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 June 30, 2000.
|_| 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.)
925 Allwood Road, Clifton, New Jersey 07012
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (973) 365-2799
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 June 30, 2000 there were outstanding 13,337,134 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 - June 30, 2000 and
September 30, 1999. 1
Consolidated Statements of Operations for the
three and nine months ended June 30, 2000 and 1999. 2
Consolidated Statements of Cash Flows for the nine
months ended June 30, 2000 and 1999. 3
Notes to Unaudited Consolidated Financial
Statements. 4
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 5
PART II. Other Information.
ITEM 4. Submission of Matters to a Vote of Security-
Holders. 8
ITEM 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) (audited)
June 30, September 30,
2000 1999
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 3,928 $ 376
Accounts receivable 2,137 2,020
Inventories 5,536 5,354
Other current assets 721 533
------- -------
12,322 8,283
Property, plant and equipment, net 3,021 2,655
Intangible and other assets, net 49 182
------- -------
TOTAL ASSETS $15,392 $11,120
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 835 $ 874
Other liabilities 635 112
Other accrued expenses 992 785
Revolving credit arrangements -- 1,149
Current portion of long-term debt 20 136
------- -------
2,482 3,056
Other Liabilities
Long-term debt 1,114 1,404
Other long-term obligations 41 46
Shareholders' Equity 11,755 6,614
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $15,392 $11,120
======= =======
See accompanying Notes to Unaudited Consolidated Financial Statements.
1
<PAGE>
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended June 30, Nine Months Ended June 30,
--------------------------- --------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUES
Revenue $ 3,385 $ 2,549 $ 12,165 $ 7,822
Cost of revenue 1,424 1,416 6,421 4,506
------------ ------------ ------------ ------------
Gross margin 1,961 1,133 5,744 3,316
OPERATING EXPENSES
General and administrative 608 509 1,745 1,564
Distribution and marketing 565 483 1,964 1,489
Research and development 69 74 191 279
Depreciation and amortization 52 114 172 361
------------ ------------ ------------ ------------
1,294 1,180 4,072 3,693
Operating profit (loss) 667 (47) 1,672 (377)
Other (income) expense
Distribution fee income -- -- (1,000) --
Loss on conversion of debt -- -- -- 187
Other (income) expense (30) 13 (126) (133)
Interest expense 53 45 162 183
------------ ------------ ------------ ------------
23 58 (964) 237
Net income (loss) before income taxes 644 (105) 2,636 (614)
Income taxes 39 -- 111 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 605 $ (105) $ 2,525 $ (614)
============ ============ ============ ============
Average shares outstanding for basic
earnings per share 11,647,887 10,851,707 11,349,134 8,925,453
============ ============ ============ ============
Basic earnings (loss) per share $ 0.05 $ (0.01) $ 0.22 $ (0.07)
============ ============ ============ ============
Average shares outstanding for diluted
earnings per share 14,294,326 10,625,520 13,471,418 7,972,909
============ ============ ============ ============
Diluted earnings (loss) per share $ 0.04 $ (0.04) $ 0.19 $ (0.06)
============ ============ ============ ============
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements
2
<PAGE>
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
--------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 2,525 $ (614)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 304 583
Loss on conversion of debt -- 187
Changes in assets and liabilities:
Accounts receivable (199) (92)
Inventories (451) (5)
Other current assets (327) (38)
Accounts payable and accrued liabilities 816 (169)
------- -------
Net cash provided by (used in) operating activities 2,668 (148)
Cash flows from investing activities
Purchase of property, plant and equipment (840) (176)
------- -------
Net cash used in investing activities (840) (176)
Cash flows from financing activities
Issuance of stock 2,569 458
(Repayment of) proceeds from revolving credit arrangements (1,066) 183
Proceeds from (repayment of) long-term debt 242 (48)
------- -------
Net cash provided by financing activities 1,745 593
Effect of exchange rate changes on cash (21) (348)
Net increase (decrease) in cash and cash equivalents 3,552 (79)
Cash and cash equivalents, beginning of period 376 357
------- -------
Cash and cash equivalents, end of period $ 3,928 $ 278
======= =======
--------------------------------------------------------------------------------
Supplemental cash flow disclosures
Interest paid $ 53 $ 103
======= =======
Schedule of noncash financing activities:
Issuance of common stock for interest in exchange for
convertible long-term debt and accrued interest $ -- $ 2,349
Issuance of common stock for interest -- 376
------- -------
$ -- $ 2,725
======= =======
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements
3
<PAGE>
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(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.
(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 and nine months ended June 30, 2000 and 1999 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 and nine months
ended June 30, 2000 are not necessarily indicative of the results which
may be expected for the fiscal year ending September 30, 2000. The interim
financial statements should be read in conjunction with the audited
consolidated financial statements of the Company for the year ended
September 30, 1999.
(3) INVENTORIES
Major classes of inventory at June 30, 2000 and September 30, 1999 were as
follows:
June 30, September 30,
2000 1999
Raw materials $ 1,014 $ 1,519
Work in process 2,920 2,983
Finished goods 2,221 1,375
Less reserves for obsolescence (619) (523)
------- -------
$ 5,536 $ 5,354
======= =======
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(in thousands)
Results of Operations
Revenue and Cost of Revenue
Revenue for the three months ended June 30, 2000 increased 33% to $3,385 from
$2,549 for the comparable period. The increase in revenue was primarily derived
from the US operation as it increased its revenue to $1,679 from $1,105 for the
same period last year. This is a direct result of the significant revenue
performance from the Company's marketing and distribution alliance with the
Mentor Corporation. International revenue increased to $1,706 from $1,444 for
the same period last year. The revenue for the nine months ended June 30, 2000
increased 56% to $12,165 from $7,822 for the comparable period.
Gross margins for the three and nine months ended June 30, 2000 increased to 58%
from 44% and increased to 47% from 42%, respectively for the comparable periods
last year. The improved margins are due to a favorable product mix and higher
throughputs at both the US and International operations.
General and Administrative
General and administrative expenses increased 19% and 12% for the three and nine
months ended June 30, 2000, respectively, from the comparable periods last year.
The increase is due primarily to expenses associated with the move of the German
offices to the Company's manufacturing site. For the nine months ended June 30,
2000, as a percentage of revenues, General and Administrative expenses decreased
from 20% in 1999 to 14% in 2000 demonstrating the Company's ability to increase
revenues while maintaining control of expenses.
Distribution and Marketing
Distribution and marketing expenses increased 17% and 32% for the three and nine
months ended June 30, 2000, from the comparable periods last year. For the nine
months ended June 30, 2000, as a percentage of revenues, Distribution and
Marketing expenses decreased from 19% in 1999 to 16% in 2000, primarily due to
the improved performance of the Company's marketing and distribution partners.
Research and Development
Research and development expenses decreased 7% and 32% for the three and nine
months ended June 30, 2000, respectively, from the comparable periods last year.
The decrease was due to the timing and completion of certain R & D projects. For
the nine months ended June 30, 2000, as a percentage of revenues, Research and
Development decreased from 4% in 1999 to 2% in 2000.
5
<PAGE>
Depreciation and Amortization
Depreciation and amortization decreased 54% and 52% for the three and nine
months ended June 30, 2000, respectively, from the comparable periods last year.
The reduction in depreciation and amortization was attributed to an increase in
fully depreciated property, plant and equipment.
Distribution Fee
The Company entered into comprehensive agreements with Sulzer Spine-Tech, Inc.,
a subsidiary of Sulzer Medica, for the worldwide distribution of its patented
Tutoplast(R) processed bone tissues for spinal applications. Upon execution of
this agreement, on March 8, 2000, Sulzer Spine-Tech, Inc. made an initial
payment to the Company of $1 million. This transaction was recorded in the
second quarter ended March 31, 2000.
Interest Expense
Interest expense increased 18% and declined 11% for the three and nine months
ended June 30, 2000, from the comparable periods last year. The overall decrease
in interest was due to the repayment of the revolving credit lines.
Net Income
Net income for the three months ended June 30, 2000 totaled $605 million or
$0.05 basic earnings per share and $0.04 diluted earnings per share as compared
to a net loss of $0.1 million or $0.01 basic loss per share and $0.04 diluted
loss per share for the same period a year ago. Net income for the nine months
ended June 30, 2000 totaled $2,525 or $0.22 basic earnings per share and $0.19
diluted earnings per share as compared to a net loss of $614 or $0.07 basic loss
per share and $0.06 diluted loss per share for the comparable period last year.
The improvement in results from the comparable period is directly attributable
to a 56% increase in revenues, an increase in gross margins from 42% to 47%, the
controlling of expenses and the $1 million distribution fee received in March of
this year.
Foreign Currency Exchange
If the average foreign exchange rates for the nine months ended June 30, 1999
were applied to the period ending June 30, 2000, the revenues and net income
would have been higher by $644 and $234, respectively.
Liquidity and Capital Resources
At June 30, 2000 and September 30, 1999 the Company had working capital of $9.8
million and $5.2 million, respectively. The Company maintains revolving credit
facilities totaling DM 2.9 million (approximately $1.5 million) with four German
banks. At June 30, 2000 the Company had no borrowings against these lines. In
addition, in July, the Company obtained a credit facility up to $1.0 million
with a U.S. bank.
The Company has experienced a positive cash flow during the nine month period
ended June 30, 2000, as indicated by the increase in cash and cash equivalents
from $0.4 million at September 30, 1999 to $3.9 million at June 30, 2000.
6
<PAGE>
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 the results
of operations and cash flow.
7
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
An annual Meeting of Stockholders was held on April 27, 2000. All
management's nominees for director, as listed in the Proxy Statement for
the Annual Meeting, were elected. Listed below are the matters voted on by
stockholders and the number of votes cast at the Annual Meeting:
(a) Election of eight members of the Board of Directors.
Broker
Voted Votes Non-Votes
Name Voted For Against Withheld and Abstentions
---- --------- ------- -------- ---------------
G. Russell Cleveland 10,673,408 0 20,190 0
Charles C. Dragone 10,673,438 0 20,160 0
Robert C. Farone 10,670,688 0 22.910 0
J. Harold Helderman 10,673,508 0 20,090 0
Manfred Kruger 10,673,458 0 20,140 0
Thomas W. Pauken 10,673,288 0 20,310 0
Elroy G. Roelke 10,673,288 0 20,310 0
Carlton E. Turner 10,673,508 0 20,090 0
(b) Ratification of the appointment of Deloitte and Touche L.L.P. as
independent auditors of the Company for the fiscal year ending September
30, 2000.
Voted For: 10,690,178
Voted Against: 705
Voted Abstained: 2,715
Broker Non-Votes 0
(c) To approve the Amendment to the 1996 Incentive and Non-Statutory Stock
Option Plan
Voted For: 10,583,831
Voted Against: 99,578
Voted Abstained: 10,189
Broker Non-Votes 0
8
<PAGE>
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
June 30, 2000.
9
<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: August 4, 2000 /s/ Manfred Kruger
------------------
President and Chief Executive Officer
Date: August 4, 2000 /s/ George Lombardi
-------------------
Chief Financial Officer
(Principal Financial and Accounting Officer)
10
