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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
June 30, 2000 0-10581
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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 sicce 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
---------------------------- June 30, 2000
Common Stock, $.01 par value 11,830,369 shares (excluding
101,609 shares held as
Treasury Shares)
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TRIMEDYNE, INC.
<TABLE>
<CAPTION>
Page Number
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<S> <C> <C>
PART I. Financial Information
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets 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
Condition and Results of Operations 8
PART II. Other Information 10
SIGNATURE PAGE 12
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TRIMEDYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
June 30,
2000
========
<S> <C>
Current Assets:
Cash and cash equivalents................................... $ 245,000
Marketable securities....................................... 4,740,000
Trade accounts receivable, net of allowance for doubtful
accounts of $550,000....................................... 1,534,000
Inventories (Note 2)........................................ 4,606,000
Other....................................................... 431,000
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Total Current Assets..................................... 11,556,000
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Net Properties (Note 2)...................................... 442,000
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$11,998,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable............................................ $ 432,000
Accrued expenses............................................ 553,000
Deferred income............................................. 104,000
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Total Current Liabilities.................................. 1,089,000
Stockholders' Equity
Common stock-.01 par value; 30,000,000 shares authorized,
11,931,978 shares issued................................... 117,000
Capital in excess of par value.............................. 45,662,000
Accumulated deficit......................................... (33,987,000)
Unrealized loss on marketable securities available for sale. (170,000)
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11,622,000
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Less shares of common stock held in treasury,
at cost; 101,609 shares..................................... (713,000)
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Total Stockholders' Equity................................. 10,909,000
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$11,998,000
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</TABLE>
See accompanying notes to condensed consolidated financial statements
3
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TRIMEDYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
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<S> <C> <C> <C> <C>
2000 1999 2000 1999
Net sales........................................ $ 1,647,000 $ 1,437,000 $ 5,147,000 $ 5,017,000
Costs and expenses:
Cost of goods sold.............................. 787,000 910,000 2,494,000 2,709,000
Selling, general and administrative............. 1,019,000 838,000 2,441,000 3,204,000
Research and development........................ 923,000 959,000 2,682,000 2,721,000
----------- ----------- ----------- -----------
Total costs and operating expenses............ 2,729,000 2,707,000 7,617,000 8,634,000
----------- ----------- ----------- -----------
Loss from operations............................. (1,082,000) (1,270,000) (2,470,000) (3,617,000)
Other income:
Interest income................................ 85,000 81,000 224,000 253,000
Other (Note 5)................................. - 116,000 - 6,667,000
----------- ----------- ----------- -----------
Net income (loss)................................ $ (997,000) $(1,073,000) $(2,246,000) $ 3,303,000
=========== =========== =========== ===========
Basic earnings (loss) per share (Note 3)......... $(0.08) $(0.10) $(0.19) $0.31
=========== =========== =========== ===========
Weighted average number of shares outstanding:
Basic........................................ 11,830,369 10,905,956 11,830,369 10,905,956
=========== =========== =========== ===========
Dilutive..................................... 11,830,369 10,905,956 11,830,369 10,905,956
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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TRIMEDYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
--------------------------
2000 1999
--------------------------
<S> <C> <C>
Cash flows used for operating activities:
Net (loss) income.......................... $(2,246,000) $ 3,303,000
Adjustments to reconcile net (loss) income
to net cash
Provided by (used in) operating activities:
Depreciation and amortization.............. 137,000 189,000
Value of employees' stock options issued
below fair value.......................... 6,000 17,000
Changes in operating assets and liabilities:
Decrease in trade accounts receivable, net. 680,000 118,000
(Increase) decrease in inventories......... (1,166,000) 62,000
(Increase) decrease in other current assets (22,000) 53,000
Increase in accounts payable............... 107,000 257,000
Decrease in accrued expenses............... (81,000) (308,000)
Increase (decrease) in deferred income..... (25,000) 30,000
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Net cash flows (used in) provided by
operating activities....................... (2,610,000) 3,721,000
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Cash flows from investing activities:
Capital expenditures....................... (94,000) -
Loss on disposition of fixed assets........ 3,000 9,000
Unrealized loss on securities.............. (109,000) (19,000)
Purchase of marketable securities.......... (2,570,000) (5,496,000)
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Net cash used in investing activities...... (2,770,000) (5,506,000)
Cash flows from financing activities:
Proceeds from sale of common stock......... $ 2,124,000 -
Proceeds from exercise of stock options.... 289,000 -
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Net cash provided by financing activities.. 2,413,000 -
Net decrease in cash and cash equivalents... (2,967,000) (1,785,000)
Cash and cash equivalents at beginning
of period.................................. 3,212,000 1,974,000
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Cash and cash equivalents at end of period.. $ 245,000 $ 189,000
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</TABLE>
See accompanying notes to condensed consolidated financial statements
5
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TRIMEDYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(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 June 30, 2000, the results of operations for the three
and nine month periods ended June 30, 2000 and 1999 and of cash flows for the
nine month periods ended June 30, 2000 and 1999.
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.
NOTE 2 - Balance Sheet Items
<TABLE>
<CAPTION>
June 30, 2000
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<S> <C>
Inventories consist of the following:
Raw material $ 1,944,000
Work-in-process 825,000
Finished goods 1,837,000
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$ 4,606,000
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Net properties consist of the following:
Furniture and equipment $ 3,187,000
Leasehold improvements 331,000
Other 18,000
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Total properties 3,536,000
Accumulated depreciation and amortization (3,094,000)
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Net properties $ 442,000
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</TABLE>
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NOTE 3 - Earnings Per Share
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 including the Company's and the Company's majority
owned subsidiary 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) of securities available for sale. Such changes were
not material, and accordingly, not presented in the accompanying consolidated
statements of operations.
NOTE 5 - Other Income
Other Income during the three months ended June 30, 1999 includes $67,500
received in June 1999 in connection with the settlement of the Company's lawsuit
against Surgical Laser Technologies, Inc. Other income during the nine months
ended June 30, 1999 includes $6.5 million, net of legal fees and costs, received
in December 1998 in settlement of the Company's lawsuit against C.R. Bard, Inc.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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 the ability to continue its current level of
operations beyond the next twelve months due to limited cash. Other risk
factors and uncertainties include 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 condensed consolidated financial statements include the accounts of the
Company and its 90% owned subsidiary, Cardiodyne, Inc. ("Cardiodyne").
Quarter ended June 30, 2000 compared to quarter ended June 30, 1999.
During the quarter ended June 30, 2000, Trimedyne's net revenues increased 15%
from the same quarter of the previous year ($1,647,000 vs. $1,437,000). For the
current quarter, the Company incurred a loss from continuing operations of
$1,082,000 or $0.09 per share compared to a loss from operations of $1,270,000
or $0.12 per share for the prior year period.
Cost of goods sold was 48% of net sales in the third quarter of fiscal 2000
compared to 63% for the third quarter of fiscal 1999. The decrease in cost of
goods sold as a percentage of revenues was due to a reduction in the ratio of
laser sales to sales of disposables, as compared to the year ago quarter.
Selling, general and administrative expenses increased to $1,019,000 for the
current quarter compared to $838,000 for the quarter ended June 30, 1999, an
increase of $181,000 or 22%. The increase in selling, general and
administrative expenses is attributed to the addition of certain marketing,
sales and administration personnel, and an increase in patent and other
expenses.
Research and development expenditures for the quarter ended June 30, 2000,
decreased 4% ($923,000 vs. $959,000) due to a decrease in expenditures of
Trimedyne's 90% owned subsidiary, Cardiodyne, Inc.
8
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Interest income increased by 5% to $85,000 for the current quarter, compared
with $81,000 for the same period of the prior year, due to the increased balance
of marketable securities.
Liquidity and Capital Resources
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The Company's working capital increased from $10,357,000 at September 30, 1999
to $10,467,000 at June 30, 2000, of which $4,985,000 is cash and equivalents and
marketable securities. Management believes its existing working capital, along
with revenues from operations, will be sufficient to meet Trimedyne's operating
needs and the needs of its 90% owned subsidiary, Cardiodyne, Inc. for at least
the next twelve months. The Company has implemented cut-backs in Cardiodyne's
operating expenses and has also implemented cost reductions at Trimedyne. The
Company is seeking additional financing to continue development of Cardiodyne's
products and to support Trimedyne's operations, the success of which cannot be
assured.
9
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PART II.
Other Information
Item 1. Legal Proceedings
On October 6, 1995, the Company filed a lawsuit against C.R. Bard Inc.
claiming substantial damages for Bard's failure to perform its obligations as
Trimedyne's exclusive distributor under the Agreement and pay certain amounts
due under the Agreement. In December 1998, the Company settled its lawsuit
against Bard and received $6.5 million after legal costs and expenses.
In early 1995, the Company filed a patent infringement lawsuit against
Surgical Laser Technologies, Inc. (SLT). In April 1999, the Company settled its
lawsuit against SLT. The Company granted SLT a license to certain of its
patents, and SLT agreed to pay the Company $67,500 and royalties on any future
sales of products covered by the licensed patents.
The Company is subject to various claims and actions which arise in the
ordinary course of business. The litigation process is inherently uncertain,
and it is possible that the resolution of the Company's existing and future
litigation may adversely affect the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
(a) The Annual Stockholders Meeting of the Company was held on June 1,
2000.
(b) At the Annual Stockholders Meeting, the Stockholders voted on the
following uncontested matters. The nominees for directors were elected by a
vote of the Stockholders as follows:
<TABLE>
<CAPTION>
Name For Against Withheld
----------------------- --------- ------- --------
<S> <C> <C> <C>
Marvin P. Loeb 9,843,771 -- 372,339
Richard F. Horowitz 9,870,826 -- 435,284
</TABLE>
(c) The motion to amend the Articles of Incorporation to increase the
authorized number of shares of common stock from 15,000,000 to 30,000,000 shares
passed by a vote of Stockholders as follows:
For Against Withheld
--- ------- --------
9,306,721 -- 788,715
10
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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
11
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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.
8/14/00 s/ MARVIN P. LOEB
Date: ___________________ __________________________________________
Marvin P. Loeb
Chairman and
Chief Executive Officer
8/14/00 s/ SHANE H. TRAVELLER
Date: ___________________ __________________________________________
Chief Financial and Accounting Officer
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