UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
or
[ ] 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: 01-19890
LIFECELL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 76-0172936
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization
3606 RESEARCH FOREST DRIVE 77381
THE WOODLANDS, TEXAS (zip code)
(Address of principal executive office)
(281) 367-5368
(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)
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
--- ---
As of July 31, 1999, there were outstanding 11,877,683 shares of common stock,
par value $.001, and 118,194 of series B preferred stock, par value $.001 (which
are convertible into approximately an additional 3,812,709 shares of common
stock), of the registrant.
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
LIFECELL CORPORATION
BALANCE SHEETS
June 30, December 31,
1999 1998
------------- -------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 7,533,011 $ 8,025,415
Short-term investments - 4,000,745
Accounts and other receivables, net 2,079,232 1,383,920
Inventories 2,494,673 1,749,023
Prepayment and other 239,374 207,570
-------------- -----------
Total current assets 12,346,290 15,366,673
FURNITURE AND EQUIPMENT, net 2,271,963 1,388,339
INTANGIBLE ASSETS, net 326,409 275,687
-------------- -----------
Total assets $ 14,944,662 $17,030,699
============= =============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 896,327 $ 704,938
Accrued liabilities 2,537,095 2,065,123
Accrued relocation costs 502,328 -
------------- -------------
Total current liabilities 3,935,750 2,770,061
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Series B preferred stock, $.001 par value, 182,205 shares authorized,
118,424 and 119,084 issued and outstanding, respectively 118 119
Undesignated preferred stock, $.001 par value, 1,817,795 shares
authorized, none issued and outstanding - -
Common stock, $.001 par value, 48,000,000 shares authorized
11,869,989 and 11,612,852 shares issued and outstanding respectively 11,869 11,612
Warrants outstanding to purchase 3,182,188 shares of common stock 298,344 298,344
Additional paid-in capital 59,712,279 58,426,555
Accumulated deficit (49,013,698) (44,475,992)
------------- -------------
Total stockholders' equity 11,008,912 14,260,638
------------- -------------
Total liabilities and stockholders' equity $ 14,944,662 $ 17,030,699
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
LIFECELL CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30,
---------------------------
1999 1998
------------ ------------
REVENUES
<S> <C> <C>
Product sales $ 2,955,061 $ 2,003,324
Research funded by others 289,988 168,635
------------ ------------
Total revenues 3,245,049 2,171,959
------------ ------------
COSTS AND EXPENSES
Cost of goods sold 764,045 704,931
Research and development 879,054 879,861
General and administrative 1,787,005 749,730
Selling and marketing 1,583,879 1,591,472
Restructuring charges 442,665 -
------------ ------------
Total costs and expenses 5,456,648 3,925,994
------------ ------------
LOSS FROM OPERATIONS (2,211,599) (1,754,035)
------------ ------------
Interest income and other, net 110,965 224,261
------------ ------------
NET LOSS $(2,100,634) $(1,529,774)
============ ============
LOSS PER COMMON SHARE-BASIC AND DILUTED $ (0.19) $ (0.15)
============ ============
SHARES USED IN COMPUTING
LOSS PER COMMON SHARE-BASIC AND DILUTED 11,849,716 11,182,112
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
<TABLE>
<CAPTION>
LIFECELL CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
Six months ended June 30,
--------------------------
1999 1998
------------ ------------
<S> <C> <C>
REVENUES
Product sales $ 5,274,134 $ 3,818,438
Research funded by others 576,752 310,984
------------ ------------
Total revenues 5,850,886 4,129,422
------------ ------------
COSTS AND EXPENSES
Costs of goods sold 1,571,039 1,547,213
Research and development 1,941,122 1,625,761
General and administrative 3,094,149 1,760,296
Selling and marketing 3,227,519 3,007,418
Restructuring charges 442,665 -
------------ ------------
Total costs and expenses 10,276,494 7,940,688
------------ ------------
LOSS FROM OPERATIONS (4,425,608) (3,811,266)
------------ ------------
Interest income and other, net 240,530 479,102
------------ ------------
NET LOSS $(4,185,078) $(3,332,164)
============ ============
LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.39) $ (0.33)
============ ============
SHARES USED IN COMPUTING
LOSS PER COMMON SHARE - BASIC AND DILUTED 11,752,102 11,160,771
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
LIFECELL CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six months ended June 30,
--------------------------
1999 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $(4,185,078) $(3,332,164)
Adjustments to reconcile net loss to net cash used in
operating activities -
Depreciation and amortization 191,368 150,258
Gain/loss on abandonment of assets 334,874 -
Change in assets and liabilities -
Increase in accounts and other receivables (695,312) (591,716)
Increase in inventories (745,650) (211,072)
(Increase) decrease in prepayments and other (31,803) 224,682
Increase (decrease) in accounts payable and accrued liabilities 1,165,689 (474,799)
Increase (decrease) in deferred revenues and deferred credit - (38,870)
------------ ------------
Total adjustments 219,166 (941,517)
------------ ------------
Net cash used in operating activities (3,965,912) (4,273,681)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,406,790) (411,015)
Intangible assets (53,801) (52,803)
(Purchases) sales of short-term investments 4,000,745 (4,001,335)
------------ ------------
Net cash provided by (used) in investing activities 2,540,154 (4,465,153)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock 1,285,982 537,407
Cash dividends paid (352,628) (360,920)
------------ ------------
Net cash provided by financing activities 933,354 176,487
------------ ------------
Net Decrease in Cash and Cash Equivalents (492,404) (8,562,347)
Cash and Cash Equivalents at Beginning of Period 8,025,415 20,781,026
------------ ------------
Cash and Cash Equivalents at End of Period $ 7,533,011 $12,218,679
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CONDENSED NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND CERTAIN SIGNIFICANT RISKS:
LifeCell Corporation, a Delaware corporation, ("LifeCell" or the "Company") is a
bioengineering company engaged in the development and commercialization of
tissue regeneration and cell preservation products. The Company was
incorporated on January 6, 1992, for the purpose of merging with its predecessor
entity, which was formed in 1986. LifeCell began commercial sales of its first
transplantable tissue product, AlloDerm , a matrix template that provides an
acellular dermal graft, during 1994. The future operating results of the
Company will be principally dependent on the market acceptance of its current
and future products, competition from other products or technologies, protection
of the Company's proprietary technology, and access to funding as required.
Accordingly, there can be no assurance of the Company's future success. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" elsewhere herein and "Risk Factors" in the Company's annual report
on Form 10-K for the year ended December 31, 1998.
2. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission (the
"Commission"). Certain information and footnote disclosures normally included
in the annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations. This financial information should be read in conjunction
with the financial statements included within the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.
In the opinion of the management of the Company, the accompanying financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) that are necessary for a fair presentation of financial position
and the results of operations for the periods presented. Financial results for
interim periods are not necessarily indicative of the results for the full year
or future interim periods.
3. INVENTORIES
Inventories consist of products in various stages produced for sale and include
the costs of raw materials, labor and overhead. A summary of inventories is as
follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
---------- --------------
<S> <C> <C>
Raw materials used in production $ 924,467 $ 723,921
Work-in-process. . . . . . . . . 956,621 423,839
Finished goods . . . . . . . . . 613,585 601,263
Total inventories. . . . . . . . $2,494,673 $ 1,749,023
========== ==============
</TABLE>
4. DIVIDENDS PAYABLE ON SERIES B PREFERRED STOCK
The Series B Preferred Stock bears cumulative dividends, payable quarterly for
five years ending 2001, at the annual rate of $6.00 per share. Dividends may be
paid in cash, in additional shares of Series B preferred stock based on the
stated value of $100 per share, or any combination of cash and Series B
Preferred Stock at the Company's option.
While the shares of Series B Preferred Stock are outstanding or any dividends
are owed thereon, the Company may not declare or pay cash dividends on its
Common Stock
During the second quarter of 1999, the Company accrued dividends on the Series B
Preferred Stock of $177,149, payable in cash. Such dividends are payable on
August 16, 1999.
During the first six months of 1999, the Company accrued dividends on the Series
B Preferred Stock of $352,629, of which $175,480 were paid in cash on May 15,
1999.
6
<PAGE>
5. RELOCATION COSTS
In June 1999, management approved plans to relocate the Company's operations
from The Woodlands, Texas to Branchburg, New Jersey. Costs charged to
operations during the three months ended June 30, 1999 included the cost of
non-relocating employee retention benefits, a non-cash charge to abandon assets
related to the Company's current facility and the costs of relocating key
employees to New Jersey.
Costs recorded during the three months ended June 30, 1999 and classified as
restructuring charges in the Statement of Operations are as follows:
<TABLE>
<CAPTION>
Three Months
Ended
June 30, 1999
--------------
<S> <C>
Non-relocating employee retention benefits $ 107,792
Facility abandonment costs 334,873
--------------
Total restructuring charges $ 442,665
==============
</TABLE>
In addition, non-recurring costs of $788,995 which did not qualify for
classification as restructuring charges under current accounting standards, were
recorded as general and administrative expense during the three months ended
June 30, 1999 in relation to costs of relocating key employees. The Company
expects to incur additional restructuring charges during the third quarter
relating to the cost of lease terminations and additional employee retention
benefits. These additional costs were either not quantifiable or to which the
company had not committed a course of action as of June 30, 1999. The Company
expects that these additional charges will not exceed $700,000.
6. LOSS PER SHARE
Loss per common share has been computed by dividing net loss, which has been
increased for imputed and stated dividends on outstanding Preferred Stock, by
the weighted average number of shares of Common Stock outstanding during each
period. In all applicable years, all Common Stock equivalents, including the
Series B Preferred Stock were antidilutive and, accordingly, were not included
in the computation.
Basic loss per common share was calculated as follows:
<TABLE>
<CAPTION>
Three Months ended June 30, Six Months ended June 30,
-------------------------- --------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Loss. . . . . . . . . . . . . . . . . $(2,100,634) $(1,529,774) $(4,185,078) $(3,332,164)
Less: Preferred dividends. . . . . . . . (177,149) (181,056) (352,629) (360,921)
------------ ------------ ------------ ------------
Net Loss available to Common Stock-basic. $(2,277,783) $(1,710,830) $(4,537,707) $(3,693,085)
============ ============ ============ ============
Weighted average shares outstanding-basic 11,849,716 11,182,112 11,752,102 11,160,771
============ ============ ============ ============
Loss per Common Share-basic . . . . . . . $ (0.19) $ (0.15) $ (0.39) $ (0.33)
============ ============ ============ ============
</TABLE>
Diluted loss per common share is the same as basic loss per share due to the
antidilutive nature of all of the Company's Common Stock equivalents.
7. COMMITMENTS AND CONTINGENCIES
The Company is subject to numerous risks and uncertainties and from time to time
may be subject to various claims in the ordinary course of its operations. The
Company maintains insurance coverage for events and in amounts that it deems
appropriate. There can be no assurance that the level of insurance maintained
will be sufficient to cover any claims incurred by the Company or that the type
of claims will be covered by the terms of insurance coverage.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
7
<PAGE>
The following discussion of operations and financial condition of LifeCell
should be read in conjunction with the Financial Statements and Notes herein.
Certain statements set forth below constitute "Forward-Looking Statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. See "Special
Note Regarding Forward-Looking Statements and Risk Factors."
GENERAL AND BACKGROUND
LifeCell Corporation ("LifeCell" or the "Company") is a bioengineering company
engaged in the development and commercialization of tissue regeneration and cell
preservation products. The Company's patented tissue processing and cell
preservation technologies serve as platforms for a broad range of potential
products addressing significant clinical needs in multiple markets. The
Company's first commercial product is AlloDerm , a processed tissue that
provides a graft consisting of an extracellular tissue matrix that retains the
essential biochemical and structural composition of human dermis. The Company
believes that AlloDerm is the only commercial tissue transplant product that
promotes normal human soft tissue regeneration. The Company currently markets
AlloDerm in the United States and internationally for use in reconstructive
plastic, dental and burn surgery, and it has been successfully transplanted in
over 40,000 patients. LifeCell's development programs include Micronized
AlloDerm , vascular grafts, nerve connective tissue and ThromboSol platelet
storage solution.
Since inception, LifeCell's activities have been financed through the public and
private sale of equity securities, product sales, corporate alliances and the
receipt of government grants and contracts.
LifeCell began the sale of AlloDerm grafts as a dermal replacement in the
grafting of third-degree burns in December 1993 and commenced commercial
activities in 1994. LifeCell commenced the sale of AlloDerm for periodontal
surgery in September 1995 and for reconstructive plastic surgery uses in
November 1995. To date, proceeds from the sale of AlloDerm products have not
been sufficient to fund in full the Company's operating activities.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
The net loss for the three months ended June 30, 1999, increased 37% to
approximately $2.1 million compared to approximately $1.5 million for the same
period of 1998. The increase was principally attributable to non-recurring
expenses related to the pending relocation of the Company to New Jersey. These
expenses were offset in part by increased product sales and revenues from
research funding.
Total revenues for the three months ended June 30, 1999, increased 49% to
approximately $3.2 million compared to approximately $2.2 million for the same
period of 1998. The increase was primarily attributable to increased sales of
products, which were the result of expanded sales and marketing activities, and
increased pricing of certain AlloDerm products during the 1999 period.
Cost of goods sold for the three months ended June 30, 1999, was approximately
$764,000 resulting in a gross margin of approximately 74%. The gross margin for
the same period of 1998 was approximately 65%. The increase in gross margin was
principally attributable to pricing benefits resulting from the change from
distributing reconstructive plastic products through distributors to direct
distribution from LifeCell to hospitals and doctors' offices. In addition,
increases in sales of certain higher margin AlloDerm products and increased
prices of certain AlloDerm products contributed to the improved gross margins.
Research and development expenses of approximately $879,000 for the three months
ended June 30, 1999, were comparable to the same period of 1998. Funding for
research expenditures increased to approximately $290,000 for the three months
ended June 30, 1999, as compared to the same period of 1998. This increase was
principally attributable to funding for the ThromboSol and red blood cell
research programs provided by the United States Department of Defense.
8
<PAGE>
General and administrative expenses for the three months ended June 30, 1999,
increased 138% to approximately $1.8 million compared to approximately $750,000
for the same period of 1998. Approximately $800,000 of the increase was due to
non-recurring expenses incurred to relocate key employees to New Jersey. The
remainder of the increase was principally due to the search fees related to
recruiting key members of senior management.
Selling and marketing expenses of approximately $1.6 million for the three
months ended June 30, 1999, were comparable to the same period last year.
Expenditures were shifted from international marketing to domestic programs
including the recruiting of key senior management, hiring additional domestic
sales representatives and developing new marketing tools for the Company's sales
force.
LifeCell incurred a restructuring charge of approximately $443,000 during the
three months ended June 30, 1999. The restructuring charge was the result of
the planned relocation of the Company to New Jersey including the costs of
abandoning the Texas facility and retention costs for non-relocating employees
incurred during the period. The Company expects to incur additional costs
during the third quarter of 1999 related to the relocation of the Company.
Interest income and other, net decreased approximately 51% to approximately
$111,000 for the three months ended June 30, 1999, compared to approximately
$224,000 during the same period of 1998. The decrease was due principally to a
decline in cash available for investment.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
The net loss for the six months ended June 30, 1999, increased 26% to
approximately $4.2 million compared to approximately $3.3 million for the same
period of 1998. The increase was principally attributable to non-recurring
expenses related to the pending relocation of the Company to New Jersey and
expenses incurred in the first quarter for professional fees related to
finalizing a distribution agreement. These expenses were offset in part by
increased product sales and revenues from research funding.
Total revenues for the six months ended June 30, 1999, increased 42% to
approximately $5.9 million compared to approximately $4.1 million for the same
period of 1998. Approximately $1.5 million of such increase was attributable to
increased sales of products, which were the result of expanded sales and
marketing activities and increased pricing of certain AlloDerm products during
the 1999 period. Revenues from funded research and development increased
approximately $266,000 during the six months ended June 30, 1999, as compared to
the same period of 1998. This increase was attributable to funding available
from the United States Department of Defense for the Company's ThromboSol and
red blood cell research programs. Amounts recognized as revenues under such
cost reimbursement arrangements were for expenses incurred during the period.
Cost of goods sold for the six months ended June 30, 1999, was approximately
$1.6 million, resulting in a gross margin of approximately 70%. The gross
margin for the same period of 1998 was approximately 59%. The increase in gross
margin was attributable principally to the pricing benefits resulting from the
change from distributing reconstructive plastic products through distributors to
direct distribution from LifeCell to hospitals and doctors' offices. In
addition, increases in sales of certain higher margin AlloDerm products and
prices of certain AlloDerm products also contributed to the improved gross
margins.
Research and development expenses for the six months ended June 30, 1999,
increased 19% to approximately $1.9 million compared to approximately $1.6
million for the comparable period in 1998. The increase in research and
development expense was primarily attributable to the increased animal and
clinical studies for the expanding uses of AlloDerm. In addition, the Company
has dedicated increased resources to product development programs such as
Micronized AlloDerm (AlloDerm reduced to the size necessary for needle
injections).
General and administrative expenses during the six months ended June 30, 1999,
increased 76% to approximately $3.1 million compared to approximately $1.8
million for the same period of 1998. Approximately $800,000 of the increase was
due to non-recurring expenses incurred to relocate key employees as a result of
the planned move of the Company to New Jersey. The remainder of the increase
was due to professional fees incurred for the recruiting of key personnel and
expenses related to the finalizing of a distribution agreement during the first
quarter of 1999.
9
<PAGE>
Selling and marketing expenses increased 7% to approximately $3.2 million during
the six months ended June 30, 1999, compared to approximately $3.0 million for
the same period of 1998. The increase was principally attributable to the
hiring of additional domestic sales representatives, recruiting key marketing
management and development of additional marketing tools to support the sale of
AlloDerm. These expenses were offset in part by the decrease in resources
dedicated to international marketing programs.
Interest income and other, net decreased 50% to approximately $241,000 during
the six months ended June 30, 1999, as compared to the same period of 1998. The
decrease was principally attributable to a decrease in funds available for
investment during the 1999 period.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, LifeCell's principal sources of funds have been equity
offerings, product sales, external funding of research activities, and interest
on investments.
LifeCell expects to incur substantial expenses in connection with its efforts to
expand sales and marketing of AlloDerm, develop expanded uses for AlloDerm,
conduct the Company's product development programs (including costs of clinical
studies), prepare and make any required regulatory filings, introduce products,
relocate its operations to New Jersey and support ongoing administrative and
research and development activities. The Company currently intends to fund
these activities from its existing cash resources, sales of products, research
and development funding received from others and through an incentive financing
package expected to be provided by the New Jersey Economic Development
Authority. While the Company believes that the proceeds from the expected
financing and its existing available funds will be sufficient to meet its
present operating and capital requirements through at least 2000, there can be
no assurance that such sources of funds will be sufficient to meet these future
expenses. If adequate funds are not available, the Company expects it will be
required to delay, scale back or eliminate one or more of its product
development programs and raise additional capital. The Company's need for
additional financing will be principally dependent on the degree of market
acceptance achieved by the Company's products and the extent to which the
Company can achieve substantial growth in product sales during 1999 and 2000, as
well as the extent to which the Company may decide to expand its product
development efforts. There can be no assurance that the Company will be able to
obtain any such additional financing on acceptable terms, if at all.
LifeCell has incurred losses since inception and therefore has not been subject
to federal income taxes. As of December 31, 1998, LifeCell had net operating
loss ("NOL") and research and development tax credit carryforwards for income
tax purposes of approximately $40.5 million and $395,000, respectively,
available to reduce future income tax and tax liabilities. Federal tax laws
provide for a limitation on the use of NOL and tax credit carryforwards
following certain ownership changes that could limit LifeCell's ability to use
its NOL and tax credit carryforwards. The sale of common stock in a public
offering in December 1997 resulted in an ownership change for federal income tax
purposes. The Company estimates that the amount of NOL carryforwards and the
credits available to offset taxable income as of December 31, 1998, was
approximately $14.0 million on a cumulative basis. Accordingly, if LifeCell
generates taxable income in any year in excess of its then cumulative
limitation, the Company may be required to pay federal income taxes even though
it has unexpired NOL and tax credit carryforwards.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Statements contained in this report other than historical facts are
forward-looking statements provided in accordance with the provisions of the
Private Securities Litigation Reform Act of 1995. While these statements
reflect the Company's beliefs as of the date of this report, they are subject to
uncertainties and risks that could cause actual results to differ materially.
In addition, the operations and activities of the Company and investments in its
securities are subject to certain significant risks. These risks include, but
are not limited to, the demand for the Company's products and services, economic
and competitive conditions, competitive products and technologies, uncertainty
of patent protection, access to borrowed or equity capital on favorable terms,
and other risks detailed in the Company's Annual Report of Form 10-K for the
year ended December 31, 1998.
10
<PAGE>
YEAR 2000 COMPLIANCE
In recent years, the Company has been replacing and enhancing its information
systems to gain operational efficiencies and keep pace with the Company's
growth. In conjunction with these activities, the Company has been preparing
its information systems for the year 2000.
The Company has completed a comprehensive assessment of the impact of the year
2000 on its internal information systems and applications and intends to make
the necessary revisions or upgrades to its systems to render them year 2000
compliant. The Company is also focusing on compliance attainment efforts and
key interfaces with vendors. To date, all of the Company's critical software
applications have been certified year 2000 compliant. The Company's computer
hardware is in the process of final testing, and the Company expects that it
will be compliant by the end of the third quarter of 1999. Notwithstanding the
Company's efforts, the Company could experience disruptions to some aspects of
its activities and operations as a result of non-compliant systems utilized by
the Company or unrelated third parties. The Company is, therefore, developing
contingency plans to mitigate the extent of any such potential disruption to
business operations. The Company does not expect that the costs of addressing
potential year 2000 issues will have a material adverse impact on the Company's
results of operations or financial position.
There can be no assurances that the efforts or the contingency plans related to
the Company's systems, or those of others relied upon by the Company, will be
successful or that any failure to convert, upgrade or plan appropriately for
contingencies would not have a material adverse effect on the Company.
The foregoing statements are intended to be and are hereby designated "Year 2000
Readiness Disclosure" statements within the meaning of the Year 2000 Information
and Readiness Disclosure Act.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
None.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The company from time to time may be subject to various claims in the ordinary
course of its operations. The company maintains insurance coverage for events
and in amounts that it deems appropriate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On June 3, 1999, at the Company's Annual Meeting of Stockholders, the
individuals listed below were elected directors by the holders of Common Stock
and Series B Preferred Stock, voting together as a class. Set forth opposite
each director's name is the tabulation of votes cast.
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
- ------------------ ---------- --------------
<S> <C> <C>
Michael E. Cahr 12,817,365 54,322
James G. Foster 12,814,965 56,722
Stephen A. Livesey 12,804,988 66,699
Paul G. Thomas 12,801,931 69,756
David A. Thompson 12,816,433 55,254
</TABLE>
The additional individuals listed below were elected directors by the holders of
Series B Preferred Stock, voting as a separate class.
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
- ----------------- --------- --------------
<S> <C> <C>
K. Flynn McDonald 107,337 -
Lori G. Koffman 107,337 -
</TABLE>
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
27.1 Financial Data Schedule
b. Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused report to be signed on its behalf by the undersigned
thereunto duly authorized.
LIFECELL CORPORATION
Date: August 13, 1999 By: /s/ Paul G. Thomas
--------------------------
Paul G. Thomas
President and Chief
Executive Officer
Date: August 13, 1999 By: /s/ Fenel M. Eloi
--------------------------
Fenel M. Eloi
Sr. Vice President, Chief
Financial Officer and Secretary
(Principal Financial Officer)
Date: August 13, 1999 By: /s/ Lynne P. Hohlfeld
--------------------------
Lynne P. Hohlfeld
Controller
(Principal Accounting Officer)
12
<PAGE>
EXHIBIT INDEX
27.1 Financial Data Schedule.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 7533011
<SECURITIES> 0
<RECEIVABLES> 2120583
<ALLOWANCES> (41351)
<INVENTORY> 2494673
<CURRENT-ASSETS> 12346290
<PP&E> 3660767
<DEPRECIATION> (1388804)
<TOTAL-ASSETS> 14944662
<CURRENT-LIABILITIES> 3935750
<BONDS> 0
<COMMON> 11869
0
118
<OTHER-SE> 298344
<TOTAL-LIABILITY-AND-EQUITY> 14944662
<SALES> 5274134
<TOTAL-REVENUES> 6091416
<CGS> 1571039
<TOTAL-COSTS> 8705455
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4185078)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4185078)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4185078)
<EPS-BASIC> (.39)
<EPS-DILUTED> (.39)
13
<PAGE>
</TABLE>
