<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For The Quarterly Period Ended December 31, 1995 Commission File Number 0-18170
----------------- -------
CRYOMEDICAL SCIENCES, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-3076866
-------- ----------
(State of Incorporation) (IRS Employer I.D. Number)
1300 Piccard Drive
Suite 102
Rockville, Maryland 20850
--------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (301) 417-7070
--------------
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
----- -----
24,886,806 shares of Cryomedical Sciences, Inc. Common Stock, par value $.001
per share, were outstanding as of January 30, 1996.
<PAGE> 2
CRYOMEDICAL SCIENCES, INC.
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1995
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
--------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at
December 31, 1995 and
June 30, 1995 3
Consolidated Statements of
Operations for the Three Months
and Six Months ended December 31,
1995 and 1994. 4
Consolidated Statements of
Cash Flows for the Six
Months ended December 31,
1995 and 1994. 5
Notes to Consolidated Condensed
Financial Statements 6-9
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 10-13
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE> 3
CRYOMEDICAL SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------------ ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 728,040 $ 1,117,383
Short-term investments 100,310 100,310
Receivables - net of allowance for doubtful accounts of 1,635,960 3,178,032
$78,209
Inventories 2,463,205 2,628,532
Prepaid expenses and other 258,252 297,984
------------- ------------
Total current assets 5,185,767 7,322,241
EQUIPMENT AND LEASEHOLD IMPROVEMENTS - less accumulated
depreciation and amortization of $1,227,516 and $1,010,209 882,970 1,061,935
OTHER ASSETS 18,727 18,727
------------- ------------
$ 6,087,464 $ 8,402,903
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,332,429 $ 2,096,696
Accrued settlement of stockholder class action suit - 100,000
Accrued vacation 137,001 177,831
Customer deposits 50,000 50,000
Warranty reserves 149,800 248,000
Extended warranties - current 822,963 842,738
Current portion of capital lease obligations and notes payable 21,833 31,083
------------- ------------
Total current liabilities 2,514,026 3,546,348
EXTENDED WARRANTIES 501,187 848,286
DEFERRED RENT 15,051 3,690
CAPITAL LEASE OBLIGATIONS AND NOTES PAYABLE,
net of current portion 14,986 22,654
------------- ------------
Total liabilities 3,045,250 4,420,978
------------- ------------
COMMITMENTS AND CONTINGENCIES:
9% SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK,
Par value $.001, liquidation value $.50 per share;
authorized, 621,000 shares; issued and outstanding, none - -
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001;
authorized, 9,379,000 shares; issued and outstanding, none - -
Common Stock, par value $.001; authorized,
50,000,000 shares; issued and outstanding,
24,879,383 and 24,845,631 shares 24,879 24,846
Additional paid-in capital 26,313,294 26,248,915
Accumulated deficit (23,253,863) (22,250,365)
Notes receivable from officers, including accrued interest (42,096) (41,471)
------------- ------------
Total stockholders' equity 3,042,214 3,981,925
------------- ------------
$ 6,087,464 $ 8,402,903
============= ============
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
CRYOMEDICAL SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31,
-------------------------------- -----------------------------
1995 1994 1995 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
SALES & OTHER REVENUES $ 1,662,728 $ 4,590,413 $ 3,682,150 $ 7,896,370
COST OF SALES 732,154 2,200,344 1,639,676 3,820,197
----------- ----------- ------------ -----------
GROSS PROFIT 930,574 2,390,069 2,042,474 4,076,173
----------- ----------- ------------ -----------
OPERATING EXPENSES:
Research and development 343,853 728,166 705,905 1,606,247
Sales and marketing 634,459 1,065,940 1,266,436 1,808,721
General and administrative 585,534 903,600 1,077,910 1,463,170
----------- ----------- ------------ -----------
TOTAL OPERATING EXPENSES 1,563,846 2,697,706 3,050,251 4,878,138
----------- ----------- ------------ -----------
OPERATING LOSS (633,272) (307,637) (1,007,777) (801,965)
INTEREST INCOME, net of
interest expense 2,502 18,647 4,280 29,188
----------- ----------- ------------ -----------
NET LOSS $ (630,770) $ (288,990) $ (1,003,497) $ (772,777)
=========== =========== ============ ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 24,863,350 24,690,243 24,858,707 24,573,748
=========== =========== ============ ===========
NET LOSS PER SHARE $ (0.03) $ (0.01) $ (0.04) $ (0.03)
=========== =========== ============ ===========
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE> 5
CRYOMEDICAL SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
December 31,
----------------------------------------
1995 1994
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (1,003,497) $ (772,777)
------------- ------------
Adjustments to reconcile net loss to
net cash used in operating activities:
(Decrease) increase in warranty reserves (98,200) 43,600
Depreciation and amortization 217,307 206,202
Changes in assets and liabilities:
Decrease (increase) in receivables 1,542,072 (417,379)
Decrease in inventories 165,327 54,950
Decrease in prepaid expenses and other assets 39,731 64,035
Decrease in accounts payable,
accrued expenses, and deferred rent (910,654) (36,584)
(Decrease) increase in extended warranties (366,873) 259,875
Decrease in customer deposits - (10,000)
------------- ------------
Total Adjustments 588,710 164,699
------------- ------------
NET CASH USED IN OPERATING ACTIVITIES (414,787) (608,078)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments - (100,310)
Maturities of short-term investments - 97,424
Purchase of equipment (38,342) (173,268)
------------- ------------
NET CASH USED IN INVESTING ACTIVITIES (38,342) (176,154)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes receivable from officers (625) (938)
Increase of notes payable - 41,372
Exercise of warrants - 81,860
Issuance of shares for Employee Stock Purchase Plan 20,311 -
Exercise of Employee Stock Options 44,100 -
Exercise of IPO Unit Purchase Options & underlying warrants - 429,990
-------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 63,786 552,284
------------- ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (389,343) (231,948)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,117,383 2,426,467
------------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 728,040 $ 2,194,519
============= ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 9,484 $ 4,435
============= ============
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE> 6
CRYOMEDICAL SCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
A. GENERAL
Cryomedical Sciences, Inc. ("CMS") and its wholly owned subsidiary Cryo
Instruments, Inc. ("CII"), collectively referred to as the "Company," is
engaged in the research, development, manufacturing and marketing of
products for use in the field of hypothermic (low-temperature) medicine.
The Consolidated Balance Sheet as of December 31, 1995, the Consolidated
Statements of Operations for the three and six month periods ended
December 31, 1995 and 1994, and the Consolidated Statements of Cash Flows
for the six-month periods ended December 31, 1995 and 1994, have been
prepared without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of
operations, and cash flows at December 31, 1995, and for all periods then
ended, have been recorded. All adjustments recorded were of a normal
recurring nature.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction with
the financial statements and notes thereto for the fiscal year ended June
30, 1995 included in the Company's Annual Report on Form 10-K for the
year ended June 30, 1995.
The results of operations for the periods ended December 31, 1995 are not
necessarily indicative of the operating results anticipated for the
fiscal year ending June 30, 1996.
B. NET LOSS PER SHARE
Net loss per share is based on the weighted average number of common
shares outstanding during the three months and six months ended December
31, 1995 and 1994. No effect has been given to unexercised stock options
or warrants because the effect would be antidilutive.
6
<PAGE> 7
CRYOMEDICAL SCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
(continued)
C. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, 1995 June 30, 1995
----------------- -------------
<S> <C> <C>
Raw materials and purchased parts $ 1,486,500 $ 1,296,445
Work in process 505,789 628,302
Finished goods 616,220 789,090
Consignment inventory 53,706 53,706
----------- -----------
2,662,215 2,767,543
Less reserves (199,010) (139,011)
----------- -----------
$ 2,463,205 $ 2,628,532
=========== ===========
</TABLE>
D. CONTINGENCIES
On October 26, 1995, the Company received 510(k) marketing clearance from
the FDA for its CMS Urethral Warmer System ("Warmer") clearing the
product for marketing in the United States.
Subsequent to the quarter ended March 31, 1994, in which quarter the
Company announced receipt of the correspondence from the FDA denying an
earlier application by the Company for 510(k) premarket clearance of the
Warmer, CMS AccuProbe System sales in the urological field slowed
significantly. The Company believes that this was due, in part, to
uncertainty regarding the status of the Warmer and the availability of
alternatives. The Company believes that the use of alternative warming
methods resulted in reports of increased complications related to the
urethral warming procedures. The Company believes that these anecdotal
reports of increased complications may have affected the rate of sales of
AccuProbe Systems during the period ended December 31, 1995. However,
the Company believes that the lack of uniform medical insurance
reimbursement policies, which policies have not yet been established, was
the most significant factor affecting sales of AccuProbe Systems in
recent months.
In April 1994, present or former stockholders of the Company filed
several suits against the Company, its President and CEO and two other
directors in the United States District Court for the District of
Maryland. The suits were subsequently consolidated under Case No.
AW-94-873, and a consolidated amended complaint was
7
<PAGE> 8
CRYOMEDICAL SCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
(continued)
D. CONTINGENCIES (continued)
filed. The plaintiffs sought to have the consolidated action designated
as a class action on behalf of all persons who purchased the Company's
stock between September 13, 1991 and April 4, 1994. The plaintiffs
claimed that, during that period, the defendants inflated the market
price of the Company's stock in violation of the federal securities laws
and the common law. On April 26, 1995, the Court dismissed a major
portion of the action against the Company and dismissed the plaintiffs'
claims against the individual defendants in their entirety. In September
1995, the parties reached an agreement to settle the case. The
settlement is subject to approval by the Court, which is scheduled to
hold a hearing to consider this issue on February 15, 1996. Currently,
the deadline for submitting claims is June 25, 1996. Pursuant to the
agreement, a class consisting of all persons who purchased the Company's
stock between September 13, 1991 and April 4, 1994 has been certified
solely for settlement purposes. The agreement provides that, in return
for a general release of all claims which members of the class may have
against the Company and its past and present officers, directors,
employees and other agents, the Company will pay $100,000 in cash (which
payment has already been paid) and will issue shares of common stock of
the Company with a market value of $350,000, based on the average closing
price on the ten trading days prior to district court approval of the
settlement. The Company accrued the entire $450,000 settlement cost of
the stockholder class action suit as of June 30, 1995. The $350,000 of
common stock to be issued was recorded as additional paid in capital at
June 30, 1995. The plaintiffs' counsel intend to apply to the Court for
an award of fees equal to approximately one third of the gross amount of
the settlement proceeds, as well as for reimbursement of the out of
pocket expenses they incurred during the course of litigation. In the
event that the settlement is approved by the Court, the settlement
proceeds, minus any amounts paid to the plaintiffs' counsel and the costs
of administering the settlement, including the costs of notice to the
class, will be distributed to those members of the class who submit
timely claims, in proportion to the investment losses they have suffered
on shares they purchased during the class period. Members of the class
who did not wish to participate in the settlement were permitted to opt
out of the class if they gave written notice postmarked no later than
February 1, 1996. To date, the Company has received such notices from
persons who purchased approximately 430,000 shares of the Company's stock
during the class period. The Company has settled the litigation solely
to avoid the expenses that would be involved in defending the suit
between now and its conclusion. Those expenses were expected to exceed
the amount of the cash consideration being paid in the settlement. The
defendants have admitted no liability and continue to believe that the
suits are without merit. In the event that the
8
<PAGE> 9
settlement is not finally approved, or in the event that shareholders who
elected to opt out of the class assert similar claims in a new action,
the Company will continue to defend its position vigorously.
On or about October 19, 1995, the Company was served with a complaint
alleging gender bias which had been filed by a female former employee who
claims that she was discriminated against with respect to her salary and
also with respect to the decision to terminate her employment as part of
a reduction in work force. The suit was filed in the Circuit Court for
Montgomery County, Maryland and subsequently removed to the United States
District Court for the District of Maryland. The claims are asserted
under both Title VII of the Civil Rights Act of 1964 and the Equal Pay
Act. The plaintiff is seeking reinstatement with back pay, as well as
compensatory and punitive damages. The case is in the early stages of
discovery. The Company intends to defend this case vigorously.
E. TRANSACTIONS AFFECTING COMMON STOCK
In November 1995 the Company issued 25,000 shares of Common Stock to a
former officer of the Company in connection with the exercise of options
from the Employee Stock Option Plan.
F. SUBSEQUENT EVENT
On January 17, 1996 the Company received $1,910,000 of net proceeds
related to a convertible preferred stock sale to several foreign
investors. According to the terms of the convertible preferred stock,
investors may convert 50% of their shares into common stock forty days
subsequent to the January 16, 1996 closing at a conversion rate
determined by the average closing bid prices for five days immediately
preceding the date the holder notifies the Company of their intention to
convert preferred shares into common shares (the average of such closing
bid prices being referred to as "average bid price"). If the average bid
price is $2.00 or less, then the conversion price shall equal 82.5% of
the average bid price. If the average bid price is $2.01 or more, the
conversion price shall equal 80% of the average bid price. Investors may
convert the balance of their preferred stock into common stock
seventy-five days after the closing. Any shares of the convertible
preferred stock outstanding on January 16, 1997, automatically shall be
converted into Common Stock.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is engaged in the research, development, manufacture and
marketing of products for use in the field of hypothermic (low-temperature)
medicine. The Company has developed a cryosurgical system, called the CMS
AccuProbe(R) System (the "AccuProbe"), which is a sophisticated cryosurgical
device designed to freeze and destroy unwanted (diseased) tissue. The initial
clinical focus of physicians with respect to the AccuProbe has been in the
fields of urology and general surgery, primarily to destroy tissue which cannot
be removed surgically or in which typical surgery offers extensive adverse side
effects. The Company plans to further test and market its AccuProbe in certain
of the various fields for which the original 400 series device received
clearance from the FDA in April 1991 and the 500 series received FDA clearance
in December 1995. The CMS AccuProbe is cleared for marketing in the fields of
dermatology, general surgery, neurosurgery, thoracic surgery, ENT, gynecology,
oncology, proctology and urology.
RESULTS OF OPERATIONS
Sales and other operating revenues for the three and six months ended
December 31, 1995 totaled $1,662,728 and $3,682,150, respectively, compared to
$4,590,413 and $7,896,370, respectively, for the comparable periods of the
prior fiscal year, representing decreases of 64% and 53%, respectively. The
Company's operating revenues in the three months ended December 31, 1995
included sales of 3 CMS AccuProbe Systems, disposable probes and other
accessories. Sales for the three months ended December 31, 1994 included 14
AccuProbe Systems, in addition to disposable probes and other accessory
products. Operating revenues for the six months ended December 31, 1995
included sales of 9 AccuProbe Systems, disposable probes and other accessories
compared to sales of 24 systems, disposable probes and other accessories in the
comparable period of the prior fiscal year. The Company believes revenues in
the three and six month periods ended December 31, 1995 reflect a decline in
the number of AccuProbe systems sold due primarily to lack of formal Medicare
reimbursement for urologic cryosurgery. Sales in each quarter are also subject
to substantial variation, depending upon the success of marketing efforts and
the timing of orders. The Company hopes that the separate FDA clearances of
the CMS Urethral Warmer in October 1995 and of the AccuProbe 500 series in
December 1995 will restore system, disposable probe and other accessory revenue
to previous levels, although there can be no assurance of increased revenue
from these sources. Through December 31, 1995, the Company has sold a total of
131 AccuProbe Systems since the product was introduced in June 1992.
Included in sales and other operating revenues are ultrasound systems
produced by third party manufacturers and sold in conjunction with certain
AccuProbe Systems as a convenience to the customer. There was no ultrasound
revenue for the three and six months ended December 31, 1995, compared to
$552,488 and $672,288 respectively, for the comparable periods of the prior
fiscal year.
10
<PAGE> 11
Gross Profits for all products for the three months ended December 31,
1995 totaled $930,574, or 56% of sales, compared to gross profits of
$2,390,069, or 52% of sales, for the three months ended December 31, 1994. For
the six months ended December 31, 1995 gross profits totaled $2,042,474, or 55%
of sales, compared to gross profits of $4,076,173, or 52% of sales, for the
comparable period of the prior fiscal year. Gross profits as a percent of
sales increased in the three and six months ended December 31, 1995 as compared
to the comparable periods of the prior fiscal year as cost reductions were
continued by the Company.
Research and development expenses for the three months ended December 31,
1995 totaled $343,853, a decrease of 53% compared to $728,166 for the
comparable period of the prior fiscal year. Research and development expenses
decreased for the six months ended December 31, 1995 totaled $705,905, a
decrease of 56% compared to $1,606,247, in the comparable period of the prior
fiscal year. Research and development expenses decreased during the three and
six month periods ended December 31, 1995 due to a reduction in staffing and a
temporary reduction of research grants related to the development of the
Company's hypothermic solutions, reflecting cost reduction measures effected by
the Company.
Sales and marketing expenses for the three months ended December 31, 1995
totaled $634,459, a decrease of 40% compared to $1,065,940 for the comparable
period of the prior fiscal year. Sales and marketing expenses for the six
months ended December 31,1995 totaled $1,266,436, a decrease of 30% compared to
$1,808,721 in the comparable period of the prior fiscal year. Sales and
marketing expenses decreased during these periods due to a reduction in
staffing and reduced marketing activity.
General and administrative expenses for three months ended December 31,
1995 totaled $585,534, a decrease of 35% compared to $903,600 for the
comparable period of the prior fiscal year. General and administrative
expenses for the six months ended December 31, 1995 totaled $1,077,910, a
decrease of 26% compared to $1,463,170 for the comparable period of the prior
fiscal year. General and administrative expenses decreased in the more recent
periods due to a reduction in staffing and reduced professional fees.
As a result of the foregoing decrease in operating expenses, which were
offset by decreased gross profits from sales, the Company sustained net losses
of $630,770 and $1,003,497, respectively, for the three and six months ended
December 31, 1995 compared to net losses of $288,990 and $772,777,
respectively, in the comparable periods of the prior fiscal year.
Sales of the AccuProbe are effected by the level of reimbursement by
public and private insurers in connection with procedures in which the
AccuProbe is utilized. The availability of consistent, uniform insurance
reimbursement guidelines for hospitals and physicians is an important factor
often considered by some potential customers when making a decision regarding
the purchase of any new medical device, including the AccuProbe System.
Reimbursement of hospitals and urologists by public and private
11
<PAGE> 12
insurers such as Medicare and Blue Cross and Blue Shield is a necessary part of
gaining general acceptance for use of the AccuProbe for urological cryosurgery.
Currently Medicare considers urological cryosurgical procedures to be
investigational and excludes such procedures from reimbursement, although
Medicare carriers may pay for such procedures if the carriers decide that the
use of the AccuProbe is appropriate for the patients involved. No national
payment guidelines for such surgery have yet been established by either
Medicare's Health Care Financing Administration ("HCFA") or by the National
Blue Cross and Blue Shield Association. Therefore, insurer's reimbursement
decisions are made on an insurer-by-insurer or case-by-case basis. While
payments received by customers vary significantly by region and insurer,
widespread formal reimbursement acceptance has yet to be achieved. When
insurance coverage is not available, patients may either elect to pay for
treatment themselves or undergo traditional therapies which are covered by
their insurers. The Company cannot predict if or when national coverage
guidelines for Medicare, Blue Cross and Blue Shield or any other insurance
carriers will be instituted for this form of surgery. The Company believes the
uncertainty and added efforts required for the Company's customers to secure
payment is impacting sales growth and utilization of AccuProbe Systems to some
degree and, if so, may continue to do so unless and until formal national
coverage guidelines are established.
In view of the operating losses suffered by the Company and the level of the
Company's current liquid resources (see "Liquidity and Capital Resources"
below), in May and October 1995 the Company undertook certain actions to reduce
expense levels, as described above.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company had cash, cash equivalents, and
short-term investments totaling $828,350 and working capital of $2,671,741, as
compared to $1,217,693 and $3,775,893, respectively, at June 30, 1995. The
Company's cash and working capital positions decreased from June 30, 1995 due
primarily to the net loss of $1,003,497 sustained by the Company for the six
months ended December 31, 1995. Subsequent to December 31, 1995, the Company
received $1,910,000 of net proceeds from a convertible preferred stock sale to
several foreign investors. The proceeds from this offering will be utilized
for working capital and to finance the introduction of the Company's new
AccuProbe 500 series.
Capital expenditures for leasehold improvements, furniture and equipment
totaled $38,342 in the six months ended December 31, 1995, compared to $173,268
in the comparable period of the prior fiscal year. The Company has budgeted
$485,000 for additional equipment and furniture in the year ending June 30,
1996.
The Company expects to incur substantial expenditures over the remainder
of fiscal 1995 and in fiscal 1996 related to research, development,
manufacturing and testing of its products and for sales and marketing efforts
and other operating expenses. The Company's management believes that its
current cash and working capital position will be sufficient to fund the
operations of the Company for the next 12 months dependent, in part, on the
level of sales revenues achieved, the level of sales and marketing activity
engaged
12
<PAGE> 13
in by the Company, and the amounts of research funded by the Company. However,
the Company may pursue various forms of short term financing in addition to the
recently completed equity financing. Except for the sale of its products, the
Company has no other major sources of liquidity and has no commitments with
regard to obtaining any additional funds.
13
<PAGE> 14
CRYOMEDICAL SCIENCES, INC.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On January 8, 1996 the Company held its Annual Meeting of
Stockholders. The Stockholders voted on and approved the
following:
1. The election of the following individuals to serve as
Directors until the next annual meeting and until their
successors are duly elected and qualified:
J. J. Finkelstein
Howard S. Breslow
Sam Carl
Robert A. Schoellhorn
Henry T. Pietraszek
J. Donald Hill
2. The ratification of an amendment to the Company's 1988 Stock
Option Plan to increase the number of shares issuable
thereunder to 2,700,000. In this connection, 14,597,389
shares were voted for ratification, 1,856,013 shares were
voted against ratification, and 246,024 abstained.
3. The ratification of the selection by the Board of Directors
of Deloitte & Touche to serve as Independent Auditors for
the fiscal year ended June 30, 1996. In this connection,
19,590,916 shares were voted for ratification, 122,066
shares were voted against ratification, and 149,485 shares
abstained.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
Subsequent to December 31, 1995 the Company filed one
current report on Form 8-K dated January 16, 1996. Item:
Announcement of convertible preferred stock sale to several
foreign investors.
14
<PAGE> 15
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.
Cryomedical Sciences, Inc.
----------------------------------------------
(Registrant)
Date: February 9, 1996 /s/J. J. Finkelstein
----------------------------------------------
J. J. Finkelstein
President and Chief
Executive Officer
(Principal Executive Officer and
Principal Financial Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 728,040
<SECURITIES> 100,310
<RECEIVABLES> 1,714,169
<ALLOWANCES> (78,209)
<INVENTORY> 2,463,205
<CURRENT-ASSETS> 5,185,767
<PP&E> 2,110,486
<DEPRECIATION> 1,227,516
<TOTAL-ASSETS> 6,087,464
<CURRENT-LIABILITIES> 2,514,026
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0
0
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<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
