<PAGE>
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 September 30, 1995
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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 0-10728
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GISH BIOMEDICAL, INC.
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
California 95-3046028
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2681 Kelvin Avenue Irvine, California 92714
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714)756-5485
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N/A
______________________________________________________________________________
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 is required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of November 10,
1995: 3,105,254.
<PAGE>
GISH BIOMEDICAL, INC.
INDEX
PART I. Financial Information Page
--------------------- ----
Item 1: Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of 3
September 30, 1995 and June 30, 1995.
Condensed Consolidated Statements of Operations 4
for the three months ended September 30,
1995 and 1994
Condensed Consolidated Statements of Cash Flows 5
for the three months ended September 30,
1995 and 1994
Notes to Condensed Consolidated 6, 7
Financial Statements
Item 2: Management's Discussion and Analysis 8
of Financial Condition and Results of
Operations
PART II. Other Information
-----------------
Item 6: Exhibits and Reports on Form 8-K 9
2
<PAGE>
GISH BIOMEDICAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1995 June 30, 1995
------------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,164,400 $ 2,165,800
Short-term investments 4,169,900 5,147,900
Accounts receivable, net 3,643,400 3,342,200
Inventories 6,186,400 5,561,900
Deferred income tax assets 748,900 625,000
Prepaid expenses 264,200 171,600
----------- -----------
Total current assets 16,177,200 17,014,400
Property and equipment, at cost 8,848,900 8,574,900
Less accumulated depreciation (4,849,400) (4,661,700)
----------- -----------
Net property and equipment 3,999,500 3,913,200
Note receivable 600,000 -
Other assets 121,100 116,700
----------- -----------
$20,897,800 $21,044,300
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 890,100 $ 944,300
Accrued compensation and related items 500,200 563,400
Accrued income taxes - 570,900
Other accrued liabilities 726,200 128,600
----------- -----------
Total current liabilities 2,116,500 2,207,200
Deferred income taxes 4,500 4,500
Deferred rent 242,200 227,900
Shareholders' equity:
Preferred stock, 2,250,000 shares authorized;
no shares outstanding
Common stock, no par value, 7,500,000 shares
authorized, 3,104,254 shares issued and
outstanding (3,101,129 shares at June 30, 1995) 7,775,800 7,761,800
Note receivable - officer stock purchase (60,000) (60,000)
Retained earnings 10,818,800 10,902,900
----------- -----------
Total shareholders' equity 18,534,600 18,604,700
----------- -----------
$20,897,800 $21,044,300
=========== ===========
</TABLE>
See accompanying notes
3
<PAGE>
GISH BIOMEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net sales $5,271,200 $5,347,500
Cost of sales 3,433,300 3,490,100
---------- ----------
Gross profit 1,837,900 1,857,400
Selling and marketing 695,700 591,400
Research and development 256,500 287,600
General and administrative 380,300 381,600
Distributor contract termination fee 702,000 -
---------- ----------
Total operating expenses 2,034,500 1,260,600
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Operating income (loss) (196,600) 596,800
Other income, net 58,800 53,700
---------- ----------
Income (loss) before provision for taxes (137,800) 650,500
Provision (benefit) for taxes (53,700) 253,700
---------- ----------
Net income (loss) $ (84,100) $ 396,800
========== ==========
Net income (loss) per share:
Primary $ (.03) $ .13
========== ==========
Fully diluted $ (.03) $ .13
========== ==========
Average common and common
equivalent shares:
Primary 3,372,803 3,100,145
========== ==========
Fully diluted 3,372,803 3,137,979
========== ==========
</TABLE>
See accompanying notes
4
<PAGE>
GISH BIOMEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (84,100) $ 396,800
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 187,700 195,400
Deferred rent 14,300 19,200
Changes in operating assets and liabilities (1,232,900) (497,800)
----------- ----------
Net cash provided by (used in) by operating
activities (1,115,000) 113,600
----------- ----------
Cash flows from investing activities:
Sale of short-term investments 978,000 -
Note receivable (600,000) -
Purchases of property and equipment (274,100) (57,800)
Increase in other assets (4,400) (12,400)
----------- ----------
Net cash provided by (used in) investing
activities 99,500 (70,200)
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Cash flows from financing activities:
Proceeds from stock options exercised 14,100 261,000
----------- ----------
Net increase (decrease) in cash and cash equivalents (1,001,400) 304,400
Cash at beginning of period 2,165,800 6,124,900
----------- ----------
Cash at end of period $ 1,164,400 $6,429,300
=========== ==========
</TABLE>
See accompanying notes
5
<PAGE>
GISH BIOMEDICAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. GENERAL
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The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, and include all adjustments which are,
in the opinion of management, necessary for a fair presentation of the results
of operations and cashflows for the three month periods ended September 30, 1995
and 1994, and financial position at September 30, 1995, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures in such condensed consolidated financial
statements are adequate to make the information presented not misleading, these
condensed consolidated financial statements should be read in conjunction with
the Company's consolidated financial statements and the notes thereto included
in the Company's Annual Report filed with the Securities and Exchange Commission
on Form 10-K for the year ended June 30, 1995.
Statement of Cash Flows
- -----------------------
Changes in operating assets and liabilities as shown in the condensed
consolidated statements of cash flows comprise:
<TABLE>
<CAPTION>
Three months ended September 30, 1995 1994
- -------------------------------- ----------- ---------
<S> <C> <C>
Decrease(increase) in:
Accounts receivable $ (301,200) $(424,200)
Inventories (624,500) (126,700)
Deferred tax assets (123,900) -
Prepaid expenses (92,600) (93,700)
Increase(decrease) in:
Accounts payable (54,200) 111,600
Accrued compensation and related items (63,200) (35,900)
Accrued income taxes (570,900) 69,700
Other accrued liabilities 597,600 1,400
----------- ---------
Change in operating assets and liabilities $(1,232,900) $(497,800)
=========== =========
</TABLE>
The Company paid $640,000 and $184,000 in Federal and State income taxes during
the three month periods ended September 30, 1995 and 1994, respectively.
6
<PAGE>
GISH BIOMEDICAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
(UNAUDITED)
2. Inventories
-----------
Inventories are stated at the lower of cost (first-in, first-out) or net
realizable value and are summarized as follows:
<TABLE>
<CAPTION>
September 30, 1995 June 30, 1995
------------------ -------------
<S> <C> <C>
Raw materials $3,255,600 $2,936,700
Work in progress 1,142,600 1,317,900
Finished goods 1,788,200 1,307,300
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$6,186,400 $5,561,900
========== ==========
</TABLE>
3. Earnings per share
------------------
Earnings per share is based on the weighted average number of common and
common equivalent shares outstanding during the period. Common equivalent
shares include the potential dilution from the exercise of stock options
reduced by the number of common shares which are assumed to have been
purchased with the income tax benefits and proceeds from the exercise of
such instruments. Fully diluted earnings per share assumes the exercise of
the common stock options at the beginning of the period.
4. Acquisition
-----------
On September 12, 1995 the Company entered into an agreement to acquire the
assets and technology of Creative Medical Development, Inc. "CMD" for
$600,000 in cash and 240,240 shares of the Company's common stock.
Additionally, the Company will, upon closing of the transaction, enter into
a one-year lease for the building which CMD currently occupies. The Company
will also execute one year employment agreements with four key employees
which includes provisions for the issuance of up to 53,500 shares of the
Company's common stock to those employees upon completion of certain
performance criteria.
As of September 30, 1995 the Company had advanced $600,000 to CMD in the
form of a note which is secured by substantially all of CMD's assets.
7
<PAGE>
GISH BIOMEDICAL, INC
SEPTEMBER 30, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations: Sales for the three month period ended September 30,
1995 decreased 1% from the corresponding period of fiscal 1995. The
decrease was primarily due to a sales decline in one territory. Although
first quarter sales were slightly less than the corresponding period of
fiscal 1995 the Company believes that its recent sales force expansion and
future new product releases should have a positive impact on future sales
trends. The gross profit percentage remained constant at 35% for both
periods.
Selling and marketing expenses increased $104,000 or 13% over the
corresponding period of fiscal 1995. These increases are directly related
to the expansion of the Company's direct sales force in California and the
Southeastern United States.
Research and development expenses for the quarter ended September 30, 1995
were comparable to the corresponding period of fiscal 1995 at 5% of net
sales.
General and administrative expenses remained constant for the first quarter
of fiscal 1996 as compared to fiscal 1995.
The Company also incurred a one-time expense of $702,000 during the
quarter, which represents payments due to a former distributor as
compensation for the termination of its contract with the Company.
The effects of inflation have not been a significant factor in the results
of operations.
Liquidity and capital resources: At September 30, 1995, the Company had
$14,010,700 of working capital, a decrease of $796,500 from working capital
at June 30, 1995. The decrease is primarily due to investment activities
and the distributor contract termination fee.
On September 12, 1995 the Company entered into an agreement to acquire the
assets and technology of Creative Medical Development, Inc. "CMD" for
$600,000 in cash and 240,240 shares of the Company's common stock.
Additionally, the Company will, upon closing of the transaction, enter into
a one-year lease for the building which CMD currently occupies. The Company
will also execute one year employment agreements with four key employees
which includes provisions for the issuance of up to 53,500 shares of the
Company's common stock to those employees upon completion of certain
performance criteria.
As of September 30, 1995 the Company had advanced $600,000 to CMD in the
form of a note which is secured by substantially all of CMD's assets.
8
<PAGE>
GISH BIOMEDICAL, INC.
---------------------
SEPTEMBER 30, 1995
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PART II. OTHER INFORMATION
- --------------------------
NOT APPLICABLE
9
<PAGE>
GISH BIOMEDICAL, INC.
SEPTEMBER 30, 1995
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.
GISH BIOMEDICAL, INC.
Date: 11/13/95 JEANNE M. MILLER
----------------- ----------------
JEANNE M. MILLER
Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 1995 INTERIM FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,164,400
<SECURITIES> 4,169,900
<RECEIVABLES> 3,643,400
<ALLOWANCES> 0
<INVENTORY> 6,186,400
<CURRENT-ASSETS> 16,177,200
<PP&E> 8,848,900
<DEPRECIATION> 4,849,400
<TOTAL-ASSETS> 20,897,800
<CURRENT-LIABILITIES> 2,116,500
<BONDS> 0
<COMMON> 7,775,800
0
0
<OTHER-SE> (60,000)
<TOTAL-LIABILITY-AND-EQUITY> 20,897,800
<SALES> 5,271,200
<TOTAL-REVENUES> 5,330,000
<CGS> 3,433,300
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,034,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (137,800)
<INCOME-TAX> (53,700)
<INCOME-CONTINUING> (84,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (84,100)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
