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 March 31, 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 March 31, 2000 there were outstanding 11,561,598 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 - 1
March 31, 2000 and September 30, 1999.
Consolidated Statements of 2
Operations for the three and six
months ended March 31, 2000 and 1999.
Consolidated Statements of Cash 3
Flows for the six months ended
March 31, 2000 and 1999.
Notes to Unaudited Consolidated 4
Financial Statements.
ITEM 2. Management's Discussion and 5
Analysis of Financial 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)
March 31, September 30,
2000 1999
---- ----
ASSETS
Current Assets
Cash and cash equivalents $ 3,159 $ 376
Accounts receivable 2,365 2,020
Inventories 4,921 5,354
Other current assets 537 533
------- -------
10,982 8,283
Property, plant and equipment, net 2,639 2,655
Intangible and other assets, net 87 182
------- -------
TOTAL ASSETS $13,708 $11,120
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,217 $ 874
Other liabilities 333 112
Other accrued expenses 853 785
Revolving credit arrangements 318 1,149
Current portion of long-term debt 92 136
------- -------
2,813 3,056
Other Liabilities
Long-term debt 1,861 1,404
Other long-term obligations 42 46
Shareholders' Equity 8,992 6,614
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,708 $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 March 31, Six Months Ended March 31,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Revenue $ 4,372 $ 2,769 $ 8,780 $ 5,281
Cost of revenue 2,477 1,640 4,997 3,098
------------ ------------ ------------ ------------
Gross margin 1,895 1,129 3,783 2,183
OPERATING EXPENSES
General and administrative 625 600 1,137 1,055
Distribution and marketing 610 590 1,128 1,006
Research and development 228 124 393 206
Depreciation and amortization 31 124 120 248
------------ ------------ ------------ ------------
1,494 1,438 2,778 2,515
Operating profit (loss) 401 (309) 1,005 (332)
Distribution fee (1,000) -- (1,000) --
Loss on conversion of debt -- 187 -- 187
Other income (85) (138) (96) (151)
Interest expense 54 47 109 138
------------ ------------ ------------ ------------
(1,031) 96 (987) 174
Net income (loss) before income taxes 1,432 (405) 1,992 (506)
Income taxes 36 -- 72 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 1,396 $ (405) $ 1,920 $ (506)
============ ============ ============ ============
Average shares outstanding for basic
earnings per share 11,290,023 10,625,520 11,200,573 7,972,909
============ ============ ============ ============
Basic earnings (loss) per share $ 0.12 $ (0.04) $ 0.17 $ (0.06)
============ ============ ============ ============
Average shares outstanding for diluted
earnings per share 15,085,380 10,625,520 13,965,565 7,972,909
============ ============ ============ ============
Diluted earnings (loss) per share $ 0.09 $ (0.04) $ 0.14 $ (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>
Six Months Ended March 31,
--------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 1,920 $ (506)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 203 403
Loss on conversion of debt -- 187
Changes in assets and liabilities:
Accounts receivable (439) 177
Inventories 197 114
Other current assets (80) (220)
Accounts payable and accrued liabilities 770 (20)
------- -------
Net cash provided by operating activities 2,571 135
Cash flows from investing activities
Purchase of property, plant and equipment (383) (152)
------- -------
Net cash used in investing activities (383) (152)
Cash flows from financing activities
Issuance of stock 875 408
Repayment of revolving credit arrangements (753) (200)
Proceeds from (repayment of) long-term debt 580 (29)
------- -------
Net cash provided by financing activities 702 179
Effect of exchange rate changes on cash (107) (232)
Net increase (decrease) in cash and cash equivalents 2,783 (70)
Cash and cash equivalents, beginning of period 376 357
------- -------
Cash and cash equivalents, end of period $ 3,159 $ 287
======= =======
- --------------------------------------------------------------------------------
Supplemental cash flow disclosures
Interest paid $ 109 $ 58
======= =======
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
March 31, 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 six months ended March 31, 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 six months
ended March 31, 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, 2000.
(3) INVENTORIES
Major classes of inventory at March 31, 2000 and September 30, 1999 were
as follows:
March 31, September 30,
2000 1999
Raw materials $ 1,504 $ 1,519
Work in process 2,771 2,983
Finished goods 1,234 1,375
Less reserves for obsolescence (588) (523)
------- -------
$ 4,921 $ 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 March 31, 2000 increased 58% to $4,372 from
$2,769 for the comparable period. The increase in revenue was primarily derived
from the US operation as it more than doubled its revenue to $2,712 from $1,111
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. The revenue for the six months ended March 31, 2000
increased 66% to $8,780 from $5,281 for the comparable period.
Gross margins for the three and six months ended March 31, 2000 increased to 43%
from 41% for the comparable periods 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 4% and 8% for the three and six
months ended March 31, 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 this quarter, as a
percentage of revenues, General and Administrative expenses decreased from 22%
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 3% and 12% for the three and six
months ended March 31, 2000, from the comparable period last year. For this
quarter, as a percentage of revenues, Distribution and Marketing expenses
decreased from 21% in 1999 to 14% in 2000, primarily due to the improved
performance of the Company's marketing and distribution partners.
Research and Development
Research and development expenses increased over 80% for the three and six
months ended March 31, 2000, respectively, from the comparable periods last
year. The increase was due to the expansion of the R & D effort in Germany and
traveling and personnel costs to expand the tissue recovery sites in Europe. For
the quarter, as a percentage of revenues, Research and Development increased
from 4% in 1999 to 5% in 2000.
5
<PAGE>
Depreciation and Amortization
Depreciation and amortization decreased 75% and 52% for the three and six months
ended March 31, 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.
Interest Expense
Interest expense increased from $47 to $54 for the three months ended March 31,
2000, from the comparable period last year. For the six months ended March 31,
2000, interest expense declined by 21%. The decrease in interest was due to the
repayment of the revolving credit lines.
Net Income
Net income for the three months ended March 31, 2000 totaled $1.4 million or
$0.12 basic earnings and $0.09 diluted earnings per share as compared to a net
loss of $0.4 million or $0.04 basic loss per share for the same period a year
ago. The improvement in results from the comparable period is directly
attributed to a 58% increase in revenues, an increase in gross margins from 41%
to 43%, the controlling of expenses and the $1 million distribution fee received
in March.
Liquidity and Capital Resources
At March 31, 2000 and September 30, 1999 the Company had working capital of $8.2
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 March 31, 2000 the Company had borrowed $0.3 million against these
lines.
The Company has experienced a positive cash flow during the six month period
ended March 31, 2000, as indicated by the increase in cash and cash equivalents
from $0.4 million at September 30, 1999 to$3.2 million at March 31, 2000.
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.
6
<PAGE>
Year 2000 Compliance
The Company has completed the implementation of its year 2000 remediation plan
on a timely basis, and such remediation plan as implemented addresses all
mission critical systems. The Company is not aware of any adverse effects of
year 2000 issues on the Company, including its systems and operations. The
Company has no information that indicates that a significant vendor may be
unable to sell to the Company; a significant customer may be unable to purchase
from the Company; or a significant service provider may be unable to provide
services to the Company, in each case because of year 2000 compliance problems.
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 March 31, 2000.
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: April 27, 2000 /s/ Manfred Kruger
--------------------------------------------
President and Chief Executive Officer
Date: April 27, 2000 /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 March 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,159
<SECURITIES> 0
<RECEIVABLES> 2,454
<ALLOWANCES> (89)
<INVENTORY> 4,921
<CURRENT-ASSETS> 10,982
<PP&E> 4,315
<DEPRECIATION> (1,676)
<TOTAL-ASSETS> 13,708
<CURRENT-LIABILITIES> 2,813
<BONDS> 0
0
0
<COMMON> 116
<OTHER-SE> 8,992
<TOTAL-LIABILITY-AND-EQUITY> 13,708
<SALES> 4,372
<TOTAL-REVENUES> 4,372
<CGS> 2,477
<TOTAL-COSTS> 2,477
<OTHER-EXPENSES> 409
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> 1,432
<INCOME-TAX> 36
<INCOME-CONTINUING> 1,396
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,396
<EPS-BASIC> 0.12
<EPS-DILUTED> 0.09
</TABLE>
