_______________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended January 31, 1999
Commission File Number 001-12567
POSSIS MEDICAL, INC.
9055 Evergreen Blvd NW
Minneapolis, Minnesota 55433-8003
(612) 780-4555
A Minnesota Corporation IRS Employer ID No. 41-0783184
_________________________________
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), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___ The number of shares
outstanding of the Registrant's Common Stock, $.40 par value, as of February 24,
1999 was 13,829,714.
________________________________
<PAGE>
POSSIS MEDICAL, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets, January 31, 1999
and July 31, 1998......................................... 3
Consolidated Statements of Operations for three
months and six months ended January 31, 1999 and 1998..... 4
Consolidated Statements of Cash Flows for
six months ended January 31, 1999 and 1998................ 5
Notes to Consolidated Financial Statements................ 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 7
ITEM 3. Quantitative and Qualitative Disclosure on Market Risks... 12
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders....... 13
ITEM 6. Exhibits and Reports on Form 8-K.......................... 14
SIGNATURES................................................ 15
<PAGE>
POSSIS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
January 31, 1999 July 31, 1998
<C> <S> <S>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................... $ 8,320,904 $13,841,793
Receivables:
Trade (less allowances for doubtful accounts
and returns:
$217,000 and $67,000, respectively)........ 1,773,008 1,144,472
Other...................................... -- 3,091
Inventories:
Parts...................................... 1,028,870 1,085,236
Work-in-progress........................... 1,593,942 1,740,834
Finished goods............................. 1,765,343 1,913,084
Prepaid expenses and other assets............ 204,766 313,158
Total current assets..................... 14,686,833 20,041,668
PROPERTY:
Leasehold improvements....................... 1,210,984 1,210,984
Machinery and equipment...................... 3,795,744 3,720,772
Assets-in-construction....................... 281,596 113,094
Total property............................ 5,288,324 5,044,850
Less accumulated depreciation............... (2,613,966) (2,343,691)
Property - net............................ 2,674,358 2,701,159
OTHER ASSETS:
Deferred debt issue costs................... 673,446 884,105
Goodwill.................................... 233,922 269,922
TOTAL ASSETS.................................. $18,268,559 $23,896,854
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable...................... $ 313,314 $ 1,245,552
Accrued salaries, wages, and commissions.... 938,497 1,060,687
Current portion of long-term debt........... 94,156 97,713
Clinical trials accrual..................... 525,020 335,067
Accrued interest............................ 277,566 34,176
Litigation settlement....................... -- 200,000
Other liabilities........................... 653,183 470,448
Total current liabilities................. 2,801,736 3,443,643
LONG-TERM DEBT................................ 9,361,581 11,492,661
OTHER LIABILITIES............................. 97,100 216,200
SHAREHOLDERS' EQUITY:
Common stock - authorized, 100,000,000 shares
of $.40 par value each; issued and outstanding,
12,749,351 shares and 12,203,345 shares,
respectively.............................. 5,099,740 4,887,449
Additional paid-in capital.................. 45,652,745 42,476,257
Unearned compensation ...................... (228,741) (489,060)
Retained deficit............................ (44,515,602) (38,130,296)
Total shareholders' equity............. 6,008,142 8,744,350
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.... $18,268,559 $23,896,854
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
POSSIS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For Three Months Ended For Six Months Ended
Jan. 31, 1999 Jan. 31, 1998 Jan. 31, 1999 Jan. 31, 1998
<S> <C> <C> <C> <C>
Product sales........................................ $2,762,908 $1,214,669 $4,622,468 $2,582,652
Cost of sales and other expenses:
Cost of medical products........................ 1,887,295 1,536,613 3,421,554 3,014,652
Selling, general and administrative............. 2,436,784 1,735,356 4,491,624 3,250,731
Research and development........................ 1,534,030 1,086,216 3,020,667 2,457,680
Interest........................................ 173,969 4,259 351,025 4,807
Total cost of sales and other expenses...... 6,032,078 4,362,444 11,284,870 8,727,870
Operating loss....................................... (3,269,170) (3,147,775) (6,662,402) (6,145,218)
Interest income...................................... 116,034 137,963 277,096 318,844
Gain on sale of investments.......................... -- 14,163 -- 14,163
Net loss............................................. $(3,153,136) $(2,995,649) $(6,385,306) $(5,812,211)
Weighted average number of common
shares outstanding.............................. 12,431,165 12,196,301 12,341,854 12,172,922
Basic and dilutive net loss per common share......... $(.25) $(.25) $(.52) $(.48)
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
POSSIS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JANUARY 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ................................................... $ (6,385,306) $(5,812,211)
Adjustments to reconcile net loss to net
cash used in operating activities:
Gain on sale of marketable securities....................... -- (14,163)
(Gain) loss on asset disposal............................... 14,350 (2,100)
Depreciation................................................ 503,432 298,736
Amortization ............................................... 158,736 36,000
Stock compensation.......................................... 189,631 165,157
(Increase) decrease in receivables.......................... (625,445) 134,027
(Increase) decrease in inventories.......................... 172,670 (642,225)
Decrease in other assets.................................... 108,392 40,536
Decrease in trade accounts payable.......................... (932,238) (112,309)
Increase (decrease) in accrued and other liabilities........ 491,215 (240,304)
Net cash used in operating activities....................... (6,304,563) (6,148,856)
INVESTING ACTIVITIES:
Additions to plant and equipment............................ (290,352) (306,713)
Proceeds from the disposal of assets........................ 2,700 2,100
Purchase of marketable securities........................... -- (7,162)
Proceeds from sale/maturity of marketable securities........ -- 4,997,188
Net cash provided by investing activities ................. (287,652) 4,685,413
FINANCING ACTIVITIES:
Proceeds from notes payable................................. 21,074 175,000
Repayment of long-term debt................................. (9,444) (18,778)
Proceeds from issuance of stock and exercise of options..... 1,083,951 138,095
Deferred debt issue costs................................... (24,255) --
Net cash provided by financing activities................... 1,071,326 294,317
DECREASE IN CASH AND CASH EQUIVALENTS ...................... (5,520,889) (1,169,126)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 13,841,793 3,849,194
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 8,320,904 $2,680,068
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid............................................... $ 484 $ 4,807
Conversion of subordinated debentures and accrued
interest into common stock............................... 2,358,658 --
Deferred debt issue costs and original issue discount netted
against conversion of subordinate debentures.............. 265,911 --
Issuance of stock to settle litigation...................... 225,000 --
Cancellation of restricted stock............................ 79,063 --
Accrued payroll taxes related to restricted stock........... (57,769) 286,002
Inventory transferred to fixed assets....................... 10,804 9,588
Issuance of restricted stock................................ 8,375 816,300
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
POSSIS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. 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. The accompanying consolidated financial statements and notes
should be read in conjunction with the audited financial statements and notes
thereto included in the
Company's 1998 Annual Report.
2. INTERIM FINANCIAL STATEMENTS
Operating results for the three and six month periods ended January 31,
1999 are not necessarily indicative of the results that may be expected for the
year ending July 31, 1999.
3. RECENTLY ISSUED ACCOUNTING STANDARD
Earnings per Share:
Effective August 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income" (SFAS 130), which
establishes standards for the reporting of comprehensive income and its
components. Comprehensive income is defined as the change in equity during the
period from transactions and other events and circumstances from non-owner
sources. Implementation of SFAS 130 did not have an effect on the Company's
consolidated financial statements because comprehensive income (loss) is the
same as the Company's net income (loss).
4. EARNINGS (LOSS) PER SHARE
The Company's outstanding stock options and stock warrants were not
included in the computation of earnings per share since the impact would have
been anti-dilutive because of the net loss.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three and Six Month Periods Ended January 31, 1999 and 1998
Total product sales for the three and six month periods ended January 31,
1999 were $2,763,000 and $4,622,000, respectively. This was an increase of
$1,548,000 and $2,039,000 as compared to the previous year. The significant
revenue growth resulted from growing physician acceptance of the AngioJet(R)
Rheolytic(TM) Thrombectomy System and was impacted by medical meeting
presentations of the favorable results of the Company's randomized U.S. Food and
Drug Administration ("FDA") clinical trial, VeGAS 2.
Revenue - AngioJet Systems
In December 1996 the Company received FDA clearance to commence U.S.
marketing of the AngioJet Rheolytic Thrombectomy System, with labeling claims
for removal of blood clots from grafts used by patients on kidney dialysis. When
the Company introduced the AngioJet System to the U.S. market in 1996, the
AngioJet System drive unit, considered capital equipment, was listed at $80,000
to hospitals. Despite employing a variety of flexible drive unit acquisition
programs including outright purchase, rental, lease and fee-per-procedure, the
Company only sold three and seven drive units during the first three and six
month periods of fiscal 1998. In April 1998, the AngioJet System drive unit list
price was reduced to $25,000. A lower drive unit sales price was intended to
improve the competitive position of the AngioJet System, facilitate evaluation
of the technology and speed sale closure on units currently under evaluation.
The Company sold 39 and 55 AngioJet drive units in the three and six month
periods ending January 31, 1999. In the U.S., where most of the AngioJet System
sales are occurring, there were 207 drive units placed in hospitals as of
January 31, 1999 compared to 124 a year earlier. During the three and six month
periods ended January 31, 1999, the Company sold approximately 2,100 and 3,600
catheters and pump sets versus approximately 800 and 1,700 in the same prior
year-ago periods.
The Company's strategy to grow AngioJet System revenue is to obtain
additional FDA marketing approvals for existing products, to develop and market
AngioJet products that improve on the performance and are less costly to make
than current versions and to develop and market new catheters to remove clots
from large diameter blood vessels and the arteries in the central brain. In
September 1998, Possis submitted to the FDA a pre-market approval ("PMA")
application seeking approval to market its AngioJet System to remove blood clots
from coronary arteries and bypass grafts. The FDA targets completion of its
review and a response to the Company within 180 days. However, recent actual
industry-wide average elapsed time from sponsor submission to FDA approval is 12
months. In November 1998, the FDA granted the Company expedited review status to
its pending PMA. In addition, the FDA indicated that no Panel meeting will be
necessary to evaluate device safety and effectiveness. The coronary PMA presents
the results of a 349 patient randomized trial comparing AngioJet System
treatment to intracoronary infusion of the blood clot-dissolving drug urokinase
for patients with demonstrated clot in native coronary arteries and saphenous
vein bypass grafts. The randomized trial showed that AngioJet System treatment
has significantly better outcomes than the urokinase treatment for procedure
success and device success. AngioJet System treatment also had lower in-hospital
major cardiac complications, including fewer bleeding complications and vascular
complications. Also, the preliminary results of a cost-effectiveness trial run
concurrently with the coronary AngioJet trial shows that the AngioJet treatment
costs are on average $3,000 - $3,500 lower than those associated with the use of
urokinase. The Company believes that the treatment of blood clots in coronary
vessels and bypass grafts is a $550 million worldwide marketing opportunity for
the AngioJet System. In July 1997, the Company submitted a 510(k) application to
the FDA seeking clearance to expand label claims for its AngioJet System to
include use in peripheral arteries and bypass grafts in the U.S. The Company
expects an FDA decision on the application in calendar 1999. In December 1997,
the Company received approval to commence a clinical study of the AngioJet
System for use in the treatment of stroke caused by blockage of the carotid
arteries, the main vessels supplying blood to the brain. In January 1999, the
first patient was enrolled in the carotid stroke clinical study. The Company
believes that the treatment of neurovascular stroke is a $500 million worldwide
marketing opportunity for the AngioJet System. A new catheter in development,
the NV150, is planned to begin a neurovascular stroke FDA clinical trial in the
second half of calendar 1999.
<PAGE>
Foreign sales of the AngioJet System for the three and six month periods
ended January 31, 1999 were $165,000 and $194,000, respectively. This compared
to foreign sales of the AngioJet System of $76,000 and $105,000 for the same
periods the previous
year.
Revenue - Vascular Grafts
Vascular graft sales were $69,000 for the three and six month periods ended
January 31, 1999. This compared to $52,000 for the three and six month periods,
respectively, ended January 31, 1998. All vascular graft sales for fiscal 1999
were Perma-Seal(r) Dialysis Access Grafts. In December 1998 the Company entered
into an exclusive worldwide Supply and Distribution Agreement with Horizon
Medical Products, Inc. for its Perma-Seal Dialysis Access Graft. The first
shipment under this agreement was made in January 1999. All fiscal 1998 vascular
graft sales were Perma-Flow(r) Coronary Bypass Grafts. The Company is seeking a
new distributor for the Perma-Flow Graft. The current distribution agreement
expires in March 1999.
In February 1999, the Company received 510(k) approval from the FDA to
market three expanded polytetrafluoroethylene ("ePTFE") synthetic vascular
grafts. ePTFE synthetic grafts are the most commonly used synthetic graft in
peripheral vessel bypass procedures. This product will be marketed and sold by a
marketing partner or independent distributor.
A goal of the Company is to maximize the value of these products and
technologies for its shareholders. Its strategy is to seek partners to
distribute the products and possibly fund the graft product development program.
In addition, the Company will continue to pursue the possible sale of the
products and technologies. While the Company works toward completing these
activities, it has placed further development activities on hold, including
enrollment into the Perma-Flow clinical trial (PerFCT).
The Company is planning for continued growth in product sales for the
remainder of fiscal 1999 and beyond and believes that most of this growth will
come from AngioJet System sales in the U.S. marketplace.
<PAGE>
Cost of Medical Products
Cost of medical products increased 23% and 13% in the 1999 three and six
month periods, respectively, over the same periods in the previous year. The
increase is primarily due to the significant growth in the AngioJet System
product sales. Medical product gross margins improved by $1,198,000 and
$1,633,000, respectively, for the three and six month periods as compared to the
same periods a year ago. This resulted in gross margins of 32% and 26%,
respectively, for the three and six month periods ending January 31, 1999. This
compares to negative gross margins for the three and six month periods ending
January 31, 1998. The Company believes that manufacturing costs per unit will
decline and gross margins will continue to improve as product sales and related
production volumes continue to grow and fixed manufacturing expenses are spread
over a larger volume of production.
Selling, General and Administrative Expense
Selling, general and administrative expenses, in the three and six months
ended January 31, 1999, increased $701,000 and $1,241,000, respectively,
compared to the same periods a year ago. The primary factors are increased sales
and marketing expenses related to the establishment of a direct sales
organization to sell the AngioJet System and expenses of marketing the product
in the United States. Based upon early physician interest, the Company has grown
the U.S. AngioJet System sales and marketing organization from 25 employees in
January 1998 to 35 employees in January 1999. Concurrent with the AngioJet
System receiving FDA approval for coronary use, the Company plans to further
increase the direct U.S. sales force to 43 employees by July 1999, to meet the
expected demand for the Company's AngioJet System. The Company plans on
increasing its sales and marketing expenditures through the remainder of the
current year.
Research and Development Expense
Research and development expense, in the three and six months ended January
31, 1999, increased 41% and 23%, respectively, over the previous year. The
increase is primarily due to increased expenses in the development of new
AngioJet System products. Vascular graft research and development expenses were
at approximately the same level of expense as compared to the previous year. The
Company believes that research and development expenses for AngioJet
Thrombectomy System applications will continue at approximately the current
level as it completes the development of its current products, invests in
development of new AngioJet System thrombectomy applications and new AngioJet
technology-based products. Vascular graft research and development expenses are
expected to decrease in the second half of the fiscal year.
Interest Income and Expense
Interest income decreased slightly in the most recent three and six month
periods due to a reduction in cash reserves. Interest expense for the three and
six month periods were $174,000 and $351,000 for the 1999 periods compared to
$4,000 and $5,000 in 1998. These increases were due to the issuance of the 5%
convertible subordinated debentures in July 1998. The Company expects interest
expense to decrease as the 5% convertible subordinated debentures are converted
into the Company's common stock.
<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents, and marketable securities totaled $8,321,000 at
January 31, 1999 versus $13,842,000 at July 31, 1998.
Net cash usage for the six months ended January 31, 1999 averaged $920,000
per month. This was less than the Company expected due to the early conversion
of stock warrants in the amount of $828,000. Most of the $6,305,000 cash used in
operations in the most recent six month period was due to the $6,385,000 net
loss. The other primary uses of cash were the payment of $720,000 in transaction
fees and expenses relating to the issuance of the convertible debentures issued
in July 1998, the increase in receivables due to the increase in product sales
and the additions of plant and equipment.
In January 1999, $2,300,000 of debentures were converted into 342,768
shares of the Company's common stock, including shares issued for accumulated
interest. Subsequent to quarter end and through February 24, 1999, an additional
$7,331,000 of debentures were converted into an additional 1,062,263 shares of
the Company's common stock, including shares issued for accumulated interest.
Conversions to date were at an average of $7.05 per share. As of February 24,
1999, there remained $2,369,000 of unconverted convertible debentures.
The Company believes that product sales of the AngioJet System, primarily
in the U.S., will yield meaningful sales growth going forward. Concurrently,
sales and marketing expenditures are planned to increase with the sales growth.
Research and development expenditures are expected to slightly decrease through
the remainder of fiscal 1999 due to the reduced activity with the vascular
grafts. Interest expense is expected to decrease as the convertible debentures
are converted into the Company's common stock. The Company expects to report a
loss for the current fiscal year. In addition, the Company expects that
increasing working capital investments in trade receivables and inventory will
be required to support growing product sales.
The Company is currently pursuing options to raise capital. Additional
capital will likely be secured in fiscal 1999.
<PAGE>
Year 2000
The Company established a team in May 1998 to assess and address the
possible exposures related to the Y2K issue. The areas under investigation
include product issues, business computer systems, production equipment, vendor
readiness and contingency plans. Products currently sold by the Company are Y2K
compliant. The Company does not use internally developed computer software and
is therefore not anticipating major reprogramming efforts. The Company's primary
financial and operational system has been assessed and is certified "Y2K
Compliant." There are several personal productivity applications that are not
currently Y2K compliant. The Company expects them to be compliant by
mid-calendar 1999. Various personal computers are not currently Y2K compliant.
These computers are planned to be replaced as part of the Company's technology
update strategy. The Company is in the process of replacing its voice mail
system with one that is Y2K compliant. None of these replacements have been
accelerated and they have no material effect on the Company consolidated
financial statements. Equipment used for production or quality control does not
use dates to control operations.
The Company mailed questionnaires to each of its significant vendors in
October 1998 to determine the extent to which the Company is vulnerable to those
third parties' failure to remediate their own Y2K issues. As of February 1999,
the Company has received the Y2K questionnaire back from all of its vendors and
is currently working with its significant vendors to ensure continued
operations. In addition, the Company has investigated its utility providers and
believes they will be Y2K compliant. The Company anticipates developing a
contingency plan once it has completed its assessment of significant vendor
compliance, which will be no later that the first quarter of calendar 1999. A
contingency plan will be developed to minimize the Company's exposure to work
slowdowns or business disruptions. In the event any vendors are not Y2K
compliant, the Company will seek new vendors and/or stockpile inventory to meet
its production needs.
The Company has budgeted approximately $50,000 for expenses directly
related to Y2K identification and remediation of internal systems. It has also
purchased continuation of business and director's liability insurance related to
the Y2K issue.
Although the Company does not at this time expect a significant impact on
its consolidated financial position, results of operations and cash flows, our
internal preparations have not been completed and there can be no assurance that
the systems of other companies or the systems of the Company itself will be
converted on a timely basis and will not have a corresponding adverse effect on
the Company.
Forward-Looking Statements
This Management's Discussion and Analysis of Financial Condition and
Results of Operations, including the discussion regarding Year 2000 compliance,
contain certain "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Such as statements relating to future
events and financial performance, including the submission of applications to
the FDA, revenue and expense levels and future capital requirements, and
statements reflecting management beliefs and expectations are forward-looking
statements. Such forward-looking statements involve risks and uncertainties,
including the Company's ability to meet its timetable for FDA submissions, the
review time at the FDA, changes in the Company's marketing strategies, the
Company's ability to establish product distribution channels, changes in
manufacturing methods, market acceptance of the AngioJet System, changes in the
levels of capital expenditures by hospitals, the levels of sales of the
Company's products that can be achieved, ability to raise additional capital and
other risks set forth in the cautionary statements included in Exhibit 99 to the
Company's report on Form 10-Q dated April 30, 1998, filed with the Securities
and Exchange Commission.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests its excess cash in money market mutual funds. The
market risk on such investments is minimal.
The product sales for the Company's foreign subsidiary are in U.S. Dollars
("USD"). At the end of January 1999, the amount of currency held in foreign
exchange was approximately $1,000 USD. The market risk on the Company's foreign
subsidiary operations is minimal.
At January 31, 1999, all of the Company's outstanding long-term debt
carries interest at a fixed rate. There is no material market risk relating to
the Company's long-term debt. The Company's 5% convertible subordinated
debentures, issued July 15, 1998, carry a fixed interest rate of 5%; are due
July 15, 2004; and are convertible into common stock at a price calculated per
predetermined formulas based on the market price of the Company's common stock
over a specified period of time.
<PAGE>
Part II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
a. The 1998 annual meeting of shareholders of Possis Medical, Inc. was held
on December 9, 1998.
b. By the following vote, management's nominees were elected as directors
of the Corporation for one year or until their successors are elected and
qualified:
FOR AGAINST
Dean Belbas 10,958,476 183,227
Robert G. Dutcher 10,973,859 167,844
Seymour J. Mansfield 10,977,403 164,300
Whitney A. McFarlin 11,028,461 113,242
Donald C. Wegmiller 10,976,226 165,477
c. By a vote of 5,371,757 in the affirmative, 602,505 in the negative,
143,996 abstaining and 5,023,445 being counted as broker non-votes, the proposal
to approve the issuance of common stock upon conversion of the Company's Series
A 5% Convertible Debentures due July 15, 2004 was ratified. The approval of the
issuance of such common stock is required under applicable rules of the Nasdaq
Stock Market, Inc. in the event the conversion of such debentures would result
in the issuance of a number of shares of common stock in excess of 20% of the
outstanding common stock of the Company as of the date of the transaction.
d. By a vote of 11,001,432 in the affirmative, 94,921 in the negative and
45,350 abstaining, the appointment of Deloitte & Touche LLP as the Company's
certified public accountants was ratified.
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Certain of the following exhibits are incorporated by reference from prior
filings. The form with which each exhibit was filed and the date of filing are
indicated on the following pages.
Exhibit Form Date Filed Description
3.1 10-K Fiscal year ended Articles of incorporation as
July 31, 1994 amended and restated to date.
3.2 S-2 Amendment No. 1 Bylaws as amended and
August 9, 1994 restated to date.
10.1 8-K December 14, 1998 Distributor Agreement with
Horizon Medical Products
27 Financial data schedule.
(b) Reports on Form 8-K
During the quarter ended January 31, 1999, the Company filed a report on
Form 8-K dated December 14, 1998 reporting under Item 5, the Company entered
into a distribution agreement with Horizon Medical Products, Inc. for the
Company's Perma-Seal Dialysis Access Graft.
<PAGE>
SIGNATURES
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.
POSSIS MEDICAL, INC.
DATE: February 26, 1999 BY: /s/ Robert G. Dutcher
ROBERT G. DUTCHER
President and Chief Executive Officer
DATE: February 26, 1999 BY: /s/ Russel E. Carlson
RUSSEL E. CARLSON
Vice President of Finance and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 8,320,904
<SECURITIES> 0
<RECEIVABLES> 1,619,918
<ALLOWANCES> 217,000
<INVENTORY> 4,388,155
<CURRENT-ASSETS> 14,686,833
<PP&E> 5,288,324
<DEPRECIATION> 2,613,966
<TOTAL-ASSETS> 18,268,559
<CURRENT-LIABILITIES> 2,801,736
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0
0
<COMMON> 5,099,740
<OTHER-SE> 908,402
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<TOTAL-REVENUES> 4,622,468
<CGS> 3,421,554
<TOTAL-COSTS> 3,421,554
<OTHER-EXPENSES> 7,512,291
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 351,025
<INCOME-PRETAX> (6,385,306)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,385,306)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,385,306)
<EPS-PRIMARY> (.52)
<EPS-DILUTED> (.52)
</TABLE>
