<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
December 31, 1999 0-10581
- ----------------- -------
TRIMEDYNE, INC.
(Exact name of Registrant as specified in its charter)
Nevada 36-3094439
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
2801 Barranca Road, Irvine, CA 92606
(Address of principal executive offices) (Zip Code)
(949/559-5300)
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report).
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), (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 class of
common stock, as of the last practicable date.
Class Outstanding at February 8, 2000
- ---------------------------- -------------------------------
Common Stock, $.01 par value 11,127,445 shares (excluding
93,597 shares held as
Treasury Shares)
<PAGE>
TRIMEDYNE, INC.
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. Financial Information
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
PART II. Other Information 8
SIGNATURE PAGE 9
</TABLE>
<PAGE>
TRIMEDYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
December 31,
1999
============
<S> <C>
Current Assets:
Cash and cash equivalents....................................... $ 2,860,000
Marketable securities.......................................... 2,031,000
Trade accounts receivable, net of allowance for doubtful
accounts of $582,000.......................................... 1,901,000
Inventories (Note 2)........................................... 3,906,000
Other.......................................................... 442,000
-----------
Total Current Assets......................................... 11,140,000
-----------
Net Properties (Note 2) 445,000
-----------
$11,585,000
===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current Liabilities:
<S> <C>
Accounts payable.............................................. $ 463,000
Accrued expenses and other.................................... 833,000
-----------
Total Current Liabilities................................... 1,296,000
Stockholders' Equity:
Common stock - .01 par value; 15,000,000 shares authorized,
11,127,445 shares issued.................................... 111,000
Capital in excess of par value................................ 44,777,000
Accumulated deficit........................................... (33,715,000)
Unrealized loss on securities available for sale (Note 4)..... (171,000)
-----------
11,002,000
Less 93,597 shares of common stock in treasury,
at cost....................................................... (713,000)
-----------
Total Stockholders' Equity................................... 10,289,000
-----------
$11,585,000
===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
TRIMEDYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------
1999 1998
==== ====
<S> <C> <C>
Net Sales.................... $1,985,000 $ 1,511,000
Costs and Expenses:
Cost of goods sold.......... 1,073,000 848,000
Selling, general and
administrative.............. 650,000 1,128,000
Research and development.... 820,000 641,000
---------- -----------
Total Costs and Operating
Expenses................... 2,543,000 2,617,000
---------- -----------
Loss from Operations......... (558,000) (1,106,000)
Other Income:
Interest income........... 67,000 79,000
Other..................... 7,000 6,527,000
---------- -----------
Net Income (Loss)........... $ (484,000) $ 5,498,000
========== ===========
Basic and dilutive earnings
(loss) per share (Note 3):. $(0.04) $0.50
========== ===========
Weighted average number of
shares outstanding......... 11,127,445 10,905,956
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
TRIMEDYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------
1999 1998
==== ====
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss)...................................................... (484,000) $5,498,000
Adjustment to reconcile net income (loss) to net cash from operating
activities:..............................................................
Depreciation and Amortization........................................... 57,000 60,000
Value of stock options issued below fair value.......................... 4,000 5,000
Changes in operating assets and liabilities:
Decrease in trade accounts receivable, net.............................. 313,000 349,000
(Increase) decrease in inventories...................................... (466,000) 96,000
Increase in other current assets........................................ (49,000) (12,000)
Increase (decrease) in accounts payable................................. 138,000 (27,000)
Increase (decrease) in accrued expense.................................. 65,000 (188,000)
Increase in deferred income............................................. 5,000 72,000
--------- ----------
Net cash from (used for) operating activities............................. (417,000) 5,853,000
Cash flows from investing activities:
Capital expenditures..................................................... (15,000) --
Unrealized Loss on Marketable Securities................................. (110,000) --
Sale (purchase) of marketable securities................................. 139,000 (5,330,000)
--------- ----------
Net cash (used for) from investing activities............................ 14,000 (5,330,000)
--------- ----------
Cash flows from financing activities:
Proceeds from the exercise of stock options.............................. 51,000 --
--------- ----------
Net increase (decrease) in cash and cash equivalents....................... (352,000) 523,000
Cash and cash equivalents at beginning of period........................... 3,212,000 1,974,000
--------- ----------
Cash and cash equivalents at end of period................................. $2,860,000 $2,497,000
========= ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
TRIMEDYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(UNAUDITED)
NOTE 1 - Basis of Presentation
In the opinion of management, the accompanying condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the Company's condensed consolidated
financial position as of December 31, 1999 and the results of operations and of
cash flows for the three month periods ended December 31, 1999 and 1998.
While management believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes included in the Company's latest annual
report on Form 10-K.
<TABLE>
<CAPTION>
NOTE 2 - Balance Sheet Items December 31, 1999
=================
<S> <C>
Inventories consist of the following:
Raw material............................ $ 2,050,000
Work-in-process......................... 352,000
Finished goods.......................... 1,504,000
-----------
Total inventory $ 3,906,000
===========
Net properties consist of the following:
Furniture and equipment.................. $ 3,110,000
Leasehold improvements................... 331,000
Other.................................... 16,000
-----------
Total Properties......................... 3,457,000
Accumulated depreciation................... (3,012,000)
-----------
Net properties............................. $ 445,000
===========
</TABLE>
NOTE 3
For all periods presented, the net earnings available to common shareholders and
the weighted average shares outstanding are the same for both basic and diluted
EPS, since the effects of the Company's and Cardiodyne's stock options would be
antidilutive. Basic and diluted EPS do not differ from earnings per share
previously presented.
NOTE 4 - Comprehensive Income
On October 1, 1998, the Company adopted the disclosure standard, Statement
of Financial Accounting Standard No. 130 "Comprehensive Income". The Company's
sole component of Other Comprehensive Income is changes in unrealized
appreciation (depreciation) - Securities Available for Sale. For the three
months ended December 31, 1999 and 1998, such changes were not material, and
accordingly, not presented in the accompanying consolidated statement of
operations.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The statements contained in this Quarterly Report on Form 10-Q that are not
historical facts may contain forward-looking statements that involve a number of
known and unknown risks and uncertainties that could cause actual results to
differ materially from those discussed or anticipated by management. Potential
risks and uncertainties include, among other factors, general business
conditions, government regulations governing medical device approvals and
manufacturing practices, competitive market conditions, success of the Company's
business strategy, delay of orders, changes in the mix of products sold,
availability of suppliers, concentration of sales in markets and to certain
customers, changes in manufacturing efficiencies, development and introduction
of new products, fluctuations in margins, timing of significant orders, and
other risks and uncertainties currently unknown to management.
Method of Presentation.
The consolidated financial statements include the accounts of the Company and
its 90% owned subsidiary, Cardiodyne, Inc. ("Cardiodyne").
Quarter ended December 31, 1999 compared to quarter ended December 31, 1998.
During the quarter ended December 31, 1999, Trimedyne's net revenues increased
31% from the same quarter of the previous year, $1,985,000 vs. $1,511,000. The
Company believes that the increase in revenue was primarily due to the
introduction of new delivery devices and increased demand in international
markets.
For the current quarter, the Company had a loss from continuing operations of
$484,000, or $(0.04) per share, based on 11,127,445 weighted average number of
shares outstanding, as compared to income of $5,498,000 or $0.50 per share,
based on 10,905,956 weighted average number of shares outstanding, in the same
quarter of the previous year. Net income in the prior year included a one-time
gain of $6.5 million, net of legal and other expenses, from the settlement of
the Company's lawsuit against C.R. Bard, Inc.
Cost of goods sold was 54% of net sales in the first quarter of fiscal 2000
compared to 56% for the first quarter of fiscal 1999. The decrease in cost of
goods sold as a percentage of revenues was primarily the result of a greater
volume of sales absorbing fixed overhead costs in the current quarter.
Selling, general and administrative expenses decreased from $1,128,000 to
$650,000, a decrease of $478,000 or 42%. The decrease in selling, general and
administrative expenses is attributed to continued efforts to reduce overall
operating costs.
Research and development expenditures for the quarter ended December 31, 1999,
increased 35% ($820,000 vs. $641,000), due to the commencement of new
development projects in the urology, gynecology and general surgery markets.
R&D expenditures includes $537,000 and $530,000 incurred on behalf of the
Company's 90% owned subsidiary Cardiodyne in the quarters ended December 31,
1999 and 1998, respectively.
Interest income decreased by 15% to $67,000 for the current quarter, compared
with $79,000 for the same period of the prior year, due to a corresponding
decrease in marketable securities.
Liquidity and Capital Resources
- -------------------------------
The Company's working capital decreased from $10,357,000 at September 30, 1999
to $9,844,000 at December 31, 1999, of which $4,891,000 is cash and equivalents
and marketable securities. Management believes existing working capital is
sufficient to meet Trimedyne's operating needs for at least the next 12 months.
Management has implemented cost reductions at Trimedyne and will seek additional
financing to continue development of Cardiodyne's products, the success of which
cannot be assured.
7
<PAGE>
PART II.
Other Information
Item 1. Legal Proceedings
Previously reported.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
8
<PAGE>
SIGNATURE PAGE
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 hereunto duly authorized.
TRIMEDYNE, INC.
Date: February 14, 2000 /s/ MARVIN P. LOEB
----------------- ------------------
Marvin P. Loeb
Chairman and
Chief Executive Officer
Date: February 14, 2000 /s/ SHANE H. TRAVELLER
----------------- ----------------------
Shane H. Traveller
Treasurer and
Chief Financial and Accounting Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AND STATEMENTS OF OPERATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
*IDENTIFY THE FINANCIAL STATEMENT(S) TO BE REFERENCED IN THE LEGEND:
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,860
<SECURITIES> 2,031
<RECEIVABLES> 1,901
<ALLOWANCES> 582
<INVENTORY> 3,906
<CURRENT-ASSETS> 11,140
<PP&E> 445
<DEPRECIATION> 57
<TOTAL-ASSETS> 11,585
<CURRENT-LIABILITIES> 1,296
<BONDS> 0
0
0
<COMMON> 111
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,585
<SALES> 1,985
<TOTAL-REVENUES> 2,059
<CGS> 1,073
<TOTAL-COSTS> 2,543
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (558)
<INCOME-TAX> 0
<INCOME-CONTINUING> (558)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (484)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
