the Company's
follow-on offering, on April 2, of 1,725,000 shares of Common Stock, of which
1,025,000 shares were sold by the Company generating net proceeds to the Company
of approximately $12,020,000. During the six months ended June 30, 1996, the
Company's only financing activities were borrowings from Sharpoint. In January
1997, the Company entered into a five-year capital lease covering laboratory and
scientific equipment and computers. Monthly rent obligation under the lease is
equal to 2.19 percent of the total equipment cost outstanding up to $1,500,000.
As of June 30, 1997, the Company had borrowed approximately $491,000 under this
capital lease.
The Company believes that existing cash and cash equivalents and investments,
including the proceeds from its initial public offering and follow-on offering
in April 1997, will be sufficient to finance its capital requirements for at
least 24 months. The Company's future capital requirements, however, will depend
on numerous factors, including (i) the progress of its research and product
development programs, including clinical studies, (ii) the effectiveness of
product commercialization activities and marketing agreements, including the
development and progress of sales and marketing efforts and manufacturing
operations, (iii) the ability of the Company to maintain existing marketing
agreements and establish and maintain new marketing agreements, (iv) the costs
involved in preparing, filing, prosecuting, defending and enforcing intellectual
property rights and complying with regulatory requirements, (v) the effect of
competing technological and market developments and (vi) general economic
conditions. If the Company's currently available funds and internally generated
cash flow are not sufficient to satisfy its financing needs, the Company will be
required to seek additional funding through bank borrowings and additional
public or private sales of its securities, including equity securities, or
through other arrangements with marketing partners. Other than the Company's
equipment financing line of credit, the Company has no credit facility or other
committed sources of capital. There can be no assurance that additional funds,
if required, will be available to the Company on favorable terms, if at all.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Stockholders of the Company (the "Meeting") was held on
June 4, 1997. At the Meeting, the following nominees were re-elected as
directors of the Company to serve until the Annual Meeting of Stockholders of
the Company in 2000 and until their successors shall have been elected and
qualified and received the votes set forth after their names below:
Name of Nominee For Withheld
- ------------------ ---------- --------
Dennis C. Carey 10,889,157 10,675
F. William Schmidt 10,889,357 10,475
In addition, at the Meeting, the stockholders of the Company approved and
adopted the Company's Amended and Restated 1996 Equity Compensation Plan. The
results of the voting on such matter were as follows:
For Against Abstentions or Broker Non-Votes
---------- ------- -------------------------------
10,708,660 114,542 18,845
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11 Computation of pro forma net income (loss) per share
(see Note 4 to Notes to Financial Statements in
Item 1 of this Form 10-Q).
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
11
<PAGE>
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 the
undersigned thereunto duly authorized.
CLOSURE MEDICAL CORPORATION
Date: August 13, 1997 By: \s\ Robert V. Toni
----------------------------------
Robert V. Toni
President and Chief Executive Officer
Date: August 13, 1997 By: \s\ J. Blount Swain
----------------------------------
J. Blount Swain
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
11 Computation of Pro Forma Net Income (Loss) Per Share.
27 Financial Data Schedule.
<PAGE>
Exhibit 11
CLOSURE MEDICAL CORPORATION
COMPUTATION OF PRO FORMA NET INCOME (LOSS) PER SHARE
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding for the period 13,186 9,600 12,701 9,600
Common equivalent shares pursuant to
Staff Accounting Bulletin #83 (1) - 550 - 550
------------ ------------ ------------ -------------
Shares used in computing net income (loss) per share 13,186 10,150 12,701 10,150
============ ============ ============ =============
Net income (loss) $ (1,699) $ (1,043) $ (3,195) $ 785
============ ============ ============ =============
Net income (loss) per share $ (0.13) $ (0.10) $ (0.25) $ 0.08
============ ============ ============ =============
</TABLE>
(1) Issuance of common stock options at prices below the expected public
offering price within 12 months of the effective date of the initial public
offering of Closure Medical Corporation have been included as if they had been
issued as common stock for all periods prior to June 30, 1996.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
CLOSURE MEDICAL CORPORATION FINANCIAL DATA SCHEDULE PER ITEM 601(C) OF
REGULATION S-X
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<CASH> 14,866,293
<SECURITIES> 12,259,449
<RECEIVABLES> 86,625
<ALLOWANCES> 0
<INVENTORY> 129,046
<CURRENT-ASSETS> 26,189,522
<PP&E> 1,455,829
<DEPRECIATION> (244,983)
<TOTAL-ASSETS> 29,170,168
<CURRENT-LIABILITIES> 3,212,475
<BONDS> 0
0
0
<COMMON> 131,906
<OTHER-SE> 25,378,090
<TOTAL-LIABILITY-AND-EQUITY> 29,170,168
<SALES> 347,927
<TOTAL-REVENUES> 347,927
<CGS> 421,974
<TOTAL-COSTS> 421,974
<OTHER-EXPENSES> 3,120,690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,194,737)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,194,737)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,194,737)
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