SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the period ended December 31, 1998.
[ ] 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: 0-16128
TUTOGEN MEDICAL, INC.
(Exact name of registrant as specified in its charter)
Florida 59-3100165
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1719 Route 10, Suite 314, Parsippany, New Jersey 07054
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973) 359-8444
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01
(Title of Class) (Name of Each Exchange on Which Registered)
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 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__.
As of February 1, 1999 there were outstanding 10,658,214 shares of Tutogen
Medical, Inc. Common Stock, par value $0.01.
<PAGE>
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
INDEX
PART I. Financial Information.
ITEM 1. Financial Statements.
Consolidated Balance Sheets - December 31, 1998 1
and September 30, 1998.
Consolidated Statements of Operations for 2
the three months ended December 31,
1998 and 1997.
Consolidated Statements of Cash Flows for 3
the three months ended December 31,
1998 and 1997.
Notes to Consolidated Financial Statements. 4
ITEM 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations.
PART II. Other Information.
ITEM 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) (audited)
December 31, September 30,
1998 1998
----------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 515 $ 357
Accounts receivable 1,308 1,685
Inventories 4,471 4,435
Other current assets 221 173
------- -------
6,515 6,650
Property, plant and equipment, net 3,007 2,995
Intangible and other assets, net 515 596
------- -------
TOTAL ASSETS $10,037 $10,241
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,062 $ 1,010
Accrued interest 58 189
Other accrued expenses 1,029 953
Revolving credit arrangements 623 895
Current portion of long-term debt 234 162
------- -------
3,006 3,209
Other Liabilities
Long-term debt 3,553 3,644
Other long-term obligations 17 17
Shareholders' Equity 3,461 3,371
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,037 $10,241
======= =======
See accompanying Notes to Consolidated Financial Statements.
1
<PAGE>
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
Three Months Ended December 31,
-------------------------------
1998 1997
----------- -----------
OPERATING REVENUES
Revenue $ 2,503 $ 1,942
Cost of revenue 1,450 1,162
----------- -----------
Gross margin 1,053 780
OPERATING EXPENSES
General and administrative 453 387
Distribution and marketing 412 292
Research and development 81 66
Depreciation and amortization 124 183
----------- -----------
1,070 928
Operating loss (17) (148)
Other income (9) (10)
Interest expense 90 94
----------- -----------
81 84
Net loss before income taxes (98) (232)
Income taxes -- --
----------- -----------
NET LOSS $ (98) $ (232)
=========== ===========
Average common shares outstanding 5,377,964 4,430,906
=========== ===========
Net loss per share $ (0.02) $ (0.05)
=========== ===========
See accompanying Notes to Consolidated Financial Statements
2
<PAGE>
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (98) $ (232)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 182 210
Changes in assets and liabilities:
Accounts receivable 377 183
Inventories (36) (378)
Other current assets (48) 27
Accounts payable and accrued liabilities 186 (678)
------- -------
Net cash provided by (used) in operating activities 563 (868)
Cash flows from investing activities
Purchase of property, plant and equipment (128) (19)
------- -------
Net cash used in investing activities (128) (19)
Cash flows from financing activities
Issuance of stock -- 4,185
Repayment of short-term borrowings -- (3,937)
(Repayment of) proceeds from revolving credit arrangements (272) 78
Repayment of long-term debt (19) (48)
------- -------
Net cash provided by financing activities (291) 278
Effect of exchange rate changes on cash 14 73
Net decrease in cash and cash equivalents 158 (536)
Cash and cash equivalents at beginning of period 357 777
------- -------
Cash and cash equivalents at end of period $ 515 $ 241
======= =======
- ---------------------------------------------------------------------------------------------
Supplemental cash flow disclosures
Interest paid $ 90 $ 30
======= =======
Schedule of noncash financing activities:
Issuance of common stock for interest
$ 189 $ --
======= =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements
3
<PAGE>
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(in thousands, except share data)
(1) OPERATIONS AND ORGANIZATION
Tutogen Medical, Inc. along with its consolidated subsidiaries ("the
Company") processes, manufactures and distributes worldwide specialty
surgical products and provides tissue processing services for neuro,
orthopedic, cardiovascular, reconstructive and general surgical
applications. The Company's core business is processing human donor tissue
("allografts") utilizing its patented Tutoplast(R) process for distribution
to hospitals and surgeons. At the Annual Meeting of shareholders of the
Company held on March 30, 1998, the Company's shareholders approved the
proposal to change the name of the Company from "Biodynamics International,
Inc." to "Tutogen Medical, Inc."
(2) SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements of the Company
and the unaudited results of operations and cash flows for the three months
ended December 31, 1998 and 1997 have been prepared in conformity with
generally accepted accounting principles for interim financial reporting.
Accordingly, they do not include all of the information and notes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments necessary in
order to make the financial statements not misleading have been made.
Operating results for the three months ended December 31, 1998 are not
necessarily indicative of the results which may be expected for the fiscal
year ending September 30, 1999. The interim financial statements should be
read in conjunction with the audited consolidated financial statements of
the Company for the year ended September 30, 1998.
(3) INVENTORIES
Major classes of inventory at December 31, 1998 and September 30, 1998 were
as follows:
December 31, September 30,
1998 1998
Raw materials $ 1,601 $ 1,473
Work in process 2,641 2,729
Finished goods 1,186 1,249
Less reserves for obsolescence (957) (1,016)
------- -------
$ 4,471 $ 4,435
------- -------
4
<PAGE>
(4) SUBSEQUENT EVENT
On January 28, 1999, one of the Company's institutional investors converted
its Convertible Debenture and accrued interest and expenses (approximately
$2,162) into 4,600,507 shares of the Company's common stock. In
consideration of the agreement to convert, the Company issued to the
investor 149,334 common shares as prepayment for one years interest on the
Debenture and agreed to amend its outstanding Stock Purchase Warrants,
totaling 1,353,957, by reducing the exercise price from $2.50 per share to
$1.50 per share if such warrants are exercised prior to June 30, 2000,
after which date such warrants shall revert to their initial terms.
Subsequent to the quarter ended December 31, 1998, this same institutional
investor and a Director of the Company purchased 300,000 Units and 100,000
Units, respectively, at $1.00 per Unit, each Unit consisting of one common
share of the Company and one Common Stock Purchase Warrant, expiring March
31, 2000, at an exercise price of $1.50 per share.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (in thousands)
Results of Operations
Net Loss
Net loss for the three months ended December 31, 1998 totaled $98 or $0.02 per
share as compared to a net loss of $232 or $0.05 per share for the same period a
year ago. The decrease in net loss is directly attributed to a 29% increase in
revenues and an increase in gross margins from 40% to 42%.
Revenue and Cost of Revenue
Revenue for the three months ended December 31, 1998 increased 29% to $2,503
from $1,942 for the comparable period. The US operation more than doubled its
revenue to $907 from $375 for the same period last year. This is a direct result
of its strategic alliances with the Mentor Corporation and IOP, Inc. The
International operation had a revenue increase in local currency of 9% from the
same period last year.
Gross margins for the three months ended December 31, 1998 increased to 42% from
40% for the comparable period last year. The increase is primarily attributable
to higher throughputs at both the US and International operations.
General and Administrative
General and administrative expenses increased 17% for the three months ending
December 31, 1998, from the comparable period last year. The increase is due
primarily to an increase in headcount and legal and consulting expenses.
Distribution and Marketing
Distribution and marketing expenses increased 41% for the three months ending
December 31, 1998, from the comparable period last year. The increase is
primarily associated with the building of a direct sales force in Germany.
Research and Development
Research and development expenses increased 23% for the three months ending
December 31, 1998, from the comparable period last year. The increase is due to
the expansion of the R & D effort in Germany.
Depreciation and Amortization
Depreciation and amortization decreased 32% for the three months ending December
31, 1998 from the comparable period last year. The reduction in depreciation and
amortization is attributed to substantial write-downs of intangible and fixed
assets taken, primarily due to the discontinued international suture business
during 1997.
6
<PAGE>
Interest Expense
Interest expense declined 4% for the three months ending December 31, 1998, from
the comparable period last year. Future reductions are expected as a direct
result of the capital restructuring which was completed subsequent to the
quarter ended December 31, 1998. The restructuring included the conversion of
$2,074 of long-term debt to common stock.
Liquidity and Capital Resources
At December 31, 1998 and September 30, 1998 the Company had working capital of
$3,509 and $3,441, respectively. The Company maintains revolving credit
facilities totaling DM 2,360 (approximately $1,400) with three German banks. At
December 31, 1998 the Company had borrowed $623 against these lines.
In the past the Company has relied upon its available working capital lines and
institutional investors to fund operational cash flow, when needed. Subsequent
to the quarter ended December 31, 1998, one of the Company's institutional
investors and a Director of the Company purchased 300,000 Units and 100,000
Units, respectively, at $1.00 per Unit, each Unit consisting of one common share
of the Company and one Common Stock Purchase Warrant, expiring March 31, 2000,
at an exercise price of $1.50 per share. In addition, the Company is continuing
to seek other investors to infuse additional capital into the Company. While
management believes that it will be successful in securing new funding, there
can be no assurances that it will be able to do so. Lack of new funding along
with the inability to increase processing revenues could result in a curtailment
of operations in the future.
The Company's ability to generate positive operational cash flow is dependent
upon increasing processing revenues through increased recoveries by tissue banks
in the U.S. and Europe, and the development of additional markets and surgical
applications worldwide. While the Company believes that it continues to make
progress in both these areas, there can be no assurances that changing
governmental regulations will not have a material adverse effect on results of
operations and cash flow.
Year 2000 Compliance
The Company has completed a review of its information systems and applications
and has concluded that it is year 2000 compliant. The Company believes that its
vendors and other third parties on whom it relies will be timely converted
and/or have no Year 2000 issues. However, there can be no assurance that the
systems of other companies on which the Company relies will be timely converted
or that any such failure to convert by another company would not have an adverse
effect on the Company. None of the Company's products or manufacturing systems
will be affected by the Year 2000 issue.
7
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
Exhibits
No. 27 Financial Data Schedule
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1998.
8
<PAGE>
SIGNATURES
Registrant has duly caused this report to be signed on its behalf by the
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
undersigned, thereunto duly authorized.
Tutogen Medical, Inc.
Date: February 5, 1998 /s/ Karl H. Meister
---------------------------
President and Chief
Executive Officer
Date: February 5, 1998 /s/ George Lombardi
---------------------------
Chief Financial Officer
(Principal Financial and
Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE (IN THOUSANDS, EXCEPT PER SHARE DATA) CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CONDENSED FINANCIAL STATEMENTS FOR THE QUARTER
ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1998
<CASH> 515
<SECURITIES> 0
<RECEIVABLES> 1,485
<ALLOWANCES> (177)
<INVENTORY> 4,471
<CURRENT-ASSETS> 6,515
<PP&E> 4,792
<DEPRECIATION> (1,785)
<TOTAL-ASSETS> 10,037
<CURRENT-LIABILITIES> 3,006
<BONDS> 0
0
0
<COMMON> 55
<OTHER-SE> 3,406
<TOTAL-LIABILITY-AND-EQUITY> 10,037
<SALES> 2,503
<TOTAL-REVENUES> 2,503
<CGS> 1,450
<TOTAL-COSTS> 1,450
<OTHER-EXPENSES> 1,061
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90
<INCOME-PRETAX> (98)
<INCOME-TAX> 0
<INCOME-CONTINUING> (98)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (98)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0.00
</TABLE>
