<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended SEPTEMBER 30, 1996
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 0-9570
LUTHER MEDICAL PRODUCTS, INC.
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 33-0468235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14332 CHAMBERS ROAD, TUSTIN, CA 92680
(Address of principal executive offices) (Zip Code)
(714) 544-3002
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
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.
[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.
COMMON STOCK NO STATED PAR VALUE--3,189,086 SHARES AS OF SEPTEMBER 30, 1996
<PAGE>
INDEX
LUTHER MEDICAL PRODUCTS, INC.
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
<S> <C>
Condensed Consolidated Balance Sheet - September 30, 1996 3
Condensed Consolidated Statements of Operations - Three months
ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
Three months ended September 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION 8
Signature Page 8
</TABLE>
<PAGE>
LUTHER MEDICAL PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS SEPT. 30,1996
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,374,654
Accounts receivable - net 707,684
Inventories - Note C 1,749,591
Other current assets 72,803
-----------
TOTAL CURRENT ASSETS 3,904,732
-----------
PROPERTY AND EQUIPMENT 1,216,824
Less accumulated depreciation (826,306)
-----------
PROPERTY AND EQUIPMENT - NET 390,518
INTANGIBLE ASSETS - NET 114,975
OTHER ASSETS 10,199
-----------
$ 4,420,424
===========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 317,113
Accrued payroll and related expenses 73,839
Other accrued liabilities 106,790
-----------
TOTAL CURRENT LIABILITIES 497,742
-----------
STOCKHOLDERS' EQUITY
Preferred stock - no stated par value;
10,000,000 shares authorized; none issued
Common stock - no stated par value;
25,000,000 shares authorized; issued and
outstanding 3,189,086 10,236,274
Accumulated deficit (6,313,592)
-----------
NET STOCKHOLDERS' EQUITY 3,922,682
-----------
$ 4,420,424
===========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
LUTHER MEDICAL PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED 1996 ENDED 1995
------------- -------------
<S> <C> <C>
REVENUES $ 1,132,108 $ 671,691
COSTS AND EXPENSES:
Cost of sales 664,424 349,034
Selling 325,771 196,910
General and administrative 188,580 173,327
Research and development 123,665 102,236
Depreciation and amortization 60,106 50,946
Interest expense -0- 9,865
------------- -------------
TOTAL COSTS AND EXPENSES 1,362,546 882,318
NET LOSS $ (230,438) $ (210,627)
============= =============
Weighted average number of shares
outstanding ('000) 3,179 2,986
Net loss per share: $ ( .07) $ (.07)
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE>
LUTHER MEDICAL PRODUCTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (230,438) $ (210,627)
Adjustments to reconcile net income (loss) to
net cash used by operating activities :
Depreciation and amortization 60,106 50,946
Changes in operating assets and liabilities:
Accounts and other receivables 116,601 (69,970)
Inventories (162,269) (137,895)
Prepaid expenses and other assets (584) 26,746
Accounts payable (13,434) 57,123
Accrued payroll and related expenses (6,921) (6,717)
Other accrued liabilities 18,187 (130,771)
----------- ----------
Net cash (used) provided (218,752) (421,165)
----------- ----------
INVESTING ACTIVITIES:
Proceeds from sale of U.S. Treasury bills -0- 736,794
Purchases of property and equipment (37,007) (37,424)
----------- ----------
Net cash (used) provided in investing activities (37,007) 699,370
----------- ----------
FINANCING ACTIVITIES:
Proceeds from sales of common stock 32,272 -0-
Proceeds from collection of notes receivable from
stockholder 183,444
----------- ----------
Net cash provided by financing activities 32,272 183,444
----------- ----------
Net increase (decrease) in cash (223,487) 461,649
Cash, beginning of year 1,598,141 182,726
----------- ----------
Cash, at end of three months $ 1,374,654 $ 644,375
=========== ==========
</TABLE>
See notes to condensed consolidated financial statements
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<PAGE>
LUTHER MEDICAL PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE A - BASIS OF PREPARATION
The accompanying condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ending September
30, 1996 are not necessarily indicative of the results that may be expected for
the year ended June 30, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB.
NOTE B - LOSS PER SHARE
Loss per share is calculated using the weighted average number of shares
outstanding. Common stock equivalents are not included when their effect would
be antidilutive.
NOTE C - INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
Sept. 30,1996
-------------
<S> <C>
Raw material $ 679,573
Work in process 553,146
Finished goods 516,872
-------------
$ 1,749,591
=============
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total consolidated revenues for the first quarter of fiscal year 1997 were
$1,132,000 compared to $672,000 for the prior year's quarter, an increase of
68%. Catheter product sales increased by 77% to $1,108,000 from $627,000 for
the prior year's quarter. Sales to distributors contributed $768,000, a 102%
increase from revenues of $381,000 for the same period last year. Catheter
sales to international distributors increased to $187,000 or 73% and sales to
OEM customers increased to $144,000 from $120,000 in the prior year's period.
Interest income decreased by $23,000 over the prior year's quarter.
Cost of revenues for the three months ended September 30, 1996 were $664,000
compared to $349,000 in the prior year's quarter. Cost of revenues as a
percentage of product sales increased to 60% from 56% in the prior year's
quarter, mainly as a result of a change in product mix.
Selling expenses were $326,000 for the quarter ended September 30, 1996, a 65%
increase from $197,000 in the prior year's quarter. The increase is
attributable to increased marketing efforts to support the Company's distributor
network with the goal to increase the Company's market share. General and
administrative expenses increased by $15,000 for the quarter, mainly as a result
of higher legal fees.
Research and development expenses were $124,000 for the first quarter of fiscal
year 1997 compared to $102,000 for the same period last year. Depreciation and
amortization expense increased from $51,000 to $60,000. Interest expense was
zero compared to $10,000 in the prior year's quarter.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had working capital of $3.4 million and its
principal sources of liquidity consisted of $1.4 million in cash and cash
equivalents. Net cash used by operating activities for the three months ended
September 30, 1996, was $219,000, mainly as the result of the net loss of
$230,000, the decrease in accounts and other receivables of $117,000 and the
increase in inventories of $162,000. With respect to investing activities, the
Company made purchases of property and equipment totaling $37,000, during the
quarter ended September 30, 1996. Financing activities provided $32,000,
resulting from sales of common stock for the exercise of stock options and
warrants.
The Company has no long-term commitments other than an annual lease obligation
of between $130,000 and $151,000 for its facilities through 1998 and consulting
fees of $396,000 payable to National Contracts Inc. over a two-year period,
$289,000 which was paid through September 30, 1996.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended September 30,
1996.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LUTHER MEDICAL PRODUCTS, INC.
By: /s/ DAVID ROLLO Date: November 14, 1996
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David Rollo
Chief Financial Officer
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,374,654
<SECURITIES> 0
<RECEIVABLES> 707,684
<ALLOWANCES> 0
<INVENTORY> 1,749,591
<CURRENT-ASSETS> 3,904,732
<PP&E> 1,216,824
<DEPRECIATION> 826,306
<TOTAL-ASSETS> 4,420,424
<CURRENT-LIABILITIES> 497,742
<BONDS> 0
0
0
<COMMON> 10,236,274
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,420,424
<SALES> 1,132,108
<TOTAL-REVENUES> 1,132,108
<CGS> 664,424
<TOTAL-COSTS> 1,362,546
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (230,438)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230,438)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> 0
</TABLE>
