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, 1998
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)
5250 Greens Dairy Road, 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 3, 1998
----- ------------------------------
Common Stock, par value $0.01 per share 13,277,978
<PAGE>
CLOSURE MEDICAL CORPORATION
INDEX
<TABLE>
<CAPTION>
<S> <C>
Page Number
-----------
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of June 30, 1998 (unaudited) and December 31, 1997..................................3
Statement of Operations (unaudited) for the three months ended June 30,
1998 and 1997 and for the six months ended June 30, 1998 and 1997.................................4
Statement of Cash Flows (unaudited) for the six months ended June 30,
1998 and 1997.....................................................................................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 2. Changes in Securities and Use of Proceeds......................................................11
Item 4. Submission of Matters to a Vote of Security Holders............................................12
Item 6. Exhibits and Reports on Form 8-K...............................................................12
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Closure Medical Corporation
Balance Sheet
(In thousands, except per share data)
<TABLE>
<S> <C>
June 30, December 31,
1998 1997
---- ----
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 3,260 $ 7,277
Short-term investments 10,429 14,417
Accounts receivable 858 1,226
Inventories 595 347
Prepaid expenses 294 367
---------- ----------
Total current assets 15,436 23,634
Furniture, fixtures and equipment, net 6,376 3,694
Restricted investments 1,560 1,517
Long-term investments 3,448 1,298
Intangible assets, net 435 276
---------- ----------
Total assets $ 27,255 $ 30,419
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 826 $ 478
Accrued expenses 1,368 2,598
Deferred revenue 2,346 2,019
Capital lease obligations 44 155
Current portion of long-term debt 350 350
---------- -----------
Total current liabilities 4,934 5,600
Capital lease obligations 1,250 1,250
Long-term debt less current portion 2,600 1,150
---------- -----------
Total liabilities 8,784 8,000
---------- -----------
Stockholders' Equity:
Preferred Stock, $.01 par value. Authorized 2,000 shares; none - -
issued or outstanding
Common Stock, $.01 par value. Authorized 35,000 shares;
issued and outstanding 13,273 and 13,242 shares, respectively 133 132
Additional paid-in capital 46,234 46,058
Accumulated deficit (27,351) (23,075)
Deferred compensation on stock options (545) (696)
---------- -----------
Total stockholders' equity 18,471 22,419
---------- -----------
Total liabilities and stockholders' equity $ 27,255 $ 30,419
========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
Closure Medical Corporation
Statement of Operations
(unaudited)
(In thousands, except per share data)
<TABLE>
<S> <C>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
Product sales $ 1,342 $ 140 $ 2,112 $ 348
Cost of products sold 850 271 1,384 422
-------- -------- -------- -------
Gross profit 492 (131) 728 (74)
-------- -------- -------- -------
Research, development and regulatory affairs expenses 1,550 746 2,908 1,496
Selling and administrative expenses 1,450 1,220 2,550 2,282
-------- -------- -------- -------
Total operating expenses 3,000 1,966 5,458 3,778
-------- -------- -------- -------
Loss from operations (2,508) (2,097) (4,730) (3,852)
Interest expense (103) (7) (191) (8)
Investment and interest income 291 405 645 665
-------- -------- -------- --------
Net loss $ (2,320) $ (1,699) $ (4,276) $ (3,195)
======== ======== ======== ========
Shares used in computation of net
loss per share - basic and diluted 13,264 13,186 13,258 12,701
======== ======== ======== ========
Net loss per share - basic and diluted $ (0.17) $ (0.13) $ (0.32) $ (0.25)
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
Closure Medical Corporation
Statement of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<S> <C>
Six Months Ended
June 30, June 30,
1998 1997
-------- -------
Cash flows from operating activities:
Net loss $ (4,276) $ (3,195)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization expense 200 71
Amortization of deferred compensation on stock options 151 152
Net loss on disposals of fixed assets 8 4
Change in accounts receivable 368 (20)
Change in inventories (248) (17)
Change in prepaid expenses 73 52
Change in accounts payable and accrued expenses (882) 160
Change in deferred revenue 327 (15)
------------ ----------
Net cash used by operating activities (4,279) (2,808)
------------ ----------
Cash flows from investing activities:
Additions to furniture, fixtures and equipment (2,885) (609)
Additions to intangible assets (164) (74)
Purchases of investments (8,150) (18,813)
Proceeds from the sale of investments 9,945 11,590
------------ ----------
Net cash used by investing activities (1,254) (7,906)
------------ ----------
Cash flows from financing activities:
Proceeds from borrowings 1,500 -
Repayment of debt (50) -
Net proceeds from sale of common stock 177 12,098
Proceeds from capital lease obligations - 491
Payments under capital lease obligations (111) (33)
------------ ----------
Net cash provided by financing activities 1,516 12,556
------------ ----------
Increase (decrease) in cash and cash equivalents (4,017) 1,842
Cash and cash equivalents at beginning of period 7,277 13,024
------------ ----------
Cash and cash equivalents at end of period $ 3,260 $ 14,866
============ ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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, manufactures and commercializes medical
tissue cohesive products based on its proprietary cyanoacrylate technology for
use in wound closure in humans and animals. 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 a follow-on 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 stockholder, 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, 1997
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
The results of operations for the three and six month periods ended June 30,
1998 are not necessarily indicative of the results to be expected for the full
year ending December 31, 1998.
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
adopted SFAS 130 effective January 1, 1998; the adoption of this statement did
not have a material impact on its financial position or results of operations.
Statement of Financial Accounting Standards No. 131, "Disclosures About Segments
of an Enterprise and Related Information" ("SFAS 131"), was issued in June 1997.
SFAS 131 specifies revised guidelines for determining an entity's operating
segments and the type and level of financial information to be disclosed. The
Company adopted SFAS 131 effective January 1, 1998; the adoption of this
statement did not have a material impact on its 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, 1998. 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," has been 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:
<TABLE>
<S> <C>
June 30, December 31,
1998 1997
--------- ----------
(In thousands)
Packaging $ 58 $ 45
Raw materials 108 54
Work-in-process 309 224
Finished goods 120 24
----------- -----------
$ 595 $ 347
----------- -----------
</TABLE>
5. Net Loss Per Share
Basic net loss per share is computed using the weighted average number of common
and common equivalent shares outstanding during the periods.
Diluted net 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.
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, 1997 contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
The statements set forth below that are not historical facts or statements of
current conditions are forward-looking statements. Such forward-looking
statements may be identified by, among other things, the use of forward-looking
terminology such as "believes," "expects," "forecasts," "estimates," "plans,"
"continues," "may," "will," "should," "anticipates," or "intends" or the
negative thereof or other variations thereon or comparable terminology, or by
discussions of strategy or intentions. These forward-looking statements, such as
statements regarding present or anticipated scientific progress, development of
potential products, future revenues, capital expenditures and research and
development expenditures, future financings and collaborations, management,
manufacturing development and capabilities, regulatory clearances and approvals
and other statements regarding matters that are not historical facts, involve
predictions. The Company's actual results, performance or achievements could
differ materially from the results expressed in, or implied by, these
forward-looking statements. Potential risks and uncertainties that could affect
the Company's actual results, performance or achievements include, but are not
limited to, the "Risk Factors" set forth in the Company's Annual Report on Form
10-K for the year ended December 31, 1997 filed with the Securities and Exchange
Commission. Given these uncertainties, current or prospective investors are
cautioned not to place undue reliance on any such forward-looking statements.
Furthermore, the Company disclaims any obligation or intent to update any such
factors or forward-looking statements to reflect future events or developments.
OVERVIEW
Since its inception in May 1990, the Company has been developing, manufacturing
and commercializing 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 have 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 a
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 $6,829,000 for the
year ended December 31, 1997. The Company anticipates that its recurring
operating expenses will increase for the next several years, as it expects its
research and development and selling and administrative expenses to increase in
order to develop new products, manufacture in commercial quantities 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 1998 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, 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.
8
<PAGE>
The Company is awaiting approval from the U.S. Food and Drug Administration
("FDA") of its premarket approval application to market DERMABOND in the United
States upon completion of the regulatory process, including the approval of the
Company's color additive petition for use of a color additive in DERMABOND.
There can be no assurance that the Company will be able to obtain the necessary
approvals from the FDA to market and manufacture DERMABOND in the United States
for its intended use on a timely basis, if at all.
RESULTS OF OPERATIONS
Product sales were $1,342,000 for the three months ended June 30, 1998, compared
to $140,000 for the three months ended June 30, 1997. For the six months ended
June 30, 1998, product sales were $2,112,000 compared to $348,000 for the same
period of 1997. The increase in 1998 product sales was primarily a result of
increased sales volume of DERMABOND in non-U.S. markets.
Cost of products sold were $850,000 for the three months ended June 30, 1998,
compared to $271,000 for the three months ended June 30, 1997. Cost of products
sold as a percentage of product sales decreased to 63% in the three months ended
June 30, 1998, compared to 194% during the same period of 1997. For the six
months ended June 30, 1998, cost of products sold were $1,384,000 compared to
$422,000 for the same period of 1997. Cost of products sold as a percentage of
product sales decreased to 66% in the six months ended June 30, 1998, compared
to 121% during the same period of 1997. The decrease in cost of products sold as
a percentage of product sales was primarily a result of the increased sales
volume of DERMABOND resulting in the fixed portion of cost of products sold
being allocated over higher sales volume.
Operating expenses were $3,000,000 for the three months ended June 30, 1998,
compared to $1,966,000 for the three months ended June 30, 1997. For the six
months ended June 30, 1998 and June 30, 1997, operating expenses were $5,458,000
and $3,778,000, respectively. These increases were primarily attributable to the
addition of personnel, expansion of the Company's facilities and increased
research and development and regulatory affairs expenses. In March 1998, the
Company relocated its corporate offices into a 50,000 square feet facility and
expects to relocate its manufacturing operations to the same facility in late
1998. Prior to the move, the Company occupied approximately 20,000 square feet.
Interest expense was $103,000 for the three months ended June 30, 1998, compared
to $7,000 for the three months ended June 30, 1997. For the six months ended
June 30, 1998 and June 30, 1997, interest expense was $191,000 and $8,000,
respectively. These increases were a result of the Company entering into a new
lease line and term loan during March and November 1997, respectively.
Additionally, the Company increased its borrowings under the term loan in
February 1998.
Investment and interest income was $291,000 for the three months ended June 30,
1998, compared to $405,000 for the same period of 1997. This decrease was
attributed to interest earned from lower average cash and investment balances.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date primarily through the sale of
equity securities, borrowings from Sharpoint and other lenders, license and
product development revenues, and product sales revenues. Through March 31,
1998, the Company had raised approximately $30 million in equity financing. As
of March 29,1996, all long-term debt to Sharpoint, including accrued interest,
was contributed as partners' capital to the Partnership. The Company has entered
into and received approximately $4.5 million from a lease line and term loan
since March 1997. In addition, the Company has received approximately $5.5
million related to the supply and distribution agreement for DERMABOND entered
into with Ethicon, Inc. ("Ethicon") in March 1996, of which $2.0 million has
been classified as deferred revenue and will be credited against future
royalties and product purchases expected to be paid by Ethicon.
9
<PAGE>
Net cash used by operating activities was $4,279,000 and $2,808,000 for the six
months ended June 30, 1998 and 1997, respectively.
Net cash used for investing activities was $1,254,000 and $7,906,000 for the six
months ended June 30, 1998 and 1997, respectively. The increase for the 1998
period was primarily related to leasehold improvements of the Company's new
50,000 square feet facility and acquisition of capital equipment. During the
same period of 1997, cash was used primarily to purchase investments.
Net cash provided by financing activities was $1,516,000 and $12,556,000 for the
six months ended June 30, 1998 and 1997, respectively. The Company's primary
financing activity during the six months ended June 30, 1998 was the Company's
additional borrowings under its term loan whereby the Company had borrowed $3.0
million as of June 30, 1998. The Company's primary financing activity during the
six months ended June 30, 1997 was the Company's 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.
The Company believes that existing cash and cash equivalents and investments,
which totaled approximately $18.7 million at June 30, 1998, will be sufficient
to finance its capital requirements for at least 12 months. The Company expects
to incur a loss in 1998 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 anticipates that its recurring
operating expenses will increase for the next several years, as it expects its
research and development and selling and administrative expenses to increase in
order to develop new products, manufacture in commercial quantities and fund
additional clinical trials. The Company also expects to incur additional capital
expenditures to expand its manufacturing capabilities.
The Company's future capital requirements, however, will depend on numerous
factors, including (i) the Company's ability to manufacture and commercialize
successfully its lead product, DERMABOND, (ii) the progress of its research and
product development programs for future nonabsorbable and absorbable products,
including clinical studies, (iii) the effectiveness of product commercialization
activities and marketing agreements for its future products, including
additional scale-up of manufacturing capability in anticipation of product
commercialization and development and progress of sales and marketing efforts,
(iv) the ability of the Company to maintain existing marketing agreements,
including its agreement with Ethicon for DERMABOND, and establish and maintain
new marketing agreements, (v) the costs involved in preparing, filing,
prosecuting, defending and enforcing intellectual property rights and complying
with regulatory requirements, (vi) the effect of competing technological and
market developments, (vii) timely receipt of regulatory clearances and approvals
and (viii) general economic conditions. There can be no assurance that the
Company will not be required to seek additional capital to finance its
operations in the future. 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 and term loan, 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 2. Changes in Securities and Use of Proceeds.
The Company's Registration Statement on Form S-1 (Registration No. 333-5425)
(the "Registration Statement") for the Company's initial public offering ("IPO")
of 3,000,000 shares of Common Stock, of which 2,550,000 shares were sold by the
Company, was declared effective by the Securities and Exchange Commission on
September 25, 1996 (the "Effective Date"). The net proceeds to the Company from
the IPO were approximately $17,926,000.
For the period beginning on the Effective Date of the Registration Statement on
September 25, 1996 through June 30, 1998, reasonable estimates of the uses of
proceeds from the IPO are as follows:
(millions)
---------
Working capital $5.2
Research and development and regulatory affairs 7.5 (a)
Capital expenditures 1.6 (b)
Obtain and protect patents .3
-----
Total $14.6
Of the above uses of proceeds attributed to working capital, approximately
$156,000 represented direct payments to directors for annual board compensation
and meeting fees and expenses and approximately $2,159,000 represented payments
to officers of the Company for compensation. Included in the payments to
directors was approximately $53,000 to two individuals beneficially owning ten
percent or more of the Common Stock of the Company. Additionally, reflected in
working capital is approximately $210,000 paid to a consultant who provides
services to the Company.
Temporary investments during this period have consisted primarily of corporate
and municipal bonds and money market funds. The Company invested all of the net
proceeds, approximately $18 million, upon the completion of the IPO and such
amount has been reduced as the expenditures described above have been incurred.
As of June 30, 1998, the Company had approximately $15.4 million in short-term
and long-term investments, which amount also includes proceeds of the Company's
follow-on offering in April 1997.
(a) Regulatory affairs expenses primarily consist of clinical trial expenses.
(b) Of the Company's capital expenditures of approximately $6.1 million for
this period, approximately $4.5 million has been financed through a capital
lease agreement and term loan (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources" included in Item 1 of Part I of this Form 10-Q).
11
<PAGE>
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 3, 1998. 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 2001 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
- --------------- --- --------
Richard W. Miller 12,552,887 39,151
Rolf D. Schmidt 12,553,537 38,501
Furthermore, the terms of office of the following directors continued after the
Meeting: Dennis C. Carey, F. William Schmidt, Randy H. Thurman and Robert V.
Toni.
In addition, at the Meeting, the stockholders of the Company approved and
adopted an amendment to the Company's Amended and Restated 1996 Equity
Compensation Plan (the "Plan") to increase the number of shares authorized for
issuance under the Plan from 1,000,000 to 2,500,000 shares of Common Stock. The
results of the voting on such matter were as follows:
For Against Abstentions or Broker Non-Votes
--- ------- -------------------------------
9,459,684 499,851 26,668
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11 Computation of pro forma net income (loss) per share
(see Note 5 to Notes to Financial Statements in
Item 1 of Part I of this Form 10-Q).
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
12
<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 5, 1998 By: \s\ Robert V. Toni
______________________________________
Robert V. Toni
President and Chief Executive Officer
Date: August 5, 1998 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.
CLOSURE MEDICAL CORPORATION
COMPUTATION OF PRO FORMA NET INCOME (LOSS) PER SHARE
(Unaudited)
(In thousands, except per share data)
<TABLE>
<S> <C>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- -------
Weighted average common shares
outstanding for the period 13,264 13,186 13,258 12,701
-------- ------- ------- ------
Shares used in computing net income (loss) per share 13,264 13,186 13,258 12,701
======== ======= ======= =======
Net income (loss) $ (2,320) $(1,699) $(4,276) (3,195)
======== ======= ======= =======
Net income (loss) per share $ (0.17) $ (0.13) $ (0.32) $(0.25)
======== ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Closure Medical Corporation Financial Data Schedule Per Item 601(c) of
Regulation S-X
</LEGEND>
<CIK> 0001016006
<NAME> Closure
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
<CASH> 3,259,937
<SECURITIES> 15,437,380
<RECEIVABLES> 857,857
<ALLOWANCES> 0
<INVENTORY> 595,275
<CURRENT-ASSETS> 15,436,683
<PP&E> 6,912,330
<DEPRECIATION> (536,556)
<TOTAL-ASSETS> 27,255,909
<CURRENT-LIABILITIES> 4,934,494
<BONDS> 0
0
0
<COMMON> 132,726
<OTHER-SE> 18,338,093
<TOTAL-LIABILITY-AND-EQUITY> 27,255,909
<SALES> 2,112,069
<TOTAL-REVENUES> 2,112,069
<CGS> 1,384,198
<TOTAL-COSTS> 1,384,198
<OTHER-EXPENSES> 5,457,923
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,276,355)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,276,355)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,276,355)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> (0.32)
</TABLE>
