<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1998
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 0-37159
IOMED, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0441272
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3385 WEST 1820 SOUTH, SALT LAKE CITY, UTAH 84104
(Address of principal executive offices) (Zip Code)
(801) 975-1191
(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 [ X ] Yes [ ] No.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of JANUARY 31,
1999:
CLASSES OF COMMON STOCK NUMBER OF SHARES OUTSTANDING
-------------------------- ----------------------------
Common Stock, no par value 6,502,643
<PAGE> 2
IOMED, INC.
------------
INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Page
----
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets --
December 31, 1998 and June 30, 1998 ............................ 3
Condensed Consolidated Statements of Operations --
Three months ended December 31, 1998 and 1997
Six months ended December 31, 1998 and 1997 .................... 4
Condensed Consolidated Statements of Cash Flows --
Six months ended December 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 .................. 8
Item 3. Quantitative and Qualitative Disclosure about Market Risk
Not applicable
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ............ 12
Item 5. Other Information .............................................. 13
Item 6. Exhibits and Reports on Form 8-K ............................... 13
</TABLE>
Paged 2 of 15
<PAGE> 3
IOMED, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, JUNE 30,
1998 1998
------------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $16,752,000 $16,709,000
Accounts receivable 1,166,000 1,570,000
Inventories 977,000 876,000
Prepaid expenses 33,000 53,000
----------- -----------
Total current assets 18,928,000 19,208,000
Equipment and furniture, net 715,000 783,000
Other assets 187,000 210,000
----------- -----------
TOTAL ASSETS $19,830,000 $20,201,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 129,000 $ 626,000
Accrued liabilities 684,000 687,000
Current portion of long-term obligations 55,000 50,000
------------ ------------
Total current liabilities 868,000 1,363,000
Long-term obligations 158,000 187,000
Commitments
Shareholders' equity:
Common shares 34,410,000 34,408,000
Convertible preferred shares 6,881,000 6,881,000
Accumulated deficit (22,487,000) (22,638,000)
------------ ------------
Total shareholders' equity 18,804,000 18,651,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 19,830,000 $ 20,201,000
============ ============
</TABLE>
See accompanying notes
Page 3 of 15
<PAGE> 4
IOMED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------ -----------------------------
1998 1997 1998 1997
------------ ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 2,440,000 $ 2,074,000 $ 4,595,000 $ 4,071,000
Contract research revenue, royalties & 370,000 409,000 798,000 912,000
license fees
------------ ----------- ----------- -----------
Total revenues 2,810,000 2,483,000 5,393,000 4,983,000
Operating costs and expenses:
Cost of products sold 1,040,000 837,000 1,987,000 1,670,000
Research and development 452,000 392,000 867,000 827,000
Selling, general and administrative 1,433,000 1,146,000 2,830,000 2,207,000
------------ ----------- ----------- -----------
Total costs and expenses 2,925,000 2,375,000 5,684,000 4,704,000
------------ ----------- ----------- -----------
Income (loss) from operations (115,000) 108,000 (291,000) 279,000
Interest expense 4,000 287,000 10,000 574,000
Interest income and other, net 224,000 77,000 452,000 157,000
------------ ----------- ----------- -----------
Net income (loss) $ 105,000 $ (102,000) $ 151,000 $ (138,000)
============ =========== =========== ===========
Basic and diluted income (loss) per common $ 0.01 $ (0.03) $ 0.02 $ (0.04)
share ============ =========== =========== ===========
</TABLE>
See accompanying notes.
Page 4 of 15
<PAGE> 5
IOMED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
--------------------------------
1998 1997
------------- -------------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 151,000 $ (138,000)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 207,000 117,000
Non-cash interest expense -- 574,000
Other non-cash charges -- 11,000
Changes in assets and liabilities:
Accounts receivable 404,000 (183,000)
Inventories (101,000) (124,000)
Prepaid expenses and other assets 20,000 (2,000)
Trade accounts payable (497,000) 64,000
Other current liabilities (3,000) (367,000)
------------ ------------
Net cash provided by (used in) operating activities 181,000 (48,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and furniture (116,000) (188,000)
Purchase of patent license -- (214,000)
------------ ------------
Net cash provided by (used in) investing activities (116,000) (402,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 2,000 21,000
Payments on long-term obligations (24,000) (3,000)
Redemptions of redeemable preferred stock -- (180,000)
Other -- (418,000)
------------ ------------
Net cash provided by (used in) financing activities (22,000) (580,000)
Net increase (decrease) in cash and cash equivalents 43,000 (1,030,000)
Cash and cash equivalents at beginning of period 16,709,000 6,346,000
------------ ------------
Cash and cash equivalents at end of period $ 16,752,000 $ 5,316,000
============ ============
</TABLE>
See accompanying notes.
Page 5 of 15
<PAGE> 6
IOMED, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Description of Business
IOMED, Inc., a Utah corporation (the "Company"), develops,
manufactures and commercializes controllable drug delivery systems using
proprietary iontophoretic technology. Iontophoresis is a method of
enhancing and controlling the transport of drugs through the skin
utilizing a mild electric current.
Basis of Presentation
In the opinion of management, the accompanying condensed
consolidated financial statements contain all normal recurring
adjustments necessary to present fairly the financial position of the
Company as of December 31, 1998, and the results of its operations and
cash flows for the interim periods ended December 31, 1998, and 1997.
The operating results for the interim periods are not necessarily
indicative of the results for a full year. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted. Therefore, these statements should be read in
conjunction with the Company's audited consolidated financial statements
for the year ended June 30, 1998, included in the Company's Annual
Report on Form 10-K.
Earnings (Loss) Per Share
For all periods presented, basic and diluted earnings per share
are computed in accordance with Statement of Financial Accounting
Standards (SFAS) No. 128 Earnings per Share.
Net income (loss) as presented in the condensed consolidated
statements of operations represents the numerator used in computing both
basic and diluted earnings per share and the following table sets forth
the computation of the weighted average shares representing the
denominator used in determining basic and diluted earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------ ----------------
1998 1997 1998 1997
------ ------ ------ ------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Denominator for basic earnings per
share - weighted average shares
outstanding........................ 6,501 3,212 6,501 3,212
Dilutive securities: preferred
stock and certain stock options ... 903 -- 942 --
------ ------ ----- -----
Denominator for diluted earnings
per share -- adjusted weighted
average shares outstanding and
assumed conversions................ 7,404 3,212 7,443 3,212
====== ====== ===== =====
</TABLE>
Page 6 of 15
<PAGE> 7
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At December 31, 1998, the following securities were outstanding
but were not included in the computation of diluted earnings per share
due to their anti-dilutive effect: options to purchase approximately
275,244 common shares at a weighted average exercise price of $5.36 per
share; and warrants to purchase 339,792 common shares at a weighted
average price of $13.70 per share. Due to their anti-dilutive effect, no
dilutive securities were included in the computation of diluted earnings
per share for the interim periods ended December 31, 1997.
Reverse Stock Split
On November 7, 1997, pursuant to a vote of the shareholders, the
Company effected a one for 4.8 reverse share split for each common and
preferred share then outstanding. For comparative purposes, all share
amounts in the accompanying financial statements and related footnotes
have been retroactively restated to reflect the effects of the reverse
stock split.
Reclassifications
Certain reclassifications have been made to the prior year's
financial statements to conform to the financial statement presentation
included herein.
2. INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. Inventories consisted
of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1998
------------ -------------
<S> <C> <C>
Raw materials .................... $ 807,000 $ 687,000
Work-in-progress ................. 15,000 30,000
Finished goods ................... 155,000 159,000
------------ -------------
$ 977,000 $ 876,000
============ =============
</TABLE>
3. RESEARCH AND DEVELOPMENT
In July 1995, the Company entered into various research and
development agreements (the "R&D Agreements") with Ciba-Geigy
Corporation ("Ciba") to evaluate the feasibility of delivering a number
of Ciba compounds utilizing the Company's iontophoretic drug delivery
technologies. In 1997, Ciba was merged with Sandoz Corporation to form
Novartis Pharma A.G. ("Novartis").
Although the Company met all of the essential development
objectives under the R&D Agreements, in July 1998, Novartis advised the
Company that it would not renew the R&D Agreements, which expired on
December 31, 1998. Beginning January 1, 1999, Novartis will no longer
provide contract research funding and the Company will focus its
development efforts on self funded, internal research and development
programs, while it seeks new collaborative research partners.
In connection with their collaboration, the Company granted
Novartis a perpetual, non-exclusive, royalty bearing license to certain
of the Company's iontophoretic technology which will survive the
termination of the collaboration. Novartis may, pursuant to the
royalty-bearing license, independently develop products using the
licensed technology, including products which may compete directly with
those currently marketed or under development by the Company.
Page 7 of 15
<PAGE> 8
3. RESEARCH AND DEVELOPMENT (CONTINUED)
Upon the expiration of the R&D Agreements, Novartis' rights to
exclusivity in those fields covered by the Agreements terminated, and
IOMED is free to apply the technologies it developed for Novartis to any
available drug candidates, either independently or on behalf of other
parties. The Company believes the application of these technologies may
shorten the Company's future product development cycles.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Condensed
Consolidated Financial Statements and the related Notes thereto included
elsewhere in this Report. The following Management's Discussion and Analysis of
Financial Condition and Results of Operations contains 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, that involve risks and
uncertainties. The Company's actual results of operations could differ
significantly from those anticipated in such forward-looking statements as a
result of numerous factors including those discussed herein. Additional risks
and uncertainties are described in the Company's most recent Annual Report on
Form 10-K for its fiscal year ended June 30, 1998. This discussion should be
read in conjunction with such report, copies of which are available upon
request.
OVERVIEW
The Company develops, manufactures and commercializes controllable drug
delivery systems using iontophoretic technology. The majority of the Company's
revenues have been generated through the sale of its iontophoretic drug delivery
systems in the rehabilitation and sports medicine markets for use in the
delivery of dexamethasone and through contract research revenues from the
Company's collaboration with Novartis. The Company recently introduced its local
dermal anesthesia products into the market place and, to date, has not realized
significant revenue from the sales of such products. Since its inception, the
Company has generally incurred operating losses and may incur additional
operating losses over the next several years as a result of anticipated costs
associated with increases in internally funded research, development and
clinical trial activities relating to new applications for its iontophoretic
drug delivery technologies. As of December 31, 1998, the Company's accumulated
deficit was approximately $22.5 million. The Company's ability to achieve and
sustain profitability will depend on its ability to achieve market acceptance
and successfully expand sales of its existing products; successfully complete
the development of, receive regulatory approvals for, and successfully
manufacture and market its products under development; as well as successfully
negotiate and enter into agreements with collaborative partners, licensors,
licensees and other parties for the development, clinical testing, manufacture,
marketing or sale of certain of its products or products in development, as to
which there can be no assurance.
The Company's results of operations may vary significantly from quarter
to quarter and depend, among other factors, on the signing of new product
development agreements, the timing of contract research revenues and milestone
payments made by collaborative partners, the progress of clinical trials,
product sales levels and costs associated with manufacturing processes. The
timing of the Company's research and development revenues may not match the
timing of the associated expenses. The amount of revenue in any given period is
not necessarily indicative of future revenue.
Page 8 of 15
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
Revenues. Product sales increased 18% to $2.4 million in the three
months ended December 31, 1998, from $2.1 million in the three months ended
December 31, 1997. The increase can be attributed primarily to higher sales of
the Company's iontophoretic drug delivery products for the treatment of local
inflammation resulting from continued overall growth in this market.
Contract research revenues, royalties and license fees decreased 10% to
$370,000 in the three months ended December 31, 1998, from $409,000 in the three
months ended December 31, 1997. This decrease is attributable to the decline in
the research revenues received from Novartis as the Company entered the final
phase of this collaborative development program.
Costs of Products Sold. Costs of products sold increased 24% to $1.0
million in the three months ended December 31, 1998, from $837,000 in the three
months ended December 31, 1997. This increase is due to increased material and
labor costs associated with higher unit sales volumes and higher engineering and
tooling costs.
Research and Development Expense. Research and development expenditures
increased 15% to $452,000 for the three months ended December 31, 1998, compared
to $392,000 reported for the three months ended December 31, 1997. Expenditures
in the current period included a higher proportion of expenditures on internally
funded projects.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 25%, to $1.4 million in the three months ended
December 31, 1998, compared to $1.1 million in the three months ended December
31, 1997. The increase in the current period can be attributed primarily to
increased legal, professional and related costs incurred in connection with
investor relations and SEC compliance, increased patent prosecution and
maintenance costs, and executive recruiting costs associated with the Company's
efforts to fill positions in its executive management staff. Lower sales and
marketing expenses resulting from the restructuring of the Company's field sales
force during the first quarter of fiscal 1999 offset these increases, in part.
Other Costs and Expenses. Interest expense decreased to $4,000 in the
three months ended December 31, 1998. This decrease can be attributed to lower
interest expense resulting from the repayment of the Company's indebtedness to
Elan in transactions related to the initial public offering of its common shares
in April 1998. Interest income and other miscellaneous income was $224,000 in
the three months ended December 31, 1998, compared to $77,000 in the three
months ended December 31, 1997, reflecting interest earnings on the investment
of the proceeds from the initial public offering during the current period.
Net income (loss). The Company recognized net income of $105,000 or
$0.01 per share during the three months ended December 31, 1998, compared to a
net loss of $102,000 or $0.03 per share in the three months ended December 31,
1997. During the current period, interest earnings on invested cash balances
offset a loss from operations. With anticipated increases in internally funded
research and development expenditures coupled with the loss of contract research
revenue from Novartis after December 31, 1998, the Company expects to report a
net loss for the fiscal year. The net loss reported for the three months ended
December 31, 1997, was attributable to the non-cash interest charges recorded on
the Elan indebtedness.
Page 9 of 15
<PAGE> 10
SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997
Revenues. Product sales increased 13% to $4.6 million in the six months
ended December 31, 1998, from $4.1 million in the six months ended December 31,
1997. The increase can be attributed primarily to higher sales of the Company's
iontophoretic drug delivery products for the treatment of local inflammation
resulting from continued overall growth in this market.
Contract research revenues, royalties and license fees decreased 13% to
$798,000 in the six months ended December 31, 1998, from $912,000 in the six
months ended December 31, 1997. This decrease is attributable to the decline in
the research revenues received from Novartis as the Company entered the final
phase of this collaborative development program.
Costs of Products Sold. Costs of products sold increased 19% to $2.0
million in the six months ended December 31, 1998, from $1.7 million in the six
months ended December 31, 1997. This increase is due to increased material and
labor costs associated with higher unit sales volumes and certain non-recurring
engineering and tooling costs.
Research and Development Expense. Research and development expenditures
of $867,000 for the six months ended December 31, 1998, were up 5% from the
$827,000 reported for the six months ended December 31, 1997. Expenditures in
the current period included a higher proportion of expenditures on internally
funded projects.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 28%, to $2.8 million in the six months ended
December 31, 1998, compared to $2.2 million in the six months ended December 31,
1997. The increase in the current period can be attributed primarily to
increased legal, professional and related costs incurred in connection with
investor relations and SEC compliance, increased patent prosecution and
maintenance costs, and executive recruiting costs associated with the Company's
efforts to fill positions in its executive management staff. In addition, the
Company incurred one-time costs associated with the restructuring of the
Company's field sales force and an increase in certain marketing and promotional
expenses
Other Costs and Expenses. Interest expense decreased to $10,000 in the
six months ended December 31, 1998. This decrease can be attributed to lower
interest expense resulting from the repayment of the Company's indebtedness to
Elan in transactions related to the initial public offering of its common shares
in April 1998. Interest income and other miscellaneous income was $452,000 in
the six months ended December 31, 1998, compared to $157,000 in the six months
ended December 31, 1997, reflecting interest earnings on the investment of the
proceeds from the initial public offering during the current period.
Income Taxes. The Company has substantial net operating loss
carryforwards which, under the current "change of ownership" rules of the
Internal Revenue Code of 1986, as amended, may be subject to substantial annual
limitation. No income tax expense was recognized for the three and six month
periods ended December 31, 1998, which reflects management's estimate of the
Company's fiscal 1999 tax position. In addition, no income tax benefit was
recognized on the Company's pre-tax loss for the three and six month periods
ended December 31, 1997.
Net income (loss). The Company recognized net income of $151,000 or
$0.02 per share during the six months ended December 31, 1998, compared to a net
loss of $138,000 or $0.04 per share in the six months ended December 31, 1997.
During the current period, interest earnings on invested cash balances offset a
loss from operations. With anticipated increases in internally funded research
and development expenditures coupled with the loss of contract research revenue
from Novartis after December 31, 1998, the Company expects to report a net loss
for the fiscal year. The net loss reported for the six months ended December 31,
1997, was attributable to the non-cash interest charges recorded on the Elan
indebtedness.
Page 10 of 15
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Beginning in fiscal 1996, the Company's operating losses, including its
research and development activities, have been internally funded with cash flows
from operations and from contract research and development revenues and license
fees the Company has received from Novartis.
In July 1998, Novartis elected not to renew its collaborative research
and development agreement with the Company beyond its expiration on December 31,
1998. Accordingly, the Company's contract research revenues may decline during
fiscal 1999 and future years. The effect of the loss of contract research
revenue on the Company's future operating results and cash flow may be offset,
in part, by a reduction in research and development expenditures incurred in
connection with the collaboration. In addition, the Company may earn additional
contract research revenues, if successful in its efforts to enter into new
collaborative research and development arrangements.
As of December 31, 1998, the Company had cash and cash equivalents
totaling approximately $16.8 million. Cash in excess of immediate requirements
is invested in a manner which is intended to maximize liquidity and return while
minimizing investment risk, and, whenever possible, the Company seeks to
minimize the potential effects of concentration of credit risk.
The Company generated $181,000 in cash for operating activities during
the six months ended December 31, 1998, compared to a use of $48,000 in during
the six months ended December 31, 1997. The increased cash from operating
activities in the current period can be attributed to higher net income with a
higher depreciation component as well as a decrease in the Company's net
investment in non-cash working capital during the current period.
Historically, the Company's operations have not been capital intensive
and investment in property, plant and equipment during the periods presented has
not been significant. However, investment in facilities and equipment may
increase in the future. The Company's expenditures for equipment and furniture
were $116,000 and $188,000 in each of the six month periods ended December 31,
1998 and 1997, respectively. In December 1997, the Company purchased a license
to certain iontophoretic drug delivery technology at a cost of $214,000,
including transaction expenses.
Other uses of cash in the six months ended December 31, 1998, were
$23,000 in principal reductions under capital lease obligations. During the six
months ended December 31, 1997, the Company paid $180,000 for the mandatory
redemption of a portion of its outstanding Series C Preferred Shares. The
remaining Series C Preferred Shares were converted into common shares of the
Company, on a share-for-share basis, concurrently with the closing of the
initial public offering of the Company's common shares. Also during the six
months ended December 31, 1997, the Company used $418,000 in cash to fund
certain costs associated with the Company's initial public offering.
The Company may continue to incur costs associated with its research and
development activities, including clinical trials, and make additional
investments in working capital. The Company anticipates that its existing cash
balances and cash generated from operations will be sufficient to fund the
operations of the Company at least through fiscal 2000. However, the Company may
be required or elect to raise additional capital before that time. The Company's
actual capital requirements will depend on many factors, some of which are
outside the Company's control.
IMPACT OF THE YEAR 2000
Many computer systems experience problems handling dates beyond the year
1999. The Company has evaluated its primary operating systems (including its
financial systems, material requirements planning, and production lot tracking
systems) and believes, based upon its evaluation as well as representations from
its software suppliers, that its operating systems are substantially year 2000
compliant. To the extent that any software applications are not fully year 2000
compliant, the Company
Page 11 of 15
<PAGE> 12
expects that software upgrades made in the normal course of business will either
minimize, isolate or possibly eliminate any substantive risks associated with
software or system failure.
To date, the Company has not incurred any significant costs associated
with the evaluation or modification of its systems relating to year 2000
compliance and does not anticipate the need to incur any costs outside the
normal course of business. In the event that any of the Company's systems should
fail due to a failure to identify and address a year 2000 exposure, the Company
believes that the size and scope of its operations would allow the Company to
revert to manual operating systems on a timely basis.
The custom circuitry and software utilized in the Company's
iontophoretic dose controllers do not include any date driven functions and
therefore will not exhibit any change in performance due to the arrival of the
year 2000. The Company has initiated procedures designed to evaluate the year
2000 exposure of its significant suppliers and other vendors whose systems may
impact the Company's operations. To date, the Company has not identified any
compliance deficiencies that might have a significant impact on the Company if
not rectified by such supplier or vendor on a timely basis. There can be no
assurance that such a deficiency will not be discovered or arise in the future
or that the Company would be able to identify and validate an alternative source
for any service or material which may be affected by such deficiency.
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on November
20, 1998, to consider and vote on the following proposals: (i) election
of two directors to serve a term of three years or until their
successors are duly elected and qualified; and (ii) ratification of the
appointment of Ernst & Young LLP as the Company's auditors for the
fiscal year ending June 30, 1999.
Proxies for the Annual Meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934. There was no
solicitation in opposition to management's nominees, as listed in the
Company's Proxy Statement, and all nominees were elected with the
following vote:
<TABLE>
<CAPTION>
NUMBER OF VOTES
IN FAVOR WITHHELD
--------- --------
<S> <C> <C>
Peter J. Wardle 4,745,993 104,848
Warren Wood 4,781,867 68,974
</TABLE>
The following directors' terms of office continued after the
meeting:
<TABLE>
<CAPTION>
DIRECTORS TERM ENDING
--------- -----------
<S> <C>
John W. Fara, Ph.D. 1999
Steven P. Sidwell 1999
Michael T. Sember 2000
James R. Weersing 2000
</TABLE>
Page 12 of 15
<PAGE> 13
The proposal to ratify the appointment of Ernst & Young LLP as
the Company's auditors was approved with the following vote:
<TABLE>
<CAPTION>
NUMBER OF VOTES
IN FAVOR AGAINST ABSTAINED
--------- ------- ---------
<S> <C> <C>
4,849,236 793 812
</TABLE>
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
EXHIBITS:
27.1 Financial Data Schedule for the six months ended December 31,
1998 and 1997.
REPORTS ON FORM 8-K:
No reports were filed on Form 8-K during the period covered by this
report.
Page 13 of 15
<PAGE> 14
IOMED, INC.
------------
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.
IOMED, Inc.
---------------------
(Registrant)
Date: February 16, 1999 By:/s/ James R. Weersing
---------------------
James R. Weersing
Chairman of the Board
Date: February 16, 1999 By:/s/ Robert J. Lollini
---------------------
Robert J. Lollini
Vice President, Finance and
Chief Financial Officer
Page 14 of 15
<PAGE> 15
EXHIBIT INDEX
Exhibit
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE IOMED,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS FOR THE
SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1998
<PERIOD-START> JUL-01-1998 JUL-01-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 16,752,000 0
<SECURITIES> 0 0
<RECEIVABLES> 1,232,000 0
<ALLOWANCES> 66,000 0
<INVENTORY> 977,000 0
<CURRENT-ASSETS> 18,928,000 0
<PP&E> 4,548,000 0
<DEPRECIATION> 3,833,000 0
<TOTAL-ASSETS> 19,830,000 0
<CURRENT-LIABILITIES> 868,000 0
<BONDS> 158,000 0
0 0
6,881,000 0
<COMMON> 34,410,000 0
<OTHER-SE> (22,487,000) 0
<TOTAL-LIABILITY-AND-EQUITY> 19,830,000 0
<SALES> 4,595,000 4,071,000
<TOTAL-REVENUES> 5,393,000 4,983,000
<CGS> 1,987,000 1,670,000
<TOTAL-COSTS> 5,684,000 4,704,000
<OTHER-EXPENSES> (452,000) (157,000)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 10,000 574,000
<INCOME-PRETAX> 151,000 (138,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 151,000 (138,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 151,000 (138,000)
<EPS-PRIMARY> 0.01<F1> (0.04)
<EPS-DILUTED> 0.01 (0.04)
<FN>
<F1>For purposes of This Exhibit, Primary means Basic.
</FN>
</TABLE>
