UNITED STATES
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 April 30, 1995
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 0-17019
ANGEION CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 41-1579150
(State of Incorporation) (IRS Employer Identification No.)
3650 Annapolis Lane, Plymouth, MN 55447-5434
(Address of principal (Zip Code)
executive offices)
(612) 550-9388
(Telephone number)
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 __.
Common stock, par value $.01 per share: 17,165,819 shares
outstanding as of June 5,1995
PART I. FINANCIAL INFORMATION
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ITEM DESCRIPTION Page(s)
ITEM 1. FINANCIAL STATEMENTS.
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Balance Sheets (unaudited) - April 30, 1995 and July 31, 1994. 1
Statements of Operations (unaudited) 2
- For the Three and Nine Months Ended
April 30, 1995 and 1994.
Statements of Cash Flows (unaudited) 3
- For the Nine Months Ended April 30, 1995 and 1994.
Notes to Financial Statements. 4, 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 6, 7
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 8
Signature. 9
Exhibit 27 - Financial Data Schedule (For SEC use only)
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ANGEION CORPORATION
Balance Sheets
April 30, 1995 and July 31, 1994 (Unaudited)
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April 30, July 31,
ASSETS 1995 1994
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Current Assets:
Cash and Cash Equivalents $ 4,700,977 $ 2,127,358
Other Receivable -- 38,697
Royalty Receivable -- 144,978
Inventories 229,781 230,211
Prepaid Expenses and Other Current Assets 91,481 128,135
TOTAL CURRENT ASSETS 5,022,239 2,669,379
Property and Equipment, Net 1,527,795 998,876
Patents and Trademarks, Net 1,046,705 905,875
Other Assets 159,889 178,500
TOTAL ASSETS $ 7,756,628 $ 4,752,630
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable, net of discount of $167,000 -- 2,833,000
Current Installments of Capital Lease Obligations 2,599 9,328
Accounts Payable 550,826 415,825
Accrued Payroll, Vacation and Related Costs 285,791 337,758
Other Accrued Expenses 152,729 248,852
TOTAL CURRENT LIABILITIES 991,945 3,844,763
Long-Term Debt 1,500,000 1,500,000
Capital Lease Obligations, Less Current Installments 1,917 4,187
TOTAL LIABILITIES 2,493,862 5,348,950
Shareholders' Equity (Deficit):
Class A Convertible Preferred Stock, $.01 par value.
Authorized 1,475,000 shares; issued and outstanding
875,000 shares at April 30, 1995, and July 31, 1994 3,166,425 3,166,425
Common Stock, $.01 par value. Authorized
25,000,000 shares; issued and outstanding
17,145,819 shares at April 30, 1995, and 11,152,935
at July 31, 1994 171,458 111,529
Additional Paid-In Capital 26,140,420 13,668,107
Accumulated Deficit (24,215,537) (17,542,381)
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 5,262,766 (596,320)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,756,628 $ 4,752,630
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See accompanying notes to financial statements.
ANGEION CORPORATION
Statements of Operations
For the Three and Nine Months Ended April 30, 1995 and 1994
(Unaudited)
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Three Months Ended Nine Months Ended
April 30 April 30
1995 1994 1995 1994
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Net Sales $ -- $ -- $ -- $ --
Cost of Goods Sold -- -- -- --
GROSS PROFIT -- -- -- --
Operating Expenses:
Research & Development $ 1,894,959 $ 2,259,635 $ 5,268,028 $ 5,064,924
Sales & Marketing 7,208 2,961 12,767 16,443
General & Administrative 484,039 345,293 1,495,868 1,015,729
Total Operating Expenses 2,386,206 2,607,889 6,776,663 6,097,096
OPERATING LOSS FROM
CONTINUING OPERATIONS (2,386,206) (2,607,889) (6,776,663) (6,097,096)
Other Income (Expense):
Interest Income 79,825 11,938 245,354 68,890
Interest Expense (28,706) (28,146) (141,848) (84,794)
Other Income (Expense) 51,119 (16,208) 103,506 (15,904)
LOSS FROM CONTINUING OPERATIONS $ (2,335,087) $ (2,624,097) $ (6,673,157) $ (6,113,000)
Gain on Sale of
Discontinued Operations -- 127,414 -- 344,221
NET LOSS $ (2,335,087) $ (2,496,683) $ (6,673,157) $ (5,768,779)
Net Income (Loss) Per Share:
Continuing Operations $ (.14) $ (.24) $ (.41) $ (.58)
Discontinued Operations -- .01 -- .03
NET LOSS PER SHARE $ (.14) $ (.23) $ (.41) $ (.55)
Weighted Average Number of Shares
Outstanding 17,059,537 10,744,344 16,291,900 10,519,777
</TABLE>
See accompanying notes to financial statements.
ANGEION CORPORATION
Statements of Cash Flows
For the Nine Months Ended April 30, 1995 and 1994
(Unaudited)
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1995 1994
OPERATING ACTIVITIES:
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Net Loss $ (6,673,157) $ (5,768,779)
Adjustments to Reconcile Net Loss
to Net Cash Provided by (Used in) Operating Activities:
Gain on Sale of Discontinued Operations -- (344,221)
Depreciation and Amortization 433,385 381,797
Compensation Expense on Grant of Stock and Stock Options 117,182 196,334
Notes Payable Discount Amortization 83,500 --
Expense on Merger of Subsidiaries (Note 3) -- 1,435,124
Changes in Operating Assets and Liabilities:
Employee Receivable 38,697 (1,952)
Other Receivable 144,978 83,656
Materials Inventories 430 (173,135)
Prepaid Expenses and Other Current Assets 36,654 (87,665)
Accounts Payable 135,001 (32,136)
Accrued Expenses (129,843) 93,387
Net Cash Used in Operating Activities (5,813,173) (4,217,590)
INVESTING ACTIVITIES:
Payments for Purchases of Property and Equipment (803,289) (170,340)
Increase in Other Assets (281,234) (321,589)
Net Cash Used in Investing Activities (1,084,523) (491,929)
FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock and Warrants, Net 10,599,122 --
Proceeds from Sale of Discontinued Operations -- 344,221
Proceeds from Exercise of Stock Options and Warrants 381,192 1,614
Repayments of Notes Payable (1,508,999) (9,500)
Net Cash Provided by Financing Activities 9,471,315 336,335
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: 2,573,619 (4,373,184)
Cash and Cash Equivalents:
Beginning of Period 2,127,358 4,842,033
End of Period $ 4,700,977 $ 468,849
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 160,533 $ 57,944
During the nine month period ended April 30, 1995,
Notes Payable of $1,500,000 were converted into common stock.
</TABLE>
See accompanying notes to financial statements.
ANGEION CORPORATION
Form 10-Q
April 30, 1995
Notes to Financial Statements
1. BASIS OF PRESENTATION
The unaudited interim financial statements have been prepared by the Company in
accordance with generally accepted accounting principles, pursuant to the rules
and regulations of the Securities and Exchange Commission. Accordingly, certain
information and footnote disclosures normally included in financial statements
have been omitted or condensed pursuant to such rules and regulations. The
accompanying unaudited interim financial statements should be read in
conjunction with the financial statements and related notes included in the
Company's July 31, 1994 Annual Report to Shareholders.
The information furnished reflects, in the opinion of the management of Angeion
Corporation, all adjustments (of only a normally recurring nature), necessary
to present a fair statement of the results for the interim periods presented.
2. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed by dividing the net income (loss) for
the period by the weighted average number of shares of common stock outstanding
during the period. Common equivalent shares representing stock warrants and
options were excluded in the Fiscal 1994 and 1995 periods presented due to
their anti-dilutive effect.
3. MERGER OF SUBSIDIARIES
Effective December 20, 1993, AngeMed, Inc. ("AngeMed") and AngeLase, Inc.
("AngeLase"), greater than 90%- owned subsidiaries of the Company, were merged
with and into the Company (the "Mergers"), with the Company being the surviving
entity after the Mergers. Pursuant to the Mergers, each share of common stock
of AngeMed and each share of common stock of AngeLase was converted into shares
of Angeion common stock. In addition, each option to purchase AngeMed or
AngeLase common stock was converted into an option to purchase Angeion common
stock based upon the respective exchange ratios.
The fair market value of the Angeion common stock issued in connection with the
Mergers was accounted for as a purchase of in-process research and development
and, accordingly, a charge of $1,450,499 is included in the Fiscal 1994
statement of operations with an offsetting credit to additional paid-in
capital.
4. NOTES PAYABLE
During June and July of 1994, the Company raised a total of $3,000,000 in the
form of short-term bridge loans (the "Bridge Financing") to fund its operations
until it could complete an equity financing. All loans under the Bridge
Financing were evidenced by promissory notes accruing interest at a rate of 12%
per year. In connection with such loans, each lender received a warrant to
purchase, at an exercise price of $2.00 per share, that number of shares of
common stock equal to 50% of the principal amount of the loan divided by the
exercise price of the warrant. The warrants expire on December 8, 1997. The
warrants issued were valued at $200,400 which was reflected as a discount and
was amortized over the term of the Bridge Financing. Certain directors of the
Company participated in the Bridge Financing and invested $1,000,000 in
exchange for promissory notes and warrants to purchase 250,000 shares. In
September 1994, $1,500,000 of the bridge notes were converted into common stock
and $1,500,000 were repaid.
5. PUBLIC OFFERING
On September 19, 1994, the Company completed a public offering of 4.9 million
shares of newly issued common stock and 4.9 million warrants to purchase
one-half of a share of common stock, which raised proceeds of approximately
$10,600,000 net of expenses. The exercise price of the warrants per whole share
is $4.75 per share and they expire in March 1996. The Company is using the net
proceeds of the sale of the securities for research and development, investment
in capital equipment and leasehold improvements, general corporate purposes,
including working capital, and for the repayment of unconverted short-term
bridge loans.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The Company's operations consist of the research and development efforts of its
two divisions, the implantable cardioverter defibrillator division and the
catheter ablation division. These divisions are developing medical devices to
treat various types of arrhythmias (irregular heartbeats).
FINANCIAL POSITION, LIQUIDITY, AND CAPITAL RESOURCES
OPERATING ACTIVITIES: Net cash used in operating activities was $5,813,173 and
$4,217,590 in the nine months ended April 30, 1995 and 1994, respectively. The
cash used was primarily related to research and development activities of
Angeion's continuing operations, the implantable cardioverter defibrillator and
the laser catheter ablation divisions.
INVESTING ACTIVITIES: Net cash used in investing activities was $1,084,523 and
$491,929 in the nine months ended April 30, 1995 and 1994, respectively. The
Company invested $281,234 in patents during the nine months ended April 30,
1995, primarily for the implantable cardioverter defibrillator. The Company also
purchased fixed assets of $803,289 consisting primarily of computer equipment
and production equipment for the implantable cardioverter defibrillator and
research and development equipment for both divisions.
FINANCING ACTIVITIES: Net cash provided by financing activities was $9,471,315
and $336,335 in the nine months ended April 30, 1995 and 1994, respectively.
Cash was provided from proceeds of a public offering of 4.9 million shares of
common stock and 4.9 million warrants. (See footnote 5.) The public offering
proceeds were offset by repayments of Notes Payable. (See footnote 4.) Cash was
provided from royalty proceeds related to the sale of the AMP division in the
nine months ended April 30, 1994.
If the Company's operations progress as anticipated, management believes the
net proceeds of the September 1994 offering along with cash on hand will fund
operations through September 1995, at which time the Company will need to raise
additional capital. There can be no assurance that efforts to raise additional
capital will be successful.
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 1995 COMPARED TO THE THREE MONTHS ENDED APRIL 30,
1994
Research and development expenses in the quarter ended April 30, 1994, included
a charge of $955,124 representing the purchase of in-process research and
development in connection with the mergers of the AngeLase, Inc. and AngeMed,
Inc. subsidiaries into the Company. (See footnote 3.) Net of that charge,
research and development expenses increased from $1,304,511 in the quarter ended
April 30, 1994 to $1,894,959 in the quarter ended April 30, 1995. This increase
of $590,448 was primarily due to an acceleration of research and development
activity on the implantable cardioverter defibrillator. Research and development
activity focused on the development of a fourth-generation automatic implantable
cardioverter defibrillator which accounted for $1,616,864 of the expense for the
quarter ended April 30, 1995, while the laser catheter ablation development
activities accounted for $278,095 of the expense. Research and development
expenses will continue to increase, reflecting the Company's intent to move
these products through their development stages as rapidly as possible and the
initiation of human clinicals during Fiscal 1995 and beyond.
General and administrative expenses increased from $345,293 in the quarter
ended April 30, 1994 to $484,039 in the quarter ended April 30, 1995. The
increase is due to increased legal expenses, payroll costs and consulting
expenses.
Interest income increased from $11,938 in the quarter ended April 30, 1994 to
$79,825 in the quarter ended April 30, 1995. The increase was due to higher
average invested cash balances in the quarter ended April 30, 1995 compared to
the quarter ended April 30, 1994.
The gain on the sale of discontinued operations of $127,414 in the quarter ended
April 30, 1994 resulted from an earned royalty related to the sale of the AMP
division.
The net loss for the quarter ended April 30, 1995 was $2,335,087 or $.14 per
share, compared to a net loss of $2,496,683 or $.23 per share for the quarter
ended April 30, 1994. The Company's aggressive research and development program
and related expenses will continue to adversely impact results of operations in
Fiscal 1995 and 1996.
NINE MONTHS ENDED APRIL 30, 1995 COMPARED TO THE NINE MONTHS ENDED
APRIL 30, 1994
Research and development expenses in the nine months ended April 30, 1994,
included a charge of $1,435,124, representing the purchase of in-process
research and development in connection with the merger of the AngeLase, Inc. and
AngeMed, Inc. subsidiaries into the Company. (See footnote 3.) Net of that
charge, research and development expenses increased from $3,629,800 in the nine
months ended April 30, 1994 to $5,268,028 in the nine months ended April 30,
1995. This increase of $1,638,228 was due to an acceleration of research and
development activity on the implantable cardioverter defibrillator. Research and
development activity focused on the development of a fourth-generation automatic
implantable cardioverter defibrillator accounted for $4,530,065 of the expense
for the nine months ended April 30, 1995, while the laser catheter ablation
development activities accounted for $737,963 of the expense. Research and
development expenses will continue to increase, reflecting the Company's intent
to move these products through their development stages as rapidly as possible
and the initiation of human clinicals during Fiscal 1995 and beyond.
General and administrative expenses increased from $1,015,729 in the nine
months ended April 30, 1994 to $1,495,868 in the nine months ended April 30,
1995. The increase is mainly due to $132,708 of expense associated with the
bridge notes that were repaid and converted in the first quarter of Fiscal 1995.
The remaining increase is due to other financing costs, increased legal, payroll
and consulting expenses.
Interest income increased from $68,890 in the nine months ended April 30, 1994
to $245,354 in the nine months ended April 30, 1995. The increase was due to
higher average invested cash balances in the nine months ended April 30, 1995
compared to the nine months ended April 30, 1994.
Interest expense increased from $84,794 in the nine months ended April 30, 1994
to $141,848 in the nine months ended April 30, 1995. The increase was due to
interest expense on the bridge notes which were repaid and converted in the
first quarter of 1995.
The gain on the sale of discontinued operations of $344,221 in the nine months
ended April 30, 1994 resulted from proceeds of a royalty payment on the net
sales of the AMP division.
The net loss for the nine months ended April 30, 1995 was $6,673,157 or $.41
per share, compared to net loss of $5,768,779 or $.55 per share for the nine
months ended April 30, 1994. The Company's aggressive research and development
program and related expenses will continue to adversely impact results of
operations in Fiscal 1995 and 1996.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27-Financial Data Schedule (for SEC use only).
(b) No Form 8-K was filed during the three months ended
April 30, 1995.
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.
ANGEION CORPORATION
Dated: June 5, 1995 By /s/ David L. Christofferson
David L. Christofferson
Vice President of Finance
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<PERIOD-END> APR-30-1995
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<INVENTORY> 229,781
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<PP&E> 2,559,885
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3,166,425
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