UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 February 29, 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: 0-18105
VASOMEDICAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2871434
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
180 Linden Ave., Westbury, New York 11590
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's Telephone Number (516) 997-4600
--------------
Number of Shares Outstanding of Common Stock,
$.001 Par Value, at March 27, 2000 55,857,761
----------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the 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 [ ]
--- --
<PAGE>
Vasomedical, Inc. and Subsidiary
INDEX
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements: Page
----
Consolidated Condensed Balance Sheets as of
February 29, 2000 and May 31, 1999 (Unaudited) 3
Consolidated Condensed Statements of Operations for
the Nine and Three Months Ended
February 29, 2000 and February 28, 1999 (Unaudited) 4
Consolidated Condensed Statement of Changes in Stockholders'
Equity for the Period from June 1, 1999 to February 29,
2000 (Unaudited) 5
Consolidated Condensed Statements of Cash Flows for the
Nine Months Ended February 29, 2000 and
February 28, 1999 (Unaudited) 6
Notes to Consolidated Condensed Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II - OTHER INFORMATION 12
<PAGE>
Vasomedical, Inc. and Subsidiary
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
February 29, May 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $738,983 $1,678,175
Accounts receivable 3,556,087 1,585,432
Inventories 588,375 594,093
Other current assets 327,841 177,713
---------- ----------
Total current assets 5,211,286 4,035,413
PROPERTY AND EQUIPMENT, net 498,006 571,368
CAPITALIZED COST IN EXCESS OF FAIR
VALUE OF NET ASSETS ACQUIRED, net 408,455 568,277
OTHER ASSETS 1,038 23,114
---------- ----------
$6,118,785 $5,198,172
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $697,513 $705,640
Accrued warranty and customer support expenses 357,083 382,000
Accrued professional fees 161,090 271,438
Accrued commissions 337,768 307,951
Dividends payable 193,610
---------- ----------
Total current liabilities 1,553,454 1,860,639
ACCRUED WARRANTY COSTS 232,317 114,000
OTHER LONG-TERM LIABILITIES 24,000 70,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,000,000 shares
authorized; 175,000 shares at May 31, 1999, issued
and outstanding (liquidation preference of $3,500,000
at May 31, 1999) 1,750
Common stock, $.001 par value; 110,000,000 shares authorized;
54,603,097 and 50,402,687 shares at February 29, 2000 and
May 31, 1999, respectively, issued and outstanding 54,603 50,403
Additional paid-in capital 38,328,901 37,749,483
Accumulated deficit (34,074,490) (34,648,103)
---------- ----------
Total stockholders' equity 4,309,014 3,153,533
---------- ----------
$6,118,785 $5,198,172
---------- ----------
<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>
<PAGE>
Vasomedical, Inc. and Subsidiary
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
February 29, February 28, February 29, February 28,
-------------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Equipment sales $8,718,175 $2,007,100 $3,049,000 $1,457,100
Equipment rentals and services 435,538 469,179 129,138 227,079
---------- ---------- ---------- ----------
9,153,713 2,476,279 3,178,138 1,684,179
---------- ---------- ---------- ----------
Costs and expenses
Cost of sales and services 2,157,634 1,164,174 788,347 590,384
Selling, general and administrative 4,952,387 4,014,589 1,603,649 1,366,313
Research and development 1,063,295 470,752 416,443 130,989
Depreciation and amortization 367,400 324,559 116,692 122,850
Interest and financing costs 5,207 9,415 1,645 2,078
Interest and other income - net (59,945) (102,101) (18,498) (18,036)
---------- ---------- ---------- ----------
8,485,978 5,881,388 2,908,278 2,194,578
---------- ---------- ---------- ----------
NET EARNINGS (LOSS) 667,735 (3,405,109) 269,860 (510,399)
Deemed dividend on preferred stock - (864,000) - -
Preferred stock dividend
requirement (94,122) (161,413) (19,879) (53,342)
---------- ---------- ---------- ----------
EARNINGS (LOSS) APPLICABLE TO
COMMON STOCK $573,613 $(4,430,522) $249,981 $(563,741)
---------- ---------- ---------- ----------
Earnings (loss) per common
share (basic and diluted) $.01 $(.09) $.00 $(.01)
---- ----- ---- -----
Weighted average common shares
outstanding
Basic 51,543,519 49,025,137 52,687,156 49,614,736
---------- ---------- ---------- ----------
Diluted 55,719,121 49,025,137 55,270,913 49,614,736
---------- ---------- ---------- ----------
<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>
<PAGE>
Vasomedical, Inc. and Subsidiary
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Total
Additional Accum- stock-
Preferred Stock Common stock paid-in ulated holders'
Shares Amount Shares Amount capital deficit equity
------ ------ ------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1999 175,000 $1,750 50,402,687 $50,403 $37,749,483 $(34,648,103) $3,153,533
Conversion of preferred stock (175,000) (1,750) 3,095,612 3,096 (1,346) -
Preferred stock dividend requirement (94,122) (94,122)
Common stock issued in lieu of
preferred stock dividends 253,200 253 287,479 287,732
Exercise of options and warrants 851,598 851 206,285 207,136
Stock options granted for services 87,000 87,000
Net earnings 667,735 667,735
------- ------ ---------- ------- ----------- ------------ ----------
Balance at February 29, 2000 - $ - 54,603,097 $54,603 $38,328,901 $(34,074,490) $4,309,014
------- ------ ---------- ------- ----------- ------------ ----------
<FN>
The accompanying notes are an integral part of this condensed statement.
</FN>
</TABLE>
<PAGE>
Vasomedical, Inc. and Subsidiary
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
-----------------
February 29, February 28,
------------ ------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $667,735 $(3,405,109)
Adjustments to reconcile net earnings (loss) -------- -----------
to net cash provided by (used in) operating activities
Depreciation and amortization 367,400 324,559
Stock options granted for services 87,000
Changes in operating assets and liabilities
Accounts receivable (1,970,655) 525,048
Inventories (50,282) (549,943)
Other current assets (150,128) 13,564
Other assets 22,076 402
Accounts payable, accrued expenses and other
current liabilities (113,575) 185,421
Other liabilities 72,317 (213,560)
---------- -----------
(1,735,847) 285,491
---------- -----------
Net cash used in operating activities (1,068,112) (3,119,618)
---------- -----------
Cash flows from investing activities
Purchase of property and equipment (78,216) (24,881)
---------- -----------
Net cash used in investing activities (78,216) (24,881)
---------- -----------
Cash flows from financing activities
Proceeds from exercise of options and warrants 207,136 355,000
---------- -----------
Net cash provided by financing activities 207,136 355,000
---------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (939,192) (2,789,499)
Cash and cash equivalents - beginning of period 1,678,175 4,367,986
---------- -----------
Cash and cash equivalents - end of period $738,983 $1,578,487
---------- -----------
Non-cash investing and financing activities were as follows:
Deemed dividend on preferred stock $864,000
Issuance of common stock in lieu of preferred dividends $287,732 73,692
Inventories transferred to (from) property and equipment,
attributable to operating leases - net 56,000 375,111
<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>
<PAGE>
Vasomedical, Inc. and Subsidiary
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
February 29, 2000
(unaudited)
NOTE A - BASIS OF PRESENTATION
The consolidated condensed balance sheet as of February 29, 2000 and the
related consolidated condensed statements of operations for the nine- and
three-month periods ended February 29, 2000 and February 28, 1999, changes in
stockholders' equity for the nine-month period ended February 29, 2000 and cash
flows for the nine-month periods ended February 29, 2000 and February 28, 1999
have been prepared by Vasomedical, Inc. and Subsidiary (the "Company") without
audit. In the opinion of management, all adjustments (which include only normal,
recurring accrual adjustments) necessary to present fairly the financial
position and results of operations as of February 29, 2000 and for all periods
presented have been made.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Annual Report on Form 10-K for the year ended May 31, 1999. Results of
operations for the periods ended February 29, 2000 and February 28, 1999 are not
necessarily indicative of the operating results expected or reported for the
full year.
NOTE B - STOCKHOLDERS' EQUITY
In January 1999, the Company's Board of Directors granted stock options
under the 1997 Plan to a consultant to purchase 150,000 shares of common stock
at an exercise price of $.875 per share (which represented the fair market value
of the underlying common stock at the time of grant) contingent upon meeting
certain performance criteria. The stock options were fair-valued at $87,000. The
Company recorded a charge to operations of $29,000 and $58,000 in February 2000
and June 1999, respectively, commensurate with the satisfaction of the
performance criteria defined therein.
In July 1999, the Company's Board of Directors approved the 1999 Stock
Option Plan (the "1999 Plan"), for which the Company reserved an aggregate of
2,000,000 shares of common stock. In addition, the Board of Directors granted
stock options under its 1997 and 1999 Plans to certain officers and employees to
purchase an aggregate of 175,000 shares and 150,000 shares of common stock,
respectively, at an exercise price of $1.69 per share, and to an employee to
purchase 30,000 shares of common stock at an exercise price of $1.53 per share
(which represented the fair market value of the underlying common stock at the
time of the respective grants).
In the first three quarters of fiscal 2000, all 175,000 shares of Series C
preferred stock were converted into 3,095,612 shares of common stock. In
addition, options and warrants to purchase 851,598 shares of common stock were
exercised (net of 101,910 shares offered in payment in lieu of cash),
aggregating $207,136 in proceeds to the Company.
In the third quarter of fiscal 2000, the Board of Directors granted stock
options under the 1999 Plan to its newly appointed President and CEO and another
officer to purchase an aggregate of 710,000 shares of common stock; 660,000
shares at an exercise price of $1.21 per share and 50,000 shares at an exercised
price of $5.15 per share (which represented the fair market value of the
underlying common stock at the time of the respective grants), subject to
certain vesting provisions as defined in the agreements.
NOTE C EARNINGS PER COMMON SHARE
Basic earnings per share are based on the weighted average number of common
shares outstanding without consideration of potential common stock. Diluted
earnings per share are based on the weighted number of common and potential
common shares outstanding. The calculation takes into account the shares that
may be issued upon the exercise of stock options and warrants, reduced by the
shares that may be repurchased with the funds received from the exercise, based
on the average price during the period, and convertible preferred stock,
assuming conversion at the beginning of the period. Potential common shares were
excluded from the diluted calculation for the nine and three months ended
February 28, 1999, as their effects were anti-dilutive.
<PAGE>
Vasomedical, Inc. and Subsidiary
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
February 29, 2000
(unaudited)
NOTE C EARNINGS PER COMMON SHARE (continued)
The following table sets forth the computation of basic and diluted
earnings per share for the nine and three months ended February 29, 2000:
<TABLE>
<CAPTION>
Nine months ended Three months ended
February 29, 2000 February 29, 2000
----------------- ------------------
<S> <C> <C>
Numerator:
Basic earnings $667,735 $269,860
Preferred stock dividends 94,122 19,879
---------- ----------
Diluted earnings $573,613 $249,981
---------- ----------
Denominator:
Basic weighted average shares 51,543,519 52,687,156
Stock options 757,887 1,031,644
Warrants 1,093,660 923,716
Convertible preferred stock 2,324,055 628,397
---------- ----------
Diluted weighted average shares 55,719,121 55,270,913
---------- ----------
Basic and diluted earnings per share $0.01 $0.00
----- -----
</TABLE>
NOTE D - COMMITMENTS AND CONTINGENCIES
Employment Agreements
In January 2000, the Board of Directors appointed a new President and CEO
and approved a one-year employment agreement for annual compensation of
$180,000. Such employment agreement provides, among other things, that in the
event there is a change in the control of the Company, as defined therein, or in
any person directly or indirectly controlling the Company, as also defined
therein, the employee has the option, exercisable within six months of becoming
aware of such event, to terminate his employment agreement. Upon such
termination or upon any other termination of such employment in breach of the
agreement, the employee has the right to receive as a lump-sum payment certain
compensation remaining to be paid for the balance of the term of the agreement.
Approximate aggregate minimum annual compensation obligations under active
employment agreements at February 29, 2000 are summarized as follows:
<TABLE>
<CAPTION>
Twelve months ended February 29, Amount
-------------------------------- ------
<S> <C>
2001 $515,000
2002 128,000
--------
$643,000
--------
</TABLE>
Litigation
In May 1996, an action was commenced in the Supreme Court of the State of
New York, Nassau County, against the Company, its directors and certain of its
officers and employees for the alleged breach of an agreement to appoint a non-
affiliated party as its exclusive distributor of EECP systems. The complaint
sought damages in the approximate sum of $50,000,000, declaratory relief and
punitive damages. The Company denied the existence of any agreement, and
contended that the complaint was frivolous and without merit. The Company also
asserted substantial counterclaims. In August 1999, a motion for summary
judgment to dismiss the complaint in its entirety was granted. This decision has
been appealed.
<PAGE>
Vasomedical, Inc. and Subsidiary
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
February 29, 2000
(unaudited)
NOTE D - COMMITMENTS AND CONTINGENCIES (continued)
In May 1998, an action was commenced in the New York Supreme Court, Suffolk
County, against the Company and other parties. The action seeks damages in the
sum of $5,000,000 based upon alleged injuries resulting from the alleged
negligence of the defendants in the use of the Company's product. The Company
and its insurer believe that the complaint is frivolous and without merit and
are vigorously defending the claims. Furthermore, management believes that the
damages sought under the complaint are fully covered by insurance. This matter
is in its preliminary stages and the Company is unable to establish the
likelihood of an unfavorable outcome or the existence or amount of any potential
loss.
In February 1999, an action was commenced in the Massachusetts Superior
Court, Essex County, against the Company. The action seeks damages in the sum of
$1,000,000 based upon an alleged breach of a sales contract. The Company
believes that the complaint is frivolous and without merit and is vigorously
defending the claims. This matter is in its preliminary stages and the Company
is unable to establish the likelihood of an unfavorable outcome or the existence
or amount of any potential loss.
Agreement with VAMED
In connection with an acquisition in 1995, the Company assumed commitments
under an agreement, expiring November 2008, with VAMED Medical Instrument
Company Ltd. ("VAMED"), a Chinese company, for the contract manufacture of its
current EECP system, subject to certain performance standards, as defined. At
February 29, 2000, the Company had outstanding purchase commitments of $97,000.
The Company believes that VAMED will be able to meet the Company's needs for
EECP systems.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- --------------------------------------------------------------------------
OPERATIONS
- ----------
Results of Operations
- ---------------------
Nine and Three Months Ended February 29, 2000 and February 28, 1999
- -------------------------------------------------------------------
The Company generated revenues from the sale and lease of EECP systems of
$9,154,000 and $2,476,000 for the nine-month periods ended February 29, 2000 and
February 28, 1999, respectively, and $3,178,000 and $1,684,000 for the
three-month periods ended February 29, 2000 and February 28, 1999, respectively.
The Company generated earnings of $668,000 and $270,000 (before deducting
$94,000 and $20,000 in preferred stock dividend requirements) for the nine and
three months ended February 29, 2000. For the comparable prior-year periods, the
Company incurred net losses of $3,405,000 and $510,000 (before deducting
$864,000 and nil, respectively, in deemed dividends on preferred stock, which
represented the discount resulting from the allocation of proceeds to the
beneficial conversion feature and the fair value of the underlying warrants, and
$161,000 and $53,000, respectively, in preferred stock dividend requirements, in
connection with the Company's April 1998 and June 1997 financings).
The number of cardiology practices and hospitals interested in becoming
providers of enhanced external counterpulsation (EECP) has increased following
the announcement by the Health Care Financing Administration (HCFA) in February
1999 of its decision to extend Medicare coverage nationally to the Company's
noninvasive, outpatient treatment for coronary artery disease. HCFA is the
federal agency that administers the Medicare program for approximately 38
million beneficiaries. In addition, the results of the Company's multicenter,
prospective, randomized, blinded, controlled clinical study of EECP
("MUST-EECP") were published in the June 1999 issue of the Journal of the
American College of Cardiology. Interest in EECP therapy has also been spurred
by the announcement of the results of the Company's one-year follow-up
quality-of-life outcomes study at the American Heart Association (AHA) annual
meetings in November 1999 and 1998, at the American College of Cardiology (ACC)
annual meeting in March 1999 and other scientific meetings. Revenue growth for
the third quarter of fiscal 2000 was, however, hindered because local Medicare
contractors established inappropriate payment levels that did not take into
account the full value of the resources health care providers must deploy to
deliver EECP therapy. Consequently, in November 1999, HCFA created a specific
code for external counterpulsation therapy and established a nationally
applicable allowable charge, effective on January 1, 2000. The allowable charge
under the new code was based upon a preliminary determination of Relative Value
Units (RVUs) assigned by HCFA to the resources needed for the administration of
the therapy. Certain patients may require additional services, such as
evaluation and management, which may be billed separately. The Company estimates
the standard national charge to approximate $130 per session of EECP therapy,
which may be adjusted by certain geographic indices. This would result in a
standard charge of $4,550 for a full course of therapy, which typically involves
35 one-hour outpatient sessions. The assigned code will allow EECP providers to
bill Medicare electronically, substantially reducing the process for receiving
reimbursement. Moreover, in light of the new payment instructions, local
Medicare contractors will no longer have the responsibility of establishing
reimbursement rates. Management expects the aforementioned events to provide a
strong foundation for accelerated growth in fiscal 2000.
Revenues for fiscal 1999, particularly for the first two fiscal quarters,
were adversely affected by the nature of the commercial arrangements under which
those units were placed. The Company expects, especially as a result of HCFA's
recent establishment of a standard reimbursement rate for Medicare beneficiaries
effective January 1, 2000, that placements made in the past under rental or
fee-for-use arrangements will continue to convert to financed leases or outright
sales in fiscal 2000, although there can be no assurance that this will occur.
Gross margins are dependent on a number of factors, particularly the mix of
EECP units sold and rented during the period, the ongoing costs of servicing
such units, and certain fixed period costs, including facilities, payroll and
insurance. Gross margins are furthermore affected by the location of the
Company's customers (including non-domestic business or distributorship
arrangements which, for discounted equipment purchase prices, co-invest in
establishing a market for EECP equipment) and the amount and nature of training
and other initial costs required to place the EECP system in service for
customer use. Consequently, the gross margin realized during the current period
may not be indicative of future margins.
Selling, general and administrative (SGA) expenses for the nine months
ended February 29, 2000 and February 28, 1999 were $4,952,000 and $4,015,000,
respectively, and $1,604,000 and $1,366,000, respectively, for the three months
ended February 29, 2000 and February 28, 1999. The increases in SGA expenses of
$937,000 and $238,000 from the comparable prior-year fiscal periods resulted
primarily from increases in sales and marketing personnel, commissions and other
selling expenses related to increased revenues.
<PAGE>
Research and development (R&D) expenses in the nine and three months ended
February 29, 2000 increased by $593,000 and $285,000 from the comparable
prior-year periods. Current period expenses relate to the long-term follow-up
phase of the multicenter clinical study, i.e., a quality-of-life outcomes study,
the expansion of the International EECP Patient Registry at the University of
Pittsburgh, the development of an upgraded model of the EECP system, and the
ongoing feasibility study in heart failure, all of which, to varying degrees,
are expected to further affect operating results in fiscal 2000.
Liquidity and Capital Resources
The Company has financed its fiscal 2000 operations primarily from working
capital and operating results. For the past two fiscal years, the Company's
operations were primarily funded from the proceeds of equity financings in
fiscal 1998 (described below). At February 29, 2000, the Company had a cash
balance of $739,000 and working capital of $3,658,000, compared to a cash
balance of $1,678,000 and working capital of $3,120,000 at May 31, 1999. The
Company's operating activities used cash of $1,068,000 and $2,834,000 for the
nine months ended February 29, 2000 and February 28, 1999, respectively. Net
cash used during the nine months ended February 29, 2000 consisted primarily of
earnings from operations, decreases in inventories and other current assets,
offset by increases in accounts receivable and decreases in accounts payable and
accrued expenses.
Investing activities used net cash of $78,000 and $25,000 during the nine
months ended February 29, 2000 and February 28, 1999, respectively. The
principal uses were for the purchase of property and equipment. At February 29,
2000, the Company did not have any material commitments for capital
expenditures.
Financing activities provided cash of $207,000 and $355,000 during the nine
months ended February 29, 2000 and February 28, 1999, respectively. Financing
activities during fiscal 2000 and fiscal 1999 consisted primarily from the sale
of common stock and receipt of cash proceeds upon the exercise of Company common
stock warrants by officers, directors, employees and consultants. Subsequent to
February 29, 2000, the Company received additional cash proceeds of $2,500,000
from the exercise of Company common stock options and warrants.
In fiscal 1998, the Company issued an aggregate of 325,000 shares of newly
created 5% Series B and 5% Series C Convertible Preferred Stock to one
accredited investor at a price of $20 per share, realizing net cash proceeds of
$6,112,000. Dividends due on such preferred stock were paid in shares of the
Company's common stock. By February 1999, all of the Series B preferred stock
(150,000 shares) had been converted into 2,135,946 shares of the Company's
common stock. As of February 29, 2000, all of the Series C preferred stock
(175,000 shares) had been converted into 3,095,612 shares of the Company's
common stock.
Management believes that its working capital position at February 29, 2000,
along with the ongoing commercialization of the EECP system (including, but not
limited to, the conversion of current units under rental or use arrangements to
outright sales or financed leases), and possible further proceeds from the
exercise of options and warrants, will make it possible for the Company to
support its internal overhead expenses and to implement its business plans for
the next twelve months.
Except for historical information contained herein, the matters discussed
are forward-looking statements that involve risks and uncertainties. When used
in this report, words such as "anticipate", "believe", "estimate", "expect" and
"intend" and similar expressions, as they relate to the Company or its
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of the Company's management, as well as assumptions
made by and information currently available to the Company's management. Among
the factors that could cause actual results to differ materially are the
following: the effect of the dramatic changes taking place in the healthcare
environment; the impact of competitive procedures and products and their
pricing; unexpected manufacturing problems in foreign supplier facilities;
unforeseen difficulties and delays in the conduct of clinical trials and other
product development programs; the actions of regulatory authorities and
third-party payers in the United States and overseas; uncertainties about the
acceptance of a novel therapeutic modality by the medical community; and the
risk factors reported from time to time in the Company's SEC reports. The
Company undertakes no obligation to update forward-looking statements as a
result of future events or developments.
<PAGE>
VASOMEDICAL, INC. AND SUBSIDIARY
--------------------------------
PART II - OTHER INFORMATION
---------------------------
ITEM 1 - LEGAL PROCEEDINGS:
Previously reported.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS:
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES:
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION:
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
Exhibits:
No. 27 Financial Data Schedule
Reports on Form 8-K:
None
<PAGE>
In accordance with to the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VASOMEDICAL, INC.
By:/s/ D. Michael Deignan
------------------------------
D. Michael Deignan
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Joseph A. Giacalone
------------------------------
Joseph A. Giacalone
Chief Financial Officer (Principal Financial
and Accounting Officer)
Date: March 31, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated condensed financial statements for the nine-months ended February
29, 2000 and is qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 738,983
<SECURITIES> 0
<RECEIVABLES> 3,556,087
<ALLOWANCES> 0
<INVENTORY> 588,375
<CURRENT-ASSETS> 5,211,286
<PP&E> 1,114,639
<DEPRECIATION> (616,633)
<TOTAL-ASSETS> 6,118,785
<CURRENT-LIABILITIES> 1,553,454
<BONDS> 0
0
0
<COMMON> 54,603
<OTHER-SE> 4,254,411
<TOTAL-LIABILITY-AND-EQUITY> 6,118,785
<SALES> 9,153,713
<TOTAL-REVENUES> 9,153,713
<CGS> 2,157,634
<TOTAL-COSTS> 2,157,634
<OTHER-EXPENSES> 6,323,137
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,207
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