<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): May 6, 1998
NEUROMEDICAL SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-26984 13-3526980
(State or other (Commission File No.) (I.R.S. Employer
jurisdiction Identification No.)
of incorporation
Two Executive Boulevard, Suite 306
Suffern, New York 10901-4164
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 368-3600
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ITEM 5.
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NEUROMEDICAL SYSTEMS ANNOUNCES FIRST QUARTER 1998 FINANCIAL RESULTS
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On May 6, 1998 Neuromedical Systems, Inc. ("NSI" or the "Company")
announced results for its first quarter ending March 31, 1998.
Revenues for the first quarter were $2,574,000, an increase of 56% from
$1,651,000 for the first quarter of 1997. Revenue from European operations
increased from $280,000 in the first quarter of 1997 to $1,059,000 in the first
quarter of 1998 reflecting the Company's continued implementation of its
business strategy in Europe of selling and leasing PAPNET-on-CyteTM systems
directly to laboratory customers. United States revenue decreased from $993,000
in the first quarter of 1997 to $890,000 in the first quarter of 1998. This
decrease reflects an impact on sales by a number of factors which include a
significant reduction in sales and marketing expenditures, increased competitor
activities, as well as the continued challenge surrounding cervical screening
reimbursement. Revenues from Asia/Pacific operations increased from $378,000 in
the first quarter of 1997 to $625,000 in the first quarter of 1998 reflecting a
laboratory acquisition in Hong Kong during the second quarter of 1997.
The Company reported a net loss for the first quarter of 1998 of
$7,657,000, or $.25 per share, compared to a net loss of $9,725,000 or $.32 per
share for the first quarter of 1997. The reduced net loss reflected increased
revenue and reduced sales and marketing expenses. These items were partially
offset by increased research and development costs, increased costs of sales
associated with product sales, increased operating expenses associated with the
acquisition of a laboratory in Hong Kong and increased general and
administrative expenses associated with severance costs related to two former
executives.
Cash and cash equivalents used along with short-term investments redeemed
for the first quarter of 1998 were $8,423,000 compared to $11,370,000, excluding
the purchase of short-term investments, for the first quarter of 1997. The
decreased use of cash and cash equivalents and short-term investments primarily
reflects lower losses in the first quarter of 1998 compared to the first quarter
of 1997. This decrease was offset by an increase in cash used for financing
activities in the first quarter of 1998 compared with the first quarter of 1997
which was due to higher scheduled debt service payments and no proceeds from
equity as compared with the first quarter of 1997.
The Company anticipates continued growth throughout the year for orders of
PAPNET-on-Cyte systems in Europe. In the United States, the Company continued
laying the groundwork for a transition similar to the Company's European
business strategy. Due to differences in the laboratory marketplace,
reimbursement practice and the regulatory requirements the Company expects this
transition will extend until at least the end of 1999.
The Company also continued working diligently on the design and preparation
for its anticipated primary screening clinical trial. Clinical sites have been
identified and the
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Company has received comments from the FDA on the protocol. The Company expects
to begin multi-centered clinical trial during the third quarter of 1998. The
trial is designed to include both conventional and liquid-based preparations, as
well as high risk patients.
Neuromedical Systems, Inc. focuses intelligent vision on medicine. NSI's
first product, the PAPNET Testing System, helps the laboratory increase the
accuracy of cervical screening by displaying potentially abnormal cells for
review and analysis by a cytology professional. PAPNET testing is available
through a network of laboratories nationwide. Laboratories, clinicians and
patients interested in learning more about PAPNET testing or Neuromedical
Systems, Inc. may call toll free at 1-800 PAPNET4 or visit NSI on the World Wide
Web at http://www.nsix.com.
Safe Harbor Statement
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Forward-looking statements discussed in this release are made under
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Except for the historical information contained herein, the matters
discussed in this release are forward-looking statements which reflect the
Company's current views with respect to future events and financial performance,
which include, but are not limited to, statements regarding the Company's plans
and operations, management's assessments and decisions, marketing and promotion
strategy, and discussions of product development and performance. The words,
"believe", "expect", "anticipate", "estimate", "project" and similar expressions
identify forward-looking statements, which speak only as of the date hereof.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from
historical results or those anticipated due to many factors, including, but not
limited to, the Company's continuing negative cash flow, reliance on a single
product, competition, dependence on key personnel, the impact on the Company of
its territorial license agreements, dependence on patents and proprietary
technology, government regulation of products and advertising, limited marketing
and sales history, the impact of third-party reimbursement decisions, litigation
and other risks detailed in the Company's Securities and Exchange Commission
filings, including its 1997 Form 10-K and Exhibit 99.1 attached thereto. The
Company undertakes no obligation to publicly update or revise any forward-
looking statements.
3
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[Insert RIDER1]
NEUROMEDICAL SYSTEMS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------------------- ----------------------
1998 1997
----------------------- ----------------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and marketable securities $ 37,513,000 $ 45,936,000
Other current assets 7,028,000 6,203,000
Property and equipment, net 11,156,000 12,092,000
Other assets 2,108,000 2,113,000
----------------------- ----------------------
Total Assets $ 57,805,000 $ 66,344,000
======================= ======================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 10,511,000 $ 10,525,000
Other liabilities 7,446,000 8,345,000
Stockholders' equity 39,848,000 47,474,000
----------------------- ----------------------
Total Liabilities and
Stockholders' Equity $ 57,805,000 $ 66,344,000
======================= ======================
</TABLE>
NEUROMEDICAL SYSTEMS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------------------------
1998 1997
----------------------- ----------------------
<S> <C> <C>
REVENUES $ 2,574,000 $ 1,651,000
----------------------- ----------------------
COSTS AND EXPENSES
Cost of sales 3,120,000 2,593,000
Sales and marketing 2,147,000 5,478,000
Research and development 2,313,000 1,948,000
General and administrative 2,750,000 1,940,000
----------------------- ----------------------
Total Costs and Expenses 10,330,000 11,959,000
----------------------- ----------------------
Other income (expense), net 99,000 583,000
----------------------- ----------------------
NET LOSS $ (7,657,000) $ (9,725,000)
======================= ======================
Basic and diluted net loss per share $ (0.25) $ (0.32)
======================= ======================
Shares used in computation of net loss per share 31,055,000 30,825,000
======================= ======================
</TABLE>
4
<PAGE>
The filing of this Form 8-K by the Company is made pursuant to the Company's
contractual obligations under Section 6A of the Underwriting Agreement (U.S.
Version) among the Company and the underwriters of the Company's initial public
offering of common stock, par value $.0001 per share, dated December 7, 1995,
previously filed with the Commission as an Exhibit to the Company's Registration
Statement on Form S-1, dated as of even date therewith.
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 hereunto duly authorized in Suffern, New York on this 6th day of
May, 1998.
NEUROMEDICAL SYSTEMS, INC.
By: /s/ Mark L. Smith
----------------------------------
Mark L. Smith
Vice President, Finance and Administration
and Chief Financial Officer
5
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<PAGE>
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