<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,1999
Commission File Number: 0-24635
HYPERTENSION DIAGNOSTICS, INC.
(Exact name of small business issuer as specified in its charter)
MINNESOTA 41-1618036
(State of incorporation) (I.R.S. Employer Identification No.)
2915 WATERS ROAD, SUITE 108
EAGAN, MINNESOTA 55121-1562
(651) 687-9999
(Address of issuer's principal executive offices and telephone number)
Check whether the issuer (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 / /
The number of shares of Common Stock outstanding as of April 30, 1999 was
5,107,235.
Transitional Small Business Disclosure Format:
Yes / / No / X /
<PAGE>
HYPERTENSION DIAGNOSTICS, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements 3
Balance Sheets - June 30, 1998 and March 31, 1999 3
Statements of Operations - Three Months and Nine Months Ended
March 31, 1998 and 1999, respectively, and Period
from July 19, 1988 (inception) to March 31, 1999 4
Statements of Cash Flows - Nine Months Ended
March 31, 1998 and 1999 and Period from
July 19, 1988 (inception) to March 31, 1999 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION:
Item 2. Use of Proceeds 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Hypertension Diagnostics, Inc.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
June 30, March 31,
1998 1999
--------------- ---------------
<S> <C> <C>
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $ 1,239,804 $ 8,514,071
Accounts receivable - 45,111
Interest receivable 4,676 54,292
Inventory 39,054 332,870
Prepaid expenses 11,254 20,404
--------------- ---------------
Total Current Assets 1,294,788 8,966,748
Property and Equipment:
Leasehold improvements 13,377 17,202
Furniture and equipment 136,737 408,278
Less accumulated depreciation (25,997) (70,969)
--------------- ---------------
124,117 354,511
Patents, net of accumulated amortization of $12,524
and $19,335 at June 30, 1998 and March 31, 1999,
respectively 32,881 26,070
Prepaid Offering Expenses 146,981 -
Others Assets 6,740 6,782
--------------- ---------------
Total Assets $ 1,605,507 $ 9,354,111
--------------- ---------------
--------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 188,100 $ 258,652
Accrued compensation - 24,060
Other accrued expenses - 3,284
--------------- ---------------
Total Current Liabilities 188,100 285,996
Shareholders' Equity:
Preferred Stock, $.01 par value:
Authorized shares--5,000,000
Issued and outstanding shares--none - -
Common Stock, $.01 par value:
Authorized shares--25,000,000
Issued and outstanding shares--2,517,735 and
5,107,235 at June 30, 1998 and March 31, 1999,
respectively 25,177 51,092
Additional paid-in capital 4,668,479 13,839,028
Deficit accumulated during the development stage (3,276,249) (4,822,005)
--------------- ---------------
Total Shareholders' Equity 1,417,407 9,068,115
--------------- ---------------
Total Liabilities and Shareholders' Equity $ 1,605,507 $ 9,354,111
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
Hypertension Diagnostics, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended July 19, 1988
March 31 March 31 (inception) to
---------------------------- ------------------------------ March 31,
1998 1999 1998 1999 1999
------------- ------------- ------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Equipment sales $ - $ 37,750 $ - $ 133,248 $ 133,248
Cost and Expenses:
Cost of equipment sales
Research and development - 14,308 - 43,400 43,400
64,504 165,480 255,787 530,231 2,089,530
Selling, general and administrative 296,481 486,881 623,383 1,424,475 3,296,918
------------- ------------- ------------- --------------- ----------------
Total Cost and Expenses 360,985 666,669 879,170 1,998,106 5,429,848
------------- ------------- ------------- --------------- ----------------
Operating Loss (360,985) (628,919) (879,170) (1,864,858) (5,296,600)
Other Income (Expense):
Interest income 19,362 105,402 45,700 319,102 521,626
Interest expense - - - - (47,031)
------------- ------------- ------------- --------------- ----------------
19,362 105,402 45,700 319,102 474,595
------------- ------------- ------------- --------------- ----------------
Net Loss and Deficit Accumulated
During the Development Stage $ (341,623) $ (523,517) $ (833,470) $ (1,545,756) $ (4,822,005)
------------- ------------- ------------- --------------- ----------------
------------- ------------- ------------- --------------- ----------------
Basic and Dilutive Net Loss per Share $ (.15) $ (.10) $ (.41) $ (.31) $ (4.19)
Weighted Average Shares Outstanding 2,279,928 5,107,235 2,050,407 4,926,185 1,149,798
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
Hypertension Diagnostics, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period from
Nine Months Ended July 19, 1988
March 31 (inception) to
-------------------------------- March 31,
1998 1999 1999
--------------- ---------------- ----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (833,470) $ (1,545,756) $ (4,822,005)
Adjustments to reconcile net loss to net
cash used in operating activities:
Value of stock options granted in lieu
of cash compensation 87,333 - 483,453
Depreciation 6,723 44,972 107,438
Amortization 1,868 6,969 20,333
Write-off of property and equipment - - 42,702
Change in operating assets and liabilities:
Accounts receivable - (45,111) (45,111)
Interest receivable 300 (49,616) (54,292)
Inventory - (293,816) (332,870)
Prepaid expenses (31,287) 137,831 (20,404)
Other assets (36,640) (200) (6,730)
Accounts payable 40,179 70,552 258,652
Accrued compensation - 24,060 24,060
Other accrued expenses - 3,284 3,458
--------------- ---------------- ----------------
Net cash used in operating activities (764,994) (1,646,831) (4,341,316)
INVESTING ACTIVITIES:
Purchase of property and equipment
(87,487) (275,366) (504,651)
Payment of patent costs - - (46,455)
--------------- ---------------- ----------------
Net cash used in investing activities (87,487) (275,366) (551,106)
FINANCING ACTIVITIES:
Proceeds from notes payable - - 315,500
Payments of notes payable - - (49,000)
Issuance of common stock 1,222,948 9,196,464 13,140,293
Redemption of common stock - - (300)
--------------- ---------------- ----------------
Net cash provided by financing activities 1,222,948 9,196,464 13,406,493
--------------- ---------------- ----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 370,467 7,274,267 8,514,071
Cash and cash equivalents at beginning of period 1,198,778 1,239,804 -
--------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,569,245 $ 8,514,071 $ 8,514,071
--------------- ---------------- ----------------
--------------- ---------------- ----------------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Conversion of note payable and accrued interest into
common stock $ - $ - $ 266,674
Cash paid for interest - - 12,526
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
HYPERTENSION DIAGNOSTICS, INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
March 31, 1999
1. Interim Financial Information
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all the
information and notes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, these
unaudited financial statements reflect all adjustments, consisting only of
normal and recurring adjustments necessary for a fair presentation of the
financial statements. The results of operations for the three months and
nine months ended March 31, 1999, respectively, are not necessarily
indicative of the results that may be expected for the full year ending
June 30, 1999. The June 30, 1998 balance sheet was derived from audited
financial statements. For further information, refer to the financial
statements and notes included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1998. The policies described in that
report are used for preparing quarterly reports.
2. Shareholders' Equity
In July and August 1998, the Company raised $9,188,464 (net of underwriting
discounts and offering expenses), through an initial public offering of
2,587,500 units (which includes 337,500 additional units to cover
over-allotments) at $4.125 per unit. Each unit consists of one share of
Common Stock and one redeemable Class A Warrant which entitles the holder
to purchase one share at an exercise price of $5.50 per Warrant, subject to
adjustment. The Class A Warrants are subject to redemption by the Company
for $.01 per Warrant at any time commencing 90 days after the Effective
Date (July 23, 1998), provided that the closing bid price of the Common
Stock exceeds $6.50 (subject to adjustment) for 14 consecutive trading
days.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING DISCLOSURE
This report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. In addition, forward-looking
statements may be made orally in the future by or on behalf of the Company. When
used in this report, the words "believe," "expect," "anticipate," "will" and
similar expressions are intended to identify such forward-looking statements.
The Company wishes to caution readers not to place undo reliance on any
forward-looking statements and to recognize that the statements are not
predictions of actual future results. Actual results could differ materially
from those anticipated in the forward-looking statements due to the risks and
uncertainties set forth in the Company's 1998 Annual Report on Form 10-KSB under
the caption "Risk Factors," as well as others not now anticipated. These risks
and uncertainties include, without limitation, the Company's ability to receive
regulatory approval for its Model DO-2020 product; the availability of
third-party reimbursements; market acceptance of the Company's products; timely
development of the central data management facility; the ability of third
parties to manufacture the Company's products on a commercial scale and in
compliance with regulatory requirements; the availability of integral components
for the Company's products; the Company's ability to develop distribution
channels; increased competition; changes in government regulation; health care
reform; exposure to potential product liability; and the Company's ability to
protect its proprietary technology.
DEVELOPMENT STAGE RESULTS OF OPERATIONS
The Company is a development stage company and is not presently
generating any significant revenues. There can be no assurance that the
Company will ever be able to generate significant revenues, attain or
maintain profitable operations or successfully implement its business plan or
its current development opportunities. As of March 31, 1999, the Company had
a deficit accumulated during the development stage of $(4,822,005),
attributable primarily to research and development and general and
administrative expenses. Until it is able to generate significant revenues
from its activities, the Company expects to continue to incur operating
losses.
The Company has developed proprietary cardiovascular profiling technology
that analyzes non-invasively derived arterial pulse pressure waveform data as a
means of providing parameters that are useful in assessing the cardiovascular
system. The Company has developed two models of the HDI/PULSEWAVE-TM-
CardioVascular Profiling Instrument: (1) the CR-2000 which is currently in use
by physician scientists for research purposes only; and (2) the DO-2020 which is
intended to assist physicians and other health care professionals in screening,
diagnosing and monitoring the treatment of patients with cardiovascular disease.
The Company has not yet received permission to market the DO-2020 from the Food
and Drug Administration ("FDA"). Although FDA clearance on the Model DO-2020 is
taking longer than the Company had originally anticipated, the Company continues
to believe that a FDA 510(k) clearance is the appropriate route to follow and
that the process will be completed within the fiscal year ending June 30, 2000.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
For the three months ended March 31, 1999, the Company recorded revenue of
$37,750 relating to sales of the HDI/PULSEWAVE-TM- CR-2000 Research
CardioVascular Profiling Instrument.
Total cost and expenses for the three months ended March 31, 1998 were
$360,985 compared to $666,669 for the three months ended March 31, 1999.
Approximately 18% of the $360,985 and 25% of the $666,669 total cost and
expenses were related to research and development expenses. A further breakdown
of research and development expenses is as follows:
7
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1998 1999
---------------- ---------------
<S> <C> <C>
Design and development of prototype devices and other
enhancements and improvements ...................... $ 35,393 $ 55,632
Design and development of a Central Data Management
Facility (CDMF) .................................... - 109,848
Recognized compensation cost for value of stock options
granted in lieu of cash compensation ............... 29,111 -
---------------- ---------------
Total research and development expenses ...... $ 64,504 $ 165,480
---------------- ---------------
---------------- ---------------
</TABLE>
For the three months ended March 31, 1999, approximately 66% of the total
research and development expenses related to the design and development of a
CDMF. When completed, the CDMF will be capable of handling multiple simultaneous
transmissions by the DO-2020 integrated with the Company's tracking, billing and
production systems and capable of storing and retrieving several hundred
thousand patient records.
The following is a summary of the major categories included in selling,
general and administrative expenses:
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------
1998 1999
---------------- ---------------
<S> <C> <C>
Wages, related expenses and benefits ............................. $ 98,778 $ 157,192
Outside consultants .............................................. 68,779 44,701
Rent-building and utilities ...................................... 21,132 21,717
Insurance-general and health ..................................... 11,117 17,671
Selling, marketing and promotion, including applicable wages ..... 28,130 112,569
Depreciation and amortization .................................... 6,493 21,195
Other-general and administrative ................................. 62,052 111,836
---------------- ---------------
Total selling, general and administrative expenses ... $ 296,481 $ 486,881
---------------- ---------------
---------------- ---------------
</TABLE>
The Company's number of employees increased from five in the three months
ended March 31, 1998 to thirteen in the three months ended March 31, 1999. In
September 1997, the Company hired its President, Greg H. Guettler. In April
1999, the Company hired Dennis L. Sellke to serve as its Chief Executive
Officer.
Interest income was $19,362 and $105,402 for the three months ended March
31, 1998 and 1999, respectively. From December 1997 through March 1998, the
Company raised $1,220,720 (net of expenses) through a private placement of
Common Stock at $3.00 per share.
Net loss was $(341,623) and $(523,517) for the three months ended March 31,
1998 and 1999, respectively. For the three months ended March 31, 1998, basic
and dilutive net loss per share was
8
<PAGE>
$(.15), based on weighted average shares outstanding of 2,279,928. For the three
months ended March 31, 1999, basic and dilutive net loss per share was $(.10),
based on weighted average shares outstanding of 5,107,235.
NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO NINE MONTHS ENDED MARCH 31, 1999
Total cost and expenses for the nine months ended March 31, 1998 were
$879,170 compared to $1,998,106 for the nine months ended March 31, 1999.
Approximately 29% of the $879,170 and 27% of the $1,998,106 total cost and
expenses were related to research and development expenses. A further breakdown
of research and development expenses is as follows:
<TABLE>
<CAPTION>
Nine Months Ended
March 31
------------------
1998 1999
---------------- ---------------
<S> <C> <C>
Design and development of prototype devices and other
enhancements and improvement ......................... $ 168,454 $ 213,187
Design and development of a Central Data Management
Facility (CDMF) ...................................... - 317,044
Recognized compensation cost for value of stock options
granted in lieu of cash compensation ................. 87,333 -
---------------- ---------------
Total research and development expenses ........ $ 255,787 $ 530,231
---------------- ---------------
---------------- ---------------
</TABLE>
For the nine months ended March 31, 1999, approximately 60% of the total
research and development expenses related to the design and development of a
CDMF.
The following is a summary of the major categories included in selling,
general and administrative expenses:
<TABLE>
<CAPTION>
Nine Months Ended
March 31
------------------
1998 1999
---------------- -----------------
<S> <C> <C>
Wages, related expenses and benefits .............................. $ 262,096 $ 461,273
Outside consultants ............................................... 110,221 174,229
Rent-building and utilities ....................................... 32,038 65,040
Insurance-general and health ...................................... 22,561 53,281
Selling, marketing and promotion, including applicable wages ...... 32,927 241,051
Depreciation and amortization ..................................... 8,591 51,941
Other-general and administrative .................................. 154,949 377,660
---------------- -----------------
Total selling, general and administrative expenses .... $ 623,383 $ 1,424,475
---------------- -----------------
---------------- -----------------
</TABLE>
The Company's number of employees increased from five in the nine months
ended March 31, 1998 to thirteen in the nine months ended March 31, 1999.
Effective November 1997, the Company leased approximately 6,900 square feet of
commercial office and light assembly space in Eagan, Minnesota.
The increase in outside consultants expense from $110,221 for the nine
months ended March 31, 1998 to $174,229 for the nine months ended March 31, 1999
was mainly attributable to additional work
9
<PAGE>
relating to the Company's FDA 510(k) application and efforts concerning an
approach for obtaining physician reimbursement from insurance coverage and third
party payers.
Selling, marketing and promotion expense increased from $32,927 for the
nine months ended March 31, 1998 to $241,051 for the nine months ended March 31,
1999. This category includes wages and commissions paid by the Company relating
to its sales and marketing efforts as well as travel expense. In this regard,
the Company added the following individuals: Director of Sales (during March
1998), Director of Marketing (during May 1998) and Mid-Atlantic regional sales
manager (during March 1999).
Interest income was $45,700 and $319,102 for the nine months ended March
31, 1998 and 1999, respectively. In July and August 1998, the Company raised
$9,188,464 (net of underwriting discounts and offering expenses) through an
initial public offering of 2,587,500 units (which included 337,500 additional
units to cover over-allotments) at $4.125 per unit.
Net loss was $(833,470) and $(1,545,756) for the nine months ended March
31, 1998 and 1999, respectively. For the nine months ended March 31, 1998, basic
and dilutive net loss per share was $(.41), based on weighted average shares
outstanding of 2,050,407. For the nine months ended March 31, 1999, basic and
dilutive net loss per share was $(.31), based on weighted average shares
outstanding of 4,926,185.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents had a net increase of $370,467 for the nine
months ended March 31, 1998. The significant elements of this change were as
follows: NET CASH USED IN OPERATING ACTIVITIES - net loss, as adjusted for
non-cash items, of $(737,546); NET CASH PROVIDED BY FINANCING
ACTIVITIES - issuance of Common Stock - $1,222,948. For the nine months ended
March 31, 1999, cash and cash equivalents had a net increase of $7,274,267. The
significant elements of this change were as follows: NET CASH USED IN OPERATING
ACTIVITIES - net loss, as adjusted for non-cash items, of $(1,493,815); increase
in inventory - $293,816; decrease in prepaid expenses - $137,831; increase in
accounts payable - $70,552; NET CASH USED IN INVESTING ACTIVITIES - purchase of
property and equipment - $275,366; NET CASH PROVIDED BY FINANCING ACTIVITIES -
issuance of Common Stock - $9,196,464.
In July 1998, the Company completed its initial public offering (IPO) in
which it sold 2,250,000 units at $4.125 per unit, each unit consisting of one
share of Common Stock and one redeemable Class A Warrant. In August 1998, the
underwriter exercised in full an overallotment option to purchase an additional
337,500 units. Total net proceeds from the IPO were $9,188,464. As of March 31,
1999, the Company has cash and cash equivalents of $8,514,071, and anticipates
that these funds should allow it to pursue the different elements of the
Company's business development strategy for at least the next two years. The
Company's business plan and financing needs are subject to change depending on,
among other things, market conditions, timing of the receipt of clearance from
the FDA to market the Model DO-2020, business opportunities and cash flow from
operations. Pending application of the net proceeds, such proceeds will be
invested in short-term, high quality, interest-bearing instruments.
Although not assured, in addition to the net proceeds from the IPO, the
Company may derive over a period of time up to $14,231,250 from the exercise of
the Class A Warrants included in the units. Each Class A Warrant entitles the
holder to purchase one share at an exercise price of $5.50 per Warrant, subject
to adjustment. The Class A Warrants are subject to redemption by the Company for
$.01 per Warrant at any time commencing October 21, 1998, provided that the
closing bid price of the shares exceeds $6.50 (subject to adjustment) for 14
consecutive trading days. The amounts, if any, that the Company derives from the
exercise of such Class A Warrants will be used in connection with the Company's
development opportunities, business plan activities and/or working capital
requirements.
10
<PAGE>
YEAR 2000 COMPLIANCE
The Company has considered the potential impact of the Year 2000 for its
internal information systems, external integration problems and the two models
of its HDI/PULSEWAVE-TM- CardioVascular Profiling Instrument (the "Product").
The Company believes that its internal information systems and current Product
are Year 2000 compliant and that its CDMF will be so prior to the Year 2000. The
Company's Product has been, and the CDMF is being, designed and developed to be
Year 2000 compliant. In addition, the Product has been tested to ensure that its
performance and functionality are not affected by the Year 2000 compliance
issues. There can be no assurance, however, that the Company will not experience
unexpected costs and delays in achieving Year 2000 compliance, which could
result in a material adverse effect on the Company's future results of
operations.
11
<PAGE>
PART II. OTHER INFORMATION.
ITEM 2. USE OF PROCEEDS
The following table sets forth the Company's use of proceeds from its
initial public offering, from the closing of the offering until March 31, 1999:
Temporary investments (U.S. Government obligations/notes
and U.S. Government money market fund; other short-term high
quality, interest-bearing instruments) $8,514,071
Central Data Management Facilty (CDMF) 317,044
Purchase of property and equipment 275,000
Sales and marketing 82,349
-------------
TOTAL NET PROCEEDS $9,188,464
-------------
-------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following Exhibits are furnished pursuant to Item 601 of Regulation
S-B:
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule for the quarter ended March 31, 1999.
99.1 Press Release dated April 19, 1999.
99.2 Press Release dated April 28, 1999.
99.3 Press Release dated May 14, 1999.
- ----------------------------
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended March 31, 1999.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HYPERTENSION DIAGNOSTICS, INC.
By /s/ James S. Murphy
-----------------------------------
James S. Murphy
Vice President-Finance and
Chief Financial Officer
(principal accounting officer)
Date: May 14, 1999
------------
13
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule for the quarter ended March 31, 1999.
99.1 Press Release dated April 19, 1999
99.2 Release dated April 28, 1999.
99.3 Press Release dated May 14, 1999.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 8,514,071
<SECURITIES> 0
<RECEIVABLES> 99,403
<ALLOWANCES> 0
<INVENTORY> 332,870
<CURRENT-ASSETS> 8,966,748
<PP&E> 425,480
<DEPRECIATION> 70,969
<TOTAL-ASSETS> 9,354,111
<CURRENT-LIABILITIES> 285,996
<BONDS> 0
0
0
<COMMON> 51,092
<OTHER-SE> 9,017,023
<TOTAL-LIABILITY-AND-EQUITY> 9,354,111
<SALES> 37,750
<TOTAL-REVENUES> 143,152
<CGS> 14,308
<TOTAL-COSTS> 14,308
<OTHER-EXPENSES> 652,361
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (523,517)
<INCOME-TAX> 0
<INCOME-CONTINUING> (523,517)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (523,517)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
<PAGE>
EXHIBIT 99.1
HYPERTENSION DIAGNOSTICS, INC. FOR IMMEDIATE RELEASE
2915 Waters Road, Suite 108
Eagan, MN 55121-1562
Contact: JAMES S. MURPHY
Chief Financial Officer
Hypertension Diagnostics, Inc.
651-687-9999
HYPERTENSION DIAGNOSTICS ANNOUNCES THE HIRING OF DENNIS L. SELLKE AS CHIEF
EXECUTIVE OFFICER AND HIS APPOINTMENT AS A BOARD MEMBER
ST. PAUL, MN - April 19, 1999 - Hypertension Diagnostics, Inc. (Nasdaq Small
Cap: HDII; HDIIW; HDIIU), today announced the hiring of Dennis L. Sellke to
serve as Chief Executive Officer, and his appointment to the Board of Directors.
Mr. Sellke will assume his duties immediately. Greg H. Guettler continues as
President of Hypertension Diagnostics, Inc. ("HDI").
Mr. Sellke served as President and Chief Executive Officer of Ela*Angeion
LLC, Minneapolis, Minnesota, a French and United States joint venture
established to market and sell pacemakers and ICDs in the United States. Mr.
Sellke also serves as Chairman and was Chief Executive Officer of Clarus
Medical, Inc., Minneapolis, Minnesota, a privately-held medical device company
involved in OEM manufacturing and spinal disc therapy sales; previous to that,
he served in various executive capacities with Medtronic, Inc., Fridley,
Minnesota.
Melville R. Bois, Chairman of the Board of HDI, said "I am delighted that
HDI was able to attract an executive of Mr. Sellke's caliber". Mr. Sellke said
"I am extremely excited about joining the HDI team. The hypertensive patient
population is sizeable. I believe their diagnosis and treatment can be improved
substantially once our proprietary Model DO-2020 is cleared by the FDA. Our
business model can benefit all HDI stakeholders: patients, their physicians,
insurers and our employees and shareholders. I look forward to being part of
this potentially significant medical business."
-MORE-
<PAGE>
PAGE 2, HYPERTENSION DIAGNOSTICS, INC.
APRIL 19, 1999
Hypertension Diagnostics has designed and developed proprietary,
non-invasive cardiovascular profiling equipment which presents several
parameters that may be useful in assessing the cardiovascular system. The
Company has developed two models of the HDI/PULSEWAVE-TM- CardioVascular
Profiling Instrument: (1) the Model CR-2000 which can be used for clinical
research purposes only; and (2) the Model DO-2020 which is intended to assist
physicians and other health care professionals with screening, diagnosing and
monitoring the treatment of patients. The Company may not market the Model
DO-2020 until clearance is received from the Food and Drug Administration
("FDA").
Forward-looking statements in this press release, if any, are made
under the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. The Company wishes to caution readers not to place undo reliance on any
forward-looking statements and to recognize that the statements are not
predictions of actual future results. Actual results could differ materially
from those anticipated in the forward-looking statements due to the risks and
uncertainties set forth in the Company's 1998 Annual Report on Form 10-KSB under
the caption "Risk Factors," as well as others not now anticipated. These risks
and uncertainties include, without limitation, the Company's ability to receive
regulatory approval for its Model DO-2020 product; the availability of
third-party reimbursements; market acceptance of the Company's products; timely
development of the central data management facility; the ability of third
parties to manufacture the Company's products on a commercial scale and in
compliance with regulatory requirements; the availability of integral components
for the Company's products; the Company's ability to develop distribution
channels; increased competition; changes in government regulation; health care
reform; exposure to potential product liability; and the Company's ability to
protect its proprietary technology.
# # #
<PAGE>
EXHIBIT 99.2
HYPERTENSION DIAGNOSTICS, INC. FOR IMMEDIATE RELEASE
2915 Waters Road, Suite 108
Eagan, MN 55121-1562
Contact: GREG H. GUETTLER
President
Hypertension Diagnostics, Inc.
651-687-9999
HYPERTENSION DIAGNOSTICS BUILDS SALES FORCE
HALE TO SPEARHEAD SALES IN THE MID-ATLANTIC REGION
ST. PAUL, Minn., April 28, 1999 -- Hypertension Diagnostics, Inc. (Nasdaq
SmallCap: HDII; HDIIW; HDIIU), a medical device company developing non-invasive
methods of monitoring and assessing cardiovascular health, today announced the
hiring of Scott Hale as its Mid-Atlantic regional sales manager. The recent hire
allows Hypertension Diagnostics (HDI) to start structuring its sales force,
beginning with one of the country's fast-growing medical research and treatment
markets.
"We are very excited to bring Scott on board the HDI team," said Greg
Guettler, President, Hypertension Diagnostics, Inc. "With Scott's extensive
medical device sales and marketing experience, HDI will broaden its
opportunities for sales of its HDI/PULSEWAVE-TM- CR-2000 Research CardioVascular
Profiling Instrument."
As Mid-Atlantic regional sales manager, Hale is responsible for regional
marketing and sales of HDI products, establishing and maintaining customer
relationships in the eleven-state region including Georgia, North Carolina,
South Carolina, Alabama, Florida, Tennessee and Virginia.
In his previous positions with medical device manufacturers, Hale developed
key clinical accounts and managed the integration of new technology into medical
practices throughout the Mid-Atlantic region. Hale's expertise was gained
through positions with Iomed, Inc., Dey Laboratories, Jones Medical Industries
and Medical Technology Systems.
Hale earned a bachelor's degree in marketing from Western Carolina
University in Cullowhee, North Carolina.
-MORE-
<PAGE>
PAGE 2, HYPERTENSION DIAGNOSTICS, INC.
APRIL 28, 1999
Founded in 1988, Hypertension Diagnostics is focused on the development of
proprietary cardiovascular profiling technology that analyzes arterial pulse
pressure waveform data. HDI has developed two models of it's HDI/PULSEWAVE
CardioVascular Profiling Instrument. HDI's first model, the HDI/PULSEWAVE
CR-2000, is currently in use by physician scientists for research purposes only.
The second model, the HDI/PULSEWAVE DO-2020, is intended to assist physicians in
screening and diagnosing patients with cardiovascular disease. HDI is currently
awaiting 510(k) clearance from the Food and Drug Administration (FDA) for the
HDI/PULSEWAVE DO-2020 model.
Forward-looking statements in this press release are made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company wishes to caution readers not to place undo reliance on any
forward-looking statements and to recognize that the statements are not
predictions of actual future results. Actual results could differ materially
from those anticipated in the forward-looking statements due to the risks and
uncertainties set forth in the Company's 1998 Annual Report on Form 10-KSB under
the caption "Risk Factors," as well as others not now anticipated. These risks
and uncertainties include, without limitation, the Company's ability to receive
regulatory approval for its Model DO-2020 product; the availability of
third-party reimbursements; market acceptance of the Company's products; timely
development of the central data management facility; the ability of third
parties to manufacture the Company's products on a commercial scale and in
compliance with regulatory requirements; the availability of integral components
for the Company's products; the Company's ability to develop distribution
channels; increased competition; changes in government regulation; health care
reform; exposure to potential product liability; and the Company's ability to
protect its proprietary technology.
# # #
<PAGE>
EXHIBIT 99.3
HYPERTENSION DIAGNOSTICS, INC. FOR RELEASE ON: MAY 14, 1999
2915 Waters Road, Suite 108
Eagan, MN 55121-1562 Contact: MR. JAMES S. MURPHY
Chief Financial Officer
Hypertension Diagnostics, Inc.
651-687-9999
HYPERTENSION DIAGNOSTICS ANNOUNCES THIRD QUARTER FY 1999 RESULTS
ST. PAUL, MN - May 14, 1999 - Hypertension Diagnostics, Inc. (Nasdaq SmallCap:
HDII; HDIIW; HDIIU), today announced financial results for the third quarter
ended March 31, 1999.
The Company reported sales revenue of $37,750 in the third quarter of
fiscal year 1999 relating to its Model CR-2000 Research CardioVascular Profiling
Instrument. The Company also reported a net loss for the third quarter of fiscal
year 1999 of $(523,517) or $(.10) per share as compared to a net loss for the
same quarter in fiscal year 1998 of $(341,623) or $(.15) per share. Revenue for
the nine months ended March 31, 1999 was $133,248 as compared to no revenue in
the preceding nine months ended March 31, 1998. Net loss for the nine months
ended March 31, 1999 was $(1,545,756) or $(.31) per share as compared to a net
loss of $(833,470) or $(.41) per share for the nine months ended March 31, 1998.
"We have focused on executing our business plan on two primary fronts:
marketing the HDI/PULSEWAVE-TM- Model CR-2000 Research CardioVascular Profiling
Instrument both domestically and internationally, and pursuing FDA clearance for
the HDI/PULSEWAVE-TM- Model DO-2020," said Greg H. Guettler, President. "During
the five months ending April 1999, we have achieved a number of our business
objectives including:
- Preliminary agreement with a major pharmaceutical firm to include the
Model CR-2000 in a multi-site post-marketing study for an approved
anti-hypertensive drug.
- Sold Model CR-2000 Research CardioVascular Profiling Instruments in
six foreign countries in addition to Instruments sold in the
United States.
-MORE-
<PAGE>
PAGE 2, HYPERTENSION DIAGNOSTICS, INC.
MAY 14, 1999
- Initiated the process of becoming ISO-9002/EN46002 certified as well
as conformance with the Medical Device Directives to permit
unrestricted marketing and sales of our entire product line in the
European Community, with a completion goal of calendar year-end.
- Completed initial development of the Central Data Management Facility
(CDMF) in support of receiving Model DO-2020 data transmissions and
integrating that data with our accounting-invoicing system.
- Added a Chief Executive Officer experienced in international
distribution and cardiovascular medical device marketing.
- Added a Regional Sales Manager for the Mid-Atlantic sales territory.
- Completed Phase I installation of our Company website at
www.HDI-PulseWave.com.
- Expanded on intellectual property protection for the Company's blood
pressure waveform analysis technology through the issuance of a patent
with additional claims entitled, "Method for Vascular Impedance
Measurement" (No. 5,876,347).
- Continued our past history of expense control, resulting in available
cash and cash equivalents of approximately $8.5 million as of March
31, 1999.
"We continue to remain focused on two primary aspects of our business
plan: FDA clearance of the HDI/PULSEWAVE-TM-Model DO-2020 and revenue growth
from sales of the Model CR-2000. Although FDA clearance of the Model DO-2020
is taking longer than we had originally anticipated, we continue to believe
that a 510(k) clearance will be completed within the next fiscal year," said
Guettler.
-MORE-
<PAGE>
PAGE 3, HYPERTENSION DIAGNOSTICS, INC.
MAY 14, 1999
Hypertension Diagnostics has developed proprietary cardiovascular profiling
technology that analyzes non-invasively derived arterial pulse pressure waveform
data as a means of providing parameters that are useful in assessing the
cardiovascular system. The Company has designed two models of the
HDI/PULSEWAVE-TM- CardioVascular Profiling Instrument: (1) the CR-2000 which is
currently in use by physician scientists for research purposes only; and (2) the
DO-2020 which is intended to assist physicians and other health care
professionals in screening, diagnosing and monitoring the treatment of patients
with cardiovascular disease. The Company has not yet received permission to
market the DO-2020 from the Food and Drug Administration.
Forward-looking statements in this press release are made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
Company wishes to caution readers not to place undo reliance on any
forward-looking statements and to recognize that the statements are not
predictions of actual future results. Actual results could differ materially
from those anticipated in the forward-looking statements due to the risks and
uncertainties set forth in the Company's 1998 Annual Report on Form 10-KSB under
the caption "Risk Factors," as well as others not now anticipated. These risks
and uncertainties include, without limitation, the Company's ability to receive
regulatory approval for its Model DO-2020 product; the availability of
third-party reimbursements; market acceptance of the Company's products; timely
development of the central data management facility; the ability of third
parties to manufacture the Company's products on a commercial scale and in
compliance with regulatory requirements; the availability of integral components
for the Company's products; the Company's ability to develop distribution
channels; increased competition; changes in government regulation; health care
reform; exposure to potential product liability; and the Company's ability to
protect its proprietary technology.
-MORE-
<PAGE>
PAGE 4, HYPERTENSION DIAGNOSTICS, INC.
MAY 14, 1999
HYPERTENSION DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
SUMMARY FINANCIAL DATA
(UNAUDITED)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
------------------ -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Equipment sales $ 37,750 $ - $ 133,248 $ -
Cost and Expenses:
Cost of equipment sales 14,308 - 43,400 -
Research and development 165,480 64,504 530,231 255,787
Selling, general and administrative 486,881 296,481 1,424,475 623,383
----------- ----------- ------------ -------------
Total Cost and Expenses 666,669 360,985 1,998,106 879,170
----------- ----------- ------------ -------------
Operating Loss (628,919) (360,985) (1,864,858) (879,170)
Interest Income 105,402 19,362 319,102 45,700
----------- ----------- ------------ -------------
Net Loss and Deficit Accumulated
During the Development Stage $ (523,517) $ (341,623) $ (1,545,756) $ (833,470)
----------- ----------- ------------ -------------
----------- ----------- ------------ -------------
Basic and Dilutive Net Loss per Share $ (.10) $ (.15) $ (.31) $ (.41)
Weighted Average Shares Outstanding 5,107,235 2,279,928 4,926,185 2,050,407
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1998
-------------- -------------
<S> <C> <C>
Cash and cash equivalents .................... $ 8,514,071 $ 1,239,804
Total assets ................................. 9,354,111 1,605,507
Total current liabilities .................... 285,996 188,100
Total long-term debt, less current portion ... -- --
Accumulated deficit .......................... (4,822,005) (3,276,249)
Total shareholders' equity ................... 9,068,115 1,417,407
.............................
</TABLE>
# # #
