<PAGE>
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 March 31, 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: 0-12128
Matritech, Inc.
---------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-2985132
-------- ----------
(State or Other (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation or
Organization)
330 Nevada Street, Newton, Massachusetts 02460
----------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(617) 928-0820
--------------
(Registrant's 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 May 11, 1999, there were 21,724,217 shares of Common Stock
outstanding.
Page 1 of 16
The Exhibit Index is located on Page 16.
<PAGE>
MATRITECH, INC.
INDEX
PART I FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements
Balance Sheets at December 31, 1998
and March 31, 1999 3
Statements of Operations for the three months
ended March 31, 1998 and 1999 5
Statements of Cash Flows for the three months
ended March 31, 1998 and 1999 6
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
Page 2 of 16
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MATRITECH, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, March 31, Proforma March 31,
1998 1999 1999
------------------- --------------------- ----------------------
(Unaudited) (Unaudited)
(Note 2)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $4,146,821 $2,412,741 $6,337,741
Accounts receivable, net 162,261 177,046 177,046
Inventories 336,398 338,964 338,964
Prepaid expenses 113,582 100,512 100,512
-------------- -------------- --------------
Total current assets 4,759,062 3,029,263 6,954,263
-------------- -------------- --------------
PROPERTY AND EQUIPMENT, at cost:
Laboratory equipment 1,418,042 1,423,124 1,423,124
Office equipment 212,698 212,698 212,698
Laboratory furniture 62,739 62,739 62,739
Leasehold improvements 56,981 56,981 56,981
-------------- -------------- --------------
1,750,460 1,755,542 1,755,542
Less-Accumulated depreciation
and amortization 1,065,060 1,110,701 1,110,701
-------------- -------------- --------------
685,400 644,841 644,841
-------------- -------------- --------------
OTHER ASSETS, net 67,363 66,738 66,738
-------------- -------------- --------------
$5,511,825 $3,740,842 $7,665,842
============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
Page 3 of 16
<PAGE>
MATRITECH, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, March 31, Proforma March 31,
1998 1999 1999
---------------------- --------------------------- ------------------------
(Unaudited) (Unaudited)
(Note 2)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Current maturities of note payable $ 68,271 $ 66,953 $ 66,953
Accounts payable 329,660 229,210 229,210
Accrued expenses 573,422 583,318 583,318
--------------- --------------- ---------------
Total current liabilities 971,353 879,481 879,481
--------------- --------------- ---------------
NOTE PAYABLE, LESS CURRENT MATURITIES 140,491 125,483 125,483
--------------- --------------- ---------------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value -
Authorized - 4,000,000 shares
Issued and outstanding - none --- --- ---
Common stock, $.01 par value -
Authorized - 40,000,000 shares
Issued and outstanding -
18,626,602
shares at December 31, 1998,
18,629,252 shares at March 31,
1999,
and 21,724,217 shares proforma 186,266 186,293 217,242
March 31, 1999
Additional paid-in capital 45,364,731 45,368,680 49,262,731
Accumulated deficit (41,151,016) (42,819,095) (42,819,095)
--------------- --------------- ---------------
Total stockholders' equity 4,399,981 2,735,878 6,660,878
--------------- --------------- ---------------
$ 5,511,825 $ 3,740,842 $ 7,665,842
=============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
Page 4 of 16
<PAGE>
MATRITECH, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
------------------- -------------------
<S> <C> <C>
REVENUE:
Product sales and collaborative
research and development $ 264,495 $ 169,882
revenue
Interest and other income 146,460 34,412
--------------- ---------------
410,955 204,294
--------------- ---------------
EXPENSES:
Research and
development 1,039,955 1,033,946
Selling, general and
administrative 1,431,456 838,426
--------------- ---------------
2,471,411 1,872,372
--------------- ---------------
NET LOSS $(2,060,456) $(1,668,078)
============== ===============
BASIC/DILUTED
NET LOSS PER SHARE $(.11) $(.09)
============== ===============
BASIC/DILUTED
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 18,579,383 18,629,252
============== ===============
</TABLE>
See accompanying notes to financial statements.
Page 5 of 16
<PAGE>
MATRITECH, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,060,456) $(1,668,078)
Adjustments to reconcile net loss to
net cash used in operating activities -
Depreciation and amortization 62,281 46,265
Operating expense related to
issuance of 112,500 ---
Common stock warrant
Changes in assets and liabilities -
Accounts receivable, net (89,922) (14,785)
Inventories 43,416 (2,566)
Prepaid expenses 32,965 13,070
Accounts payable 26,573 (100,450)
Accrued expenses 79,098 9,896
--------------- ---------------
Net cash used in operating
activities (1,793,545) (1,716,648)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and
equipment (21,323) (5,082)
--------------- ---------------
Net cash used in investing
activities (21,323) (5,082)
--------------- ---------------
</TABLE>
See accompanying notes to financial statements.
Page 6 of 16
<PAGE>
MATRITECH, INC.
STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of common stock options $ 45,924 $ 3,976
Payments on note payable (14,524) (16,326)
--------------- ---------------
Net cash provided by (used in)
financing activities 31,400 (12,350)
--------------- ---------------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (1,783,468) (1,734,080)
CASH AND CASH EQUIVALENTS,
Beginning of period 11,067,414 4,146,821
--------------- ---------------
CASH AND CASH EQUIVALENTS,
End of period $ 9,283,946 $ 2,412,741
=============== ===============
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 7,779 $ 5,977
=============== ===============
</TABLE>
See accompanying notes to financial statements.
Page 7 of 16
<PAGE>
MATRITECH, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Operations and Basis of Presentation
- ---------------------------------------
Matritech, Inc. ( the "Company") was incorporated on October 29, 1987 to
develop, produce and distribute products for the diagnosis and potential
treatment of cancer based on its proprietary nuclear matrix protein technology.
This technology was licensed to the Company by the Massachusetts Institute of
Technology ("MIT").
The Company is devoting substantially all of its efforts toward product
research and development, raising capital and marketing products. The Company
is subject to risks common to companies in similar stages of development,
including history of operating losses and anticipated future losses, fluctuation
in operating results, uncertainties associated with future performance,
dependence on key individuals, competition from substitute products and larger
companies, the development of commercially usable products and the need to
obtain adequate additional financing necessary to fund its operations and to
develop its future products.
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
presentation of interim period results. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The results for the interim periods
presented are not necessarily indicative of results to be expected for any
future period. It is suggested that these condensed financial statements be read
in conjunction with the audited financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31, 1998
filed with the SEC (File No. 0-12128).
2. Proforma Balance Sheet / Subsequent Event
- --------------------------------------------
In April 1999, the Company completed a private placement of 3,094,965
shares of Common Stock for an aggregate selling price of approximately
$4,000,000 (the "Private Placement"). The Company received net proceeds of
approximately $3,925,000 after deducting the estimated fees and expenses of the
transaction. The proforma effect of this transaction has been reflected in the
proforma balance sheet at March 31, 1999.
3. Cash Equivalents
- -------------------
Cash equivalents are short-term, highly liquid investments with original
maturities of less than three months. The Company's cash equivalents primarily
consist of auction market preferred stocks, money market accounts and repurchase
agreements at December 31, 1998 and March 31, 1999. The Company classifies its
investments in accordance with Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities".
Page 8 of 16
<PAGE>
4. Inventories
- ---------------
Inventories are stated at the lower of cost or market and consist of the
following:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------ -----------
<S> <C> <C>
Raw materials $225,159 $205,979
Work-in-process 3,195 7,887
Finished goods 108,044 125,098
------------ -----------
$336,398 $338,964
============ ===========
</TABLE>
5. Net Loss Per Common Share
- ----------------------------
In March 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share", which established new standards for calculating and
presenting earnings per share. Basic net loss per common share is computed by
dividing net loss by the weighted average number of common shares outstanding
during the year. Diluted loss per share is the same as basic loss per share as
the effects of common stock equivalents are antidilutive. This accounting
change had no effect on the Company's historical net loss per common share.
6. New Accounting Pronouncements
- --------------------------------
Effective January 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This Statement requires that all items recognized under
accounting standards as components of comprehensive earnings be reported in an
annual financial statement. It also requires that an entity classify items of
other comprehensive earnings (e.g., foreign currency translation adjustments and
unrealized gains and losses on certain marketable securities) by their nature in
an annual financial statement. The Company's total comprehensive loss for the
three months ended March 31, 1999 and 1998 were the same as reported net loss
for those periods.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 provides guidance on the financial reporting
of start-up costs and organization costs. It requires costs of start-up
activities and organization costs to be expensed as incurred. The Company does
not believe that the impact of SOP 98-5 will have a material impact on its
financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company was incorporated in 1987 to develop, manufacture and market
innovative cancer diagnostic products based on its proprietary NMP technology.
Matritech has been unprofitable since inception and expects to incur significant
operating losses for at least the next several years. For the period from
inception to March 31, 1999, the Company incurred a cumulative net loss of
approximately $43 million.
In the United States, the Company sells its NMP22(R) Test Kit through its
own direct sales force, and in March 1998 entered into a distribution agreement
with Curtis Matheson Scientific, now Fisher Healthcare ("Fisher") granting
Fisher the right, co-exclusive with Matritech, to distribute the NMP22 Test Kit
to hospitals and commercial laboratories within the United States. Outside the
United States, the Company sells the NMP22 Test Kit through distributors.
Page 9 of 16
<PAGE>
Results of Operations
- ---------------------
Three Months Ended March 31, 1999 Compared with Three Months Ended
- ------------------------------------------------------------------
March 31, 1998
- --------------
Product sales and collaborative research and development revenue
decreased to $169,882 from $264,495 for the quarter ended March 31, 1999 and
1998, respectively. Revenue from product sales decreased to $169,882 from
$209,495 for the quarter ended March 31, 1999 and 1998, respectively. Unit
sales of NMP22 Test Kits increased by 16%; however, this increase was offset by
lower per unit sales pricing in the 1999 quarter, causing an overall decrease in
revenue. This lower sales price per unit arose from increased sales to
international customers with lower pricing structures than that of domestic
customers and elimination of direct product sales based on the Fisher
distribution agreement. In addition, collaborative research and development
revenue decreased $55,000 as the SBIR funding for the Company's NuMA tumor
marker project was fulfilled in the 1998 quarter.
Interest and other income decreased to $34,412 from $146,460 for the
quarter ended March 31, 1999 and 1998, respectively. The decrease was due to
lower average cash balances available for investment in the first quarter of
1999 as compared to the first quarter of 1998.
Research and development expenses decreased slightly to $1,033,946 from
$1,039,955 for the quarter ended March 31, 1999 and 1998, respectively.
Selling, general and administrative expenses decreased to $838,426 from
$1,431,456 for the quarter ended March 31, 1999 and 1998, respectively. The
decrease is primarily due to the following: an approximate $113,000 savings
through decreased headcount associated with cost-reduction programs; an
approximate savings of $139,000 through decreased reliance upon advertising
agencies; approximately $113,000 of one-time expense for issuance of a common
stock warrant present in the 1998 quarter not incurred in the 1999 quarter; a
reduction of free kit and equipment-related expenses providing a savings of
approximately $42,000; and approximately $44,000 of one-time license fee expense
present in the 1998 quarter not incurred in the 1999 quarter. The remaining
$142,000 decrease relates to various other expense reductions arising from the
Company's cost-cutting efforts.
The Company incurred a net loss of $1,668,078 for the quarter ended March
31, 1999, compared to a net loss of $2,060,456 for the quarter ended March 31,
1998. The decreased loss was primarily the result of savings in selling,
general and administrative expenses partially offset by decreased revenue.
Liquidity and Capital Resources
- -------------------------------
Since its inception, the Company has financed its operations primarily
through private and public offerings of its securities and through funded
development and marketing agreements. At March 31, 1999 and December 31, 1998,
the Company had cash and cash equivalents of $2,412,741 and $4,146,821,
respectively, and working capital of $2,149,782 and $3,787,709, respectively.
The Company's operating activities used cash of $1,716,648 and $1,793,545
for the quarter ended March 31, 1999 and 1998, respectively, primarily to fund
the Company's operating loss.
The Company's investing activities used cash of $5,082 and $21,323 in the
quarter ended March 31, 1999 and 1998, respectively, for the purchase of
computer systems and office and laboratory equipment. The Company currently
estimates that it will acquire approximately $30,000 of capital equipment during
1999, consisting primarily of office and laboratory equipment as well as related
capital investments associated with Year 2000 activities.
Page 10 of 16
<PAGE>
The Company's financing activities used cash of $12,350 and provided cash
of $31,400 for the quarter ended March 31, 1999 and 1998, respectively, from the
exercise of common stock options net of equipment loan payments.
The Company has a term note with Phoenix Leasing Incorporated for
equipment purchases. The term note is payable over 48 months, bears interest at
11.75% and is secured by the underlying equipment. The outstanding balance of
this note at March 31, 1999 and December 31, 1998 is $192,436 and $208,762,
respectively.
The Company expects to incur continued research and development expenses
and other costs, including costs related to clinical studies to commercialize
additional products based upon its NMP technology. The Company will require
substantial additional funds to fund operations, complete new product
development, conduct clinical trials and manufacture and market its products.
The Company's future capital requirements will depend on many factors,
including but not limited to: continued scientific progress in its research and
development programs; the magnitude of its research and development programs;
progress with clinical trials for its diagnostic products; the magnitude of
product sales; the time involved in obtaining regulatory approvals; the costs
involved in filing, prosecuting and enforcing patent claims; competing
technological and market developments; and the ability of the Company to
establish additional development and marketing arrangements to provide funding
for research and development and to conduct clinical trials, obtain regulatory
approvals, and manufacture and market certain of the Company's products.
In 1998, the Company implemented and has continued certain cost-reduction
measures to conserve capital resources. Such measures include changing the
Company's public relations firm and deferring the hiring of non-essential
personnel. The Company believes that such measures will not materially detract
from its marketing and sales effort for its FDA-approved product for bladder
cancer nor materially affect its existing programs relating to colon, cervical,
breast, or prostate cancer product development.
In April 1999, the Company completed a private placement of 3,094,965
shares of Common Stock for an aggregate selling price of approximately
$4,000,000 (the "Private Placement"). The Company received net proceeds of
approximately $3,925,000 after deducting the estimated fees and expenses of the
transaction.
The Company is actively seeking additional long-term funding for its
operations from public and private sources including strategic collaborations
and partnerships. The Company anticipates that its existing capital resources
including working capital and interest thereon will satisfy its capital needs
through 1999. There can be no assurance that the Company's needs may not change
or that funds may not be depleted more rapidly than planned.
The Company has reviewed all of its information systems to assess what
steps, if any, are required to achieve full Year 2000 compliance. The Company
relies upon microprocessor-based personal computers and commercially available
applications software. These technologies have been put into service recently,
and the Company's review indicates that certain of the Company's systems are
currently Year 2000 compliant. The Company has begun to address the small
number of systems that are not yet Year 2000 compliant, and anticipates
achieving full compliance early in the fourth quarter of 1999. The Company is
currently in the process of reviewing its critical non-information technology
systems and anticipates completing such review by the end of the second quarter
of 1999. The Company does not anticipate that it will incur material expenses to
make its computer software and operating systems Year 2000 compliant and has
accrued $25,000 in its financial statements at March 31, 1999 and December 31,
1998 related to such
Page 11 of 16
<PAGE>
expenses. The Company is currently discussing Year 2000 readiness with its
material supply and service vendors. To date, those suppliers and service
vendors that have been contacted have indicated that their hardware or software
is or will be Year 2000 compliant in time frames that meet the Company's
requirements. The Company intends to continue to assess its exposure to Year
2000 noncompliance on the part of any of its material vendors and there can be
no assurance that their systems will be Year 2000 compliant. In the event that
certain material suppliers or service vendors indicate that they will not
successfully address their Year 2000 problems in a timely fashion and that such
failure may have a material adverse effect on the Company, management may elect
to suspend such business relationships until such time that such vendors become
fully compliant. The Company is currently formulating contingency plans to
address problems that may arise in the event that either the Company or its
material suppliers and vendors fail to address their Year 2000 problems in a
timely fashion. The Company presently believes that the Year 2000 issue will not
pose significant operational problems for the Company. However, if all Year 2000
issues are not properly identified, or assessment, remediation and testing are
not effected timely with respect to the Year 2000 problems that are identified,
there can be no assurance that the Year 2000 issue will not materially adversely
impact the Company's results or operations or materially adversely affect the
Company's relationships with customers, suppliers or others. Additionally, there
can be no assurance that the Year 2000 issues of third parties will not have a
material adverse impact on the Company's systems or results of operations.
The foregoing discussion includes forward-looking statements which are subject
to uncertainties and actual results may differ materially from those currently
anticipated depending on a variety of factors including those discussed below.
There can be no assurance that the Company's needs may not change. See "Factors
That May Affect Future Results - Access to Capital." The survival of the Company
in the long term, however, is dependent on its ability to generate revenue from
sales of its products. There can be no assurance that capital will be available
on terms acceptable to the Company, if at all, or that in the long term, the
Company will be able to generate sufficient revenue to achieve and maintain
profitability. If the Company uses equity to finance its capital needs, such a
financing could result in significant dilution to existing shareholders.
Factors That May Affect Future Results
- --------------------------------------
The Company's future financial and operational results are subject to a
number of material risks and uncertainties that may affect such results or
conditions, including:
Access to Capital. Even with the proceeds from the Private Placement,
the Company needs to obtain additional long-term financing. The Company is
currently seeking to raise additional capital and will consider various
alternatives, including equity or debt financing and corporate partnering
arrangements. There can be no assurance, however, that this funding will be
available on terms acceptable to the Company, if at all. If additional
financing is not available, the Company may be required to further curtail
expenses or take other steps that adversely affect the Company's future
performance.
Risk of Delisting from the Nasdaq National Market. The Company's Common
Stock is currently listed on the Nasdaq National Market ("NNM"). For continued
listing of the Company's Common Stock on the NNM, it must, among other things,
maintain at least $4 million in net tangible assets and a minimum bid price of
$1.00. If the Company's net tangible assets fall below $4 million, or the
Company's Common Stock trades at a price of less than $1.00 for 30 consecutive
business days or more, it may result in the delisting of the Company's
securities from NNM, and trading, if any, of the Company's securities would
Page 12 of 16
<PAGE>
thereafter be conducted on a non-Nasdaq over-the-counter market. If the
Company's securities are delisted, an investor could find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of, the
Company's securities. In addition, if the Company's securities were delisted,
they may be subject to a rule that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors. For transactions covered by this
rule, the broker-dealer must make a special suitability determination for the
purchaser and must have received the purchaser's written consent to the
transaction prior to sale. Consequently, delisting, if it occurred, may affect
the ability of broker-dealers to sell the Company's securities and the ability
of the stockholders to sell their securities.
History of Operating Losses and Anticipated Future Losses. The Company
has incurred operating losses since its inception and does not expect to be
profitable within the next several years. While the Company expects to improve
operating results in future periods, there can be no assurance that the Company
will achieve or maintain profitability or that its revenue will grow in the
future.
Fluctuation in Operating Results. The Company's future operating results
may vary significantly from quarter to quarter or from year to year depending on
a number of factors including: the timing and size of orders from the Company's
customers and distributors; the timing of payments from corporate partners and
research grants; regulatory approvals and the introduction of new products by
the Company; and the market acceptance of the Company's products. The Company's
current planned expense levels are based in part upon expectations as to future
revenue. Consequently, profits may vary significantly from quarter to quarter
or year to year based on the timing of revenue. Revenue or profits in any
period will not necessarily be indicative of results in subsequent periods.
Uncertainties Associated with Future Performance. The Company's success
in the market for diagnostic products will depend, in part, on the Company's
ability to: successfully develop, test, produce and market its products; obtain
necessary governmental approvals in a timely manner; attract and maintain key
employees; and successfully respond to technological changes in its marketplace.
The Company's success in markets outside the United States is dependent on the
performance of independent distributors over which the Company has limited
control.
Near-Term Dependence Upon NMP22. The Company anticipates that in the
near-term it will be substantially dependent on the success of the NMP22(R) Test
Kit for bladder cancer, which was approved for sale in the U.S. by the FDA in
1996 and approved for sale in Japan in 1998. The Company expects to generate
substantially all of its near-term product sales from the sale of NMP22 Test
Kits, and would experience a material adverse effect on its business, financial
condition and results of operations if the NMP22 Test Kit does not achieve wide
market acceptance. The remainder of the Company's products have not been
approved by the FDA or are in development, and there can be no assurance that it
will be successful with such regulatory approvals and product development.
Reliance on Sub Suppliers. The Company currently relies on sub suppliers
for certain key components for its NMP22 Test Kit. In the event that the
components from such suppliers should become unavailable for any reason, the
Company would seek alternative sources of supply, which may entail making
regulatory submissions and obtaining regulatory approvals from the FDA or such
alternative suppliers. Although the Company attempts to maintain an adequate
level of inventory to provide for these and other contingencies, should its
manufacturing process be disrupted as a result of a shortage of key components
or a revalidation of new components, there can be no assurance that the Company
would be able to meet its commitments to customers.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Investment Portfolio. The Company does not use derivative financial
instruments that meet high credit quality standards, as specified in the
Company's investment policy guidelines; the policy also limits the amount of
credit exposure to any one issue, issuer, and type of instrument. It is
suggested that this paragraph be read in conjunction with Note 1 of Notes to
Financial Statements--"Operations and Significant Accounting Policies" of the
Company's Annual Report on Form 10-K for the year ended December 31, 1998 filed
with the SEC (File No. 0-12128).
Page 13 of 16
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
--------
27 Financial Data Schedule
(b) Reports on Form 8-K:
No Reports on Form 8-K were filed during the quarter ended
March 31, 1999.
Page 14 of 16
<PAGE>
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.
MATRITECH, INC.
Date: May 11, 1999 By: /s/Stephen D. Chubb
---------------------------
Stephen D. Chubb
Director, Chairman and
Chief Executive Officer
(principal executive officer)
Date: May 11, 1999 By: /s/Robert W. Morgan
----------------------------
Robert W. Morgan
Vice President,
Chief Financial Officer and
Treasurer
(principal accounting and
financial officer)
Page 15 of 16
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
- ------ ----------- ----
27 Financial Data Schedule 17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q FOR
3/31/99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,412,741
<SECURITIES> 0
<RECEIVABLES> 214,057
<ALLOWANCES> (37,011)
<INVENTORY> 338,964
<CURRENT-ASSETS> 3,029,263
<PP&E> 1,755,542
<DEPRECIATION> (1,110,701)
<TOTAL-ASSETS> 3,740,842
<CURRENT-LIABILITIES> 879,481
<BONDS> 0
0
0
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<EPS-PRIMARY> (.09)
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</TABLE>
