<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
------------------------------
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 000-20805
---------------------------------------------------
APACHE MEDICAL SYSTEMS, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2476415
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1650 Tysons Boulevard, McLean, Virginia 22102
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(703) 847-1400
--------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 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
----------- ----------
6,871,353
---------
(Number of shares of common stock
outstanding as of November 8, 1996)
<PAGE> 2
APACHE MEDICAL SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets -- September 30, 1996
(unaudited) and December 31, 1995 1
Consolidated Statements of Operations (unaudited)
- three months and nine months ended September
30, 1996 and 1995 2
Consolidated Statements of Cash Flows (unaudited)
- nine months ended September 30, 1996 and 1995 3
Consolidated Statements of Changes in
Stockholders' Equity (Deficit) - nine months
ended September 30, 1996 (unaudited) and year
ended December 31, 1995 4
Notes to Consolidated Financial Statements (unaudited) 5-6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-10
Part II - Other Information
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8--K 12-13
Signatures 14
</TABLE>
<PAGE> 3
PART I: FINANCIAL INFORMATION
APACHE MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 23,377 $ 4,036
Accounts receivable, net of allowance for doubtful accounts 2,716 1,420
Other trade receivables 199 162
Prepaid expenses and other 715 124
------------- ------------
TOTAL CURRENT ASSETS 27,007 5,742
Other trade receivables, net of current maturities 16 75
Furniture and equipment 2,605 2,887
Less accumulated depreciation and amortization (1,588) (1,496)
------------- ------------
1,017 1,391
Capitalized software development costs, net 659 701
------------- ------------
TOTAL ASSETS $ 28,699 $ 7,909
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 276 $ 922
Accrued expenses 1,431 723
Current maturities of obligations under capital leases 95 191
Current maturities of notes payable - stockholders 237 250
Current maturities of notes payable - other 90 224
Deferred revenue 1,147 1,915
------------- ------------
TOTAL CURRENT LIABILITIES 3,276 4,225
Deferred rent benefit 167 186
Obligations under capital leases, net of current maturities 6 63
Notes payable - stockholders, net of current maturities 100 835
Notes payable - other, net of current maturities 95 181
Redeemable convertible preferred stock - 20,732
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value, authorized shares, 30,000,000 at September 30, 1996 and
5,769,231 at December 31, 1995; issued and outstanding shares, 6,871,353 at
September 30, 1996 and 1,075,458 at December 31, 1995 69 11
Additional paid-in capital 45,258 1,363
Cumulative dividends and accreted issue costs on redeemable convertible preferred stock - (1,779)
Accumulated deficit (20,272) (17,908)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 25,055 (18,313)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 28,699 $ 7,909
============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
APACHE MEDICAL SYSTEMS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUE:
Systems $ 1,726 $ 1,256 $ 4,535 $ 2,582
Support 354 366 1,059 966
Professional services 434 524 590 1,173
------------- ------------- ------------- -------------
Total revenue 2,514 2,146 6,184 4,721
EXPENSES:
Cost of operations 699 686 2,214 2,134
Research and development 550 529 1,211 1,604
Selling, general and administrative 2,142 1,232 5,175 4,188
------------- ------------- ------------- -------------
Total expenses 3,391 2,447 8,600 7,926
LOSS FROM OPERATIONS (877) (301) (2,416) (3,205)
OTHER INCOME (EXPENSE):
Interest income 312 2 393 29
Interest expense (131) (140) (341) (294)
Other, net - 2 - 2
------------- ------------- ------------- -------------
Total other income (expense) 181 (136) 52 (263)
NET LOSS $ (696) $ (437) $ (2,364) $ (3,468)
============= ============= ============= =============
Net loss per share $ (0.08) - $ (0.38) -
============= ============= ============= =============
Weighted average number of shares used
for calculation of net loss per share 6,851 - 5,381 -
============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
APACHE MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(undaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1996 1995
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net loss $ (2,364) $ (3,468)
Adjustments to reconcile net loss to net cash
from (used for) operating activities:
Depreciation and amortization 640 451
Provision for doubtful accounts 75 -
Loss on sale of furniture and equipment - 69
Accretion of interest 252 216
Stock options earned through performance plan 5 -
Increase in accounts receivable (1,371) (128)
Decrease in other trade receivables 23 140
Increase in other current assets (263) (72)
Increase in accounts payable and accrued expenses 62 429
Decrease in deferred rent (19) (25)
Increase (decrease) in deferred revenue (768) 256
-------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (3,728) (2,132)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capitalized software development costs (131) (200)
Purchase of furniture and equipment, net of disposals (53) (31)
Proceeds from sale of furniture and equipment - 221
-------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (184) (10)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Principal payments on capital lease obligations (153) (131)
Principal payments on borrowings (220) (78)
Proceeds from issuance of note payable - 2,350
Issuance costs on preferred stock (37) -
Proceeds from issuance of common stock upon exercise of options 6 8
Proceeds from initial public offering of common stock 27,600 -
Issuance costs on initial public offering of common stock (3,034) -
Payments of cumulative dividends (909) -
-------------- -------------
NET CASH FROM FINANCING ACTIVITIES 23,253 2,149
-------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 19,341 7
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,036 209
-------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 23,377 $ 216
============== =============
SUPPLEMENTAL INFORMATION:
Cash payments for interest $ 123 $ 17
============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
APACHE MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands except share data)
<TABLE>
<CAPTION>
CUMULATIVE
DIVIDENDS AND
ACCRETED
ISSUE COSTS
COMMON STOCK ADDITIONAL ON CUMULATIVE
----------------------- PAID-IN REDEEMABLE ACCUMULATED
SHARES AMOUNT CAPITAL PREFERRED STOCK DEFICIT TOTAL
----------- -------- ------------ --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 1,072,835 $11 $569 ($878) ($14,100) ($14,398)
Issuance of convertible preferred stock
warrants - - 787 - - 787
Exercise of stock options 2,623 - 7 - - 7
Accretion of cumulative dividends and
issue costs on redeemable preferred
stock - - - (901) - (901)
Net loss - - - - (3,808) (3,808)
----------- -------- ------------ --------------- ----------- ---------
BALANCE AT DECEMBER 31, 1995 1,075,458 11 1,363 (1,779) (17,908) (18,313)
Exercise of stock options 788 - 7 - - 7
Issuance of common stock through
initial public offering 2,300,000 23 27,577 - - 27,600
Accretion of cumulative dividends and
issue costs on redeemable preferred
stock - - - (679) - (679)
Conversion of convertible preferred
stock 3,294,519 33 20,017 - - 20,050
Conversion of convertible debt 122,257 1 999 - - 1,000
Conversion of cumulative dividends on
redeembable preferred stock 78,331 1 939 - - 940
Reclass cumulative dividends on
redeemable preferred stock to APIC - - (1,850) 1,850 - -
Reclass accreted issue costs on
redeemable preferred stock to APIC - - (608) 608 - -
Reclass unaccreted issue costs on
redeemable preferred stock to APIC - - (526) - - (526)
Issuance cost of initial public
offering - - (3,034) - - (3,034)
Stock options outstanding - - 374 - - 374
Net loss - - - - (2,364) (2,364)
----------- -------- ------------ --------------- ----------- ---------
BALANCE AT SEPTEMBER 30, 1996
(UNAUDITED) 6,871,353 $69 $45,258 - ($20,272) $25,055
=========== ======== ============ =============== =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 7
APACHE MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). The financial information included herein is unaudited,
however, in the opinion of management, all adjustments (which include normal
recurring adjustments) considered necessary for a fair presentation have been
made. Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, but the Company believes that the disclosures made are adequate to
make the information presented not misleading. For more complete financial
information, these financial statements should be read in conjunction with the
audited financial statements and notes thereto for the year ended December 31,
1995 included in the Company's prospectus. Results for interim periods are not
necessarily indicative of the results for any other interim period or for the
full fiscal year.
2. INITIAL PUBLIC OFFERING
On July 3, 1996, the Company completed an initial public offering of its Common
Stock whereby 2,000,000 shares were issued at $12 per share resulting in net
proceeds of approximately $22,320,000, after underwriting discounts and
commissions and before other expenses of the offering. Additionally, 300,000
shares for the underwriter's over-allotment were issued on July 9, 1996 at $12
per share resulting in net proceeds of approximately $3,348,000, after
underwriter discounts and commissions and before other expenses of the
offering. Other issuance costs incurred in conjunction with the initial public
offering totaled $1,100,000. The initial public offering commenced on June 28,
1996, and the closing and payment of the purchase price took place on July 3,
1996.
5
<PAGE> 8
On July 3, 1996 (consummation of the offering), all the outstanding shares of
Series A, B, C, D, E and F Redeemable Convertible Preferred Stock were
automatically converted into 3,294,519 shares of common stock, and at the
holders' option, conversion of $939,940 of cumulative dividends into 78,331
shares of common stock based on the stated preference of the holders. During
the third quarter of 1996, cumulative dividends of $909,464 were paid with the
proceeds of this offering, and $608,090 of accreted issue costs have been
reflected as a decrease in paid-in capital. Additionally, notes payable with
an outstanding balance of $1,000,000 and a net carrying value of approximately
$895,000 were converted into 122,257 shares of common stock.
3. EARNINGS PER SHARE
Earnings per share is computed based on the weighted average number of shares
of common stock and dilutive common stock equivalents outstanding during the
period.
4. COST OF OPERATIONS AND GROSS MARGIN BY PRIMARY REVENUE
SOURCES
The following represents revenues and cost of operations by primary revenue
sources for the three months and nine months ended September 30, 1996:
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
Sept 30, 1996 Sept 30, 1996
-------------- ---------------
(in thousands)
<S> <C> <C>
Revenue:
Systems $ 1,726 $ 4,535
Support 354 1,059
Professional services 434 590
-------------- ---------------
Total revenue 2,514 6,184
Cost of operations:
Systems 479 1,559
Support 137 426
Professional services 83 229
-------------- ---------------
Total cost of operations 699 2,214
-------------- ---------------
Gross margin $ 1,815 $ 3,970
============== ===============
</TABLE>
6
<PAGE> 9
APACHE MEDICAL SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - THREE MONTHS AND NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1995
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996 and 1995
Revenue for the quarter ended September 30, 1996 increased 17% to $2.5 million
from $2.1 million in the prior year period. Systems revenue for the quarter
ended September 30, 1996, increased 37% to $1.7 million from $1.3 million in
the prior year period. The increase was due primarily to the introduction and
sale of other systems and benchmark studies and the recording of revenue
relating to the percentage of completion method of accounting for 1995 and 1996
MCMP sales. Support revenue for the quarter ended September 30, 1996
decreased 3% to $354,000 from $366,000 in the prior year period due to the
renegotiation of annual support fees for a significant client which resulted in
lower annual support fees for the second half of 1996 and by enhanced support
fees recorded during 1995 and not repeated in the current third quarter,
partially offset by an increase in the MCMP installed client base.
Professional service revenue for the quarter ended September 30, 1996 decreased
17% to $434,000 from $524,000 for the prior year period. The decrease in
professional service revenue is due to the reduction of services sold to
biotechnology companies, which resulted from the Company's focus on the sale of
MCMP products and other systems during the first nine months of 1996. The
Company, however, is currently hiring individuals who will be devoted to
marketing and selling professional services.
Cost of operations for the quarter ended September 30, 1996 increased 2% to
$699,000 from $686,000 in the prior year period, due to the increase in
staffing requirements for client services and system consulting services and
the increase of $35,000 in amortization expense of capitalized software
development costs. These cost increases were partially offset by a decrease in
third party hardware and software costs and the reduction of costs resulting
from process improvement programs implemented during 1996. Cost of operations
for the quarter ended September 30, 1996 decreased to 28% of revenue from 32%
in the prior year period, due to the increase in revenue for the period which
more than offset the increase in cost of operations.
7
<PAGE> 10
Research and development expenses for the quarter ended September 30, 1996
increased 4% to $550,000 from $529,000 in the prior year period, due primarily
to an increase in third party consulting expenses to expedite the release of
new products for the third and fourth quarter of 1996. This increase was
partially offset by a decrease in payroll expenses related to research and
development activities and in third party research fees. During the quarter
ended September 30, 1996, $55,000 of product development activity was
capitalized, compared to $50,000 in the prior year period. Research and
development expenses for the quarter ended September 30, 1996 decreased to 22%
of revenue from 25% in the prior year period, due to the increase in revenue
for the period which more than offset the increase in research and development
expenses.
Selling, general and administrative expenses for the quarter ended September
30, 1996 increased 74% to $2.1 million from $1.2 million in the prior year
period, due to an increase in sales and marketing staff and related overhead
costs, sales commissions resulting from an increase in sales and an increase in
expenses associated with public reporting requirements. Selling, general and
administrative expenses for the quarter ended September 30, 1996 increased to
85% of revenue from 57% for the prior year period due to the same factors as
noted above, which were only partially offset by an increase in revenue.
Other income (expense) increased from ($136,000) in the quarter ended September
30, 1995 to $181,000 for the quarter ended September 30, 1996. The increase is
attributable to the increase in interest income from the Company's average cash
and cash equivalent balance and a decrease in interest-bearing notes payable,
partially offset by the write-off of non-cash imputed interest on the notes
converted on July 3, 1996, the closing date of initial public offering.
Nine Months Ended September 30, 1996 and 1995
Revenue for the nine months ended September 30, 1996 increased 31% to $6.2
million from $4.7 million in the prior year period. Systems revenue for the
nine months ended September 30, 1996, increased 76% to $4.5 million from $2.6
million in the prior year period. This increase was due primarily to the
increase in unit sales of the Company's MCMP product; the introduction and sale
of other systems and benchmark studies; and the recording of revenue relating
to the percentage of completion method of accounting for 1995 MCMP sales.
Support revenue for the nine months ended September 30, 1996 increased 10% to
$1.1 million from $966,000 in the prior year period due to an increase in the
MCMP installed client base, partially offset by the renegotiation of annual
support fees for a significant client which resulted in lower annual support
fees for the second half of 1996 and by enhanced support fees recorded during
1995 and
8
<PAGE> 11
not repeated in the current year to date period. Professional service revenue
for the nine months ended September 30, 1996 decreased 50% to $590,000 from
$1.2 million for the prior year period. The decrease in professional service
revenue is due to the reduction of services sold to biotechnology companies,
which resulted from the Company's focus on the sale of MCMP products and other
systems for the first nine months of 1996. The Company, however, is currently
hiring individuals who will be devoted to marketing and selling professional
services.
Cost of operations for the nine months ended September 30, 1996 increased 4% to
$2.2 million from $2.1 million in the prior year period, due to an increase in
staffing requirements in client services and system consulting services and the
increase of $141,000 in amortization expense of capitalized software
development costs. These cost increases were partially offset by a decrease in
third party hardware and software costs and the reduction of costs resulting
from process improvement programs implemented during 1996. Cost of operations
for the nine months ended September 30, 1996 decreased to 36% of revenue from
45% in the prior year period, due to the increase in revenue for the period
which more than offset the increase in cost of operations.
Research and development expenses for the nine months ended September 30, 1996
decreased 25% to $1.2 million from $1.6 million in the prior year period, due
primarily to a decrease in third party research fees and payroll expenses
related to research and development activities, partially offset by the
increase in third party consulting expenses to expedite the release of new
products for the third and fourth quarter of 1996. During the nine months
ended September 30, 1996, $120,000 of product development activity was
capitalized, compared to $200,000 in the prior year period. Research and
development expenses for the nine months ended September 30, 1996 decreased to
20% of revenue from 34% in the prior year period, due to the same factors
together with an increase in revenue.
Selling, general and administrative expenses for the nine months ended
September 30, 1996 increased 24% to $5.2 million from $4.2 million in the prior
year period, due to an increase in sales and marketing staff and related
overhead costs, sales commissions resulting from an increase in sales and an
increase in expenses associated with public reporting requirements. Selling,
general and administrative expenses for the nine months ended September 30,
1996 decreased to 84% of revenue from 89% for the prior year period due
primarily to the increase in revenue which more than offset the increase in
selling, general and administrative expenses.
9
<PAGE> 12
Other income (expense) increased from ($263,000) in the nine months ended
September 30, 1995 to $52,000 for the nine months ended September 30, 1996.
The increase is attributable to an increase in interest income from the
Company's average cash and cash equivalent balance partially offset by the
write-off of non-cash imputed interest on the notes converted on July 3, 1996,
the closing date of initial public offering.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $23,400,000 as of September 30, 1996 compared to
$4,000,000 as of December 31, 1995. On July 3, 1996, the Company completed an
initial public offering of its Common Stock whereby 2,000,000 shares were
issued at $12 per share resulting in net proceeds of approximately $22,320,000,
after underwriting discounts and commissions and before other expenses of the
offering. Additionally, 300,000 shares for the underwriter's over-allotment
were issued on July 9, 1996 at $12 per share resulting in net proceeds of
approximately $3,348,000, after underwriter discounts and commissions and
before other expenses of the offering. Other issuance costs incurred in
conjunction with the initial public offering totaled $1,100,000.
During the third quarter, cumulative dividends of $909,464 were paid and
$3,700,000 was used for operating activities.
The Company anticipates that net proceeds from the initial public offering and
funds generated from operations will be sufficient to meet its planned ongoing
working capital requirements and to finance planned product development, sales
and marketing activities and capital acquisitions.
10
<PAGE> 13
PART II - OTHER INFORMATION
Item 5: Other Information
In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, the Company believes that a number of
important factors could cause the Company's actual results to differ from those
that may have been or may be projected in forward-looking statements made by or
on behalf of the Company from time to time. These factors are described under
the heading "Risk Factors" in the Company's Registration Statement on Form S-1
(File No. 333-4106), as amended, filed with the Securities and Exchange
Commission on April 26, 1996. Specific reference is made to the Risk Factors
set forth therein entitled "History of Operating Losses and Accumulated
Deficit; Expected Losses; Uncertainty of Future Profitability", "Fluctuations
in Quarterly Operating Results", "Uncertainty of Market Acceptance" and "State
and Federal Government Regulation".
11
<PAGE> 14
Item 6: Exhibits and Reports on Form 8--K
(a) Exhibits --
Exhibit
Number Description
- ------ -----------
3.1 Amended and Restated Certificate of Incorporation*
3.2 By-laws*
4.1 Specimen Common Stock Certificate*
10.1 APACHE Medical Systems, Inc. Employee Stock Option Plan+*
10.2 APACHE Medical Systems, Inc. Non-Employee Director Option
Plan+*
10.3 Sublease Agreement between the Company and First Union
National Bank of Virginia, dated March 17, 1994*
10.4 Registration Agreement between the Company and Certain
Stockholders, dated December 28, 1995*
10.5 Form of Warrant Agreement relating to warrants issued in 1995*
10.6 Warrant Agreement between the Company and Venture Fund of
Washington, dated May 13, 1991*
10.7 Loan Agreement between the Company and Benefit Capital
Management Corporation, dated February 24, 1995*
10.8 Licensing Agreement between the Company and Cerner
Corporation, dated February 2, 1995*
10.9 Nonqualified Stock Option Agreement between the Company and
The Cleveland Clinic Foundation, dated August 19, 1994*
10.10 Agreement between the Company and The George Washington
University, dated August 19, 1994*
10.11 Letter Agreement between the Company and the Northern New
England Cardiovascular Disease Study Group, dated March 13,
1995*
12
<PAGE> 15
10.12 Licensing Agreement between the Company and Quality
Information Management Corporation, dated March 24, 1994*
10.13 Marketing Agreement between the Company and American
Healthcare Systems Purchasing Partners, L.P., dated as of
September 3, 1996*
11.1 Computation of Earnings Per Share
27 Financial Data Schedule
- -----------
+ Denotes compensatory plan.
* Incorporated herein by reference from the Company's
Registration Statement on Form S-1, SEC file no. 333-4106,
dated April 26, 1996.
(b) Reports on Form 8--K --
No reports on Form 8--K have been filed during the quarter ended
September 30, 1996.
13
<PAGE> 16
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.
APACHE MEDICAL SYSTEMS, INC.
Date: November 8, 1996 /s/Gerald E. Bisbee, Jr.
----------------- ------------------------------------------
Gerald E. Bisbee, Jr.
Chairman and Chief Executive
Officer
Date: November 8, 1996 /s/Brion D. Umidi
------------------ ------------------------------------------
Brion D. Umidi
Vice President, Finance and
Administration and Treasurer (Chief
Financial and Accounting Officer)
Date: November 8, 1996 /s/Lisa M. Clements
------------------ ------------------------------------------
Lisa M. Clements
Controller and Assistant Treasurer
14
<PAGE> 1
APACHE MEDICAL SYSTEMS, INC.
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months Nine months
ended ended
Sept 30, 1996 Sept 30, 1996
------------- -------------
<S> <C> <C>
Income applicable to common shares:
Net loss $ (696) $ (2,364)
Increase in earnings resulting from conversion of convertible debt (1) 119 302
------------ -------------
Loss applicable to common shares $ (577) $ (2,062)
============ =============
Weighted average common shares outstanding:
Weighted average number of common
shares from Initial Public Offering 2,230 749
Weighted average number of common
shares outstanding (2) 1,076 1,076
Conversion of preferred shares (1) 3,373 3,367
Conversion of convertible debt (1) 122 122
Cheap stock options and warrants (1) 50 67
------------ -------------
Weighted average common shares 6,851 5,381
============ =============
Loss per common share $ (0.08) $ (0.38)
============= =============
</TABLE>
(1) Assumes the conversion took place January 1, 1996.
(2) After considering the 1 for 2.86 reverse stock split effective June 18,
1996.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 23,377
<SECURITIES> 0
<RECEIVABLES> 2,802
<ALLOWANCES> (86)
<INVENTORY> 0
<CURRENT-ASSETS> 27,007
<PP&E> 2,605
<DEPRECIATION> (1,588)
<TOTAL-ASSETS> 28,699
<CURRENT-LIABILITIES> 3,276
<BONDS> 201
0
0
<COMMON> 69
<OTHER-SE> 24,986
<TOTAL-LIABILITY-AND-EQUITY> 28,699
<SALES> 6,184
<TOTAL-REVENUES> 6,184
<CGS> 0
<TOTAL-COSTS> 2,214
<OTHER-EXPENSES> 6,386
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 341
<INCOME-PRETAX> (2,364)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,364)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,364)
<EPS-PRIMARY> ($0.38)
<EPS-DILUTED> ($0.38)
</TABLE>
