UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1997
UROPLASTY INC
(Exact name of registrant as specified in its charter.)
Minnesota, U.S.A. 41-1719250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2718 Summer Street NE,
Minneapolis, Minnesota 55413
(Address of principal executive offices)
Registrant's telephone number, including area code:
(612) 378-1180
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS)
Check whether the registrant filed all documents and reports required to be
filed by Section 12,13 or 15(b) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
YES [ ] NO [ ] Not subject to Exchange Act at time [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 4,180,725 on
February 11, 1997
Transitional Small Business Disclosure Format
YES [ ] NO [X]
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UROPLASTY, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
December 31, 1997 March 31, 1997
_________________ ______________
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 871,317 $ 814,603
Accounts receivable trade 628,573 502,744
Inventories 226,654 387,373
Prepaid expenses 172,707 105,625
_________ _________
Total Current Assets 1,899,251 1,810,345
--------- ---------
Property, Plant and Equipment 1,212,540 241,075
Less accumulated depreciation
and amortization (185,122) (92,745)
_________ _________
1,027,418 148,330
--------- ---------
Intangible assets, net of
accumulated amortization 87,571 80,030
_________ _________
TOTAL ASSETS $ 3,014,240 $ 2,038,705
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 157,380 $ 160,811
Accrued liabilities
Compensation and payroll taxes 61,440 62,364
Royalties 18,300 12,400
Income tax 54,763 0
Vat payable 38,225 32,547
Other 23,836 95,219
Current maturities - long termt debt $ 47,712 $ 36,954
_________ _________
Total Current Liabilities 401,656 400,295
--------- ---------
Long Term Debt, less current maturities 641,201 407,994
Total Liabilities 1,042,857 808,289
--------- ---------
Shareholders' equity
Common stock $.01 par value;
Authorized 20,000,000 shares
Issued and outstanding -
4,170,525 shares 41,705 36,495
Additional paid in capital 2,412,309 1,963,560
Accumulated deficit (218,412) (592,918)
Cumulative translation adjustment (259,219) (171,721)
Note receivable (5,000) (5,000)
__________ __________
Total Shareholders' Equity 1,971,383 1,230,416
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' __________ __________
EQUITY $ 3,014,240 $ 2,038,705
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
UROPLASTY, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three months ended
December 31
1997 1996
__________ __________
<S> <C> <C>
Net sales $ 1,108,051 $ 906,250
Cost of goods sold 235,595 231,293
__________ __________
Gross profit 872,456 674,957
Operating expenses:
General and administrative 239,076 132,538
Research and development 255,363 183,386
Selling and marketing 238,722 233,852
__________ __________
733,161 549,776
---------- ----------
Operating profit 139,295 125,181
Other income (expense)
Interest income 1,991 1,059
Interest expense (2,205) (9,038)
Foreign currency exchange gain (loss) (7,064) (26,181)
---------- ----------
(7,278) (34,160)
Income pretax 132,017 91,021
Income tax expense 51,176 0
__________ __________
Net income $ 80,841 $ 91,021
========== ==========
Basic earnings per share $.02 $.03
Diluted earnings per share $.02 $.03
Weighted average common shares outstanding:
Basic 4,170,525 3,628,612
Diluted 4,482,407 3,628,612
Nine months ended
December 31
1997 1996
__________ __________
<S> <C> <C>
Net sales $ 3,174,654 $ 2,415,923
Cost of goods sold 694,844 571,356
__________ __________
Gross profit 2,479,810 1,844,567
Operating expenses:
General and administrative 714,142 497,036
Research and development 548,544 425,932
Selling and marketing 684,866 682,052
__________ __________
1,947,552 1,605,020
---------- ----------
Operating profit 532,258 239,547
Other income (expense)
Interest income 5,133 1,592
Interest expense (11,676) (27,749)
Foreign currency exchange loss (50,378) (113,251)
Other 0 60,175
---------- ----------
(56,921) (79,233)
Income pretax 475,337 160,314
Income tax expense 100,831 0
__________ __________
Net income $ 374,506 $ 160,314
========== ==========
Basic earnings per share $.09 $.05
Diluted earnings per share $.09 $.05
Weighted average common shares outstanding:
Basic 3,975,358 3,540,379
Diluted 4,239,359 3,540,379
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
UROPLASTY, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine months ended
December 31
1997 1996
__________ __________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 374,506 $ 160,314
Adjustments to reconcile net income
to net cash provided by:
Depreciation and amortization 106,957 55,416
Loss on disposal of assets 0 45,000
Changes in operating assets and
liabilities
Accounts receivable (125,829) (162,083)
Inventories 160,719 (120,572)
Prepaid expenses (67,082) 6,896
Accounts payable (3,431) (12,625)
Unearned income 10,462 0
Accrued liabilities 15,763 (117,855)
- ------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 472,065 (145,509)
- ------------------------------------------------------------------------
Cash flows from investing activities:
Payments for property, plant and equipm. (971,465) (83,492)
Payments relating to intangible assets (22,122) (12,635)
Proceeds from sale of intangible asset 0 0
- ------------------------------------------------------------------------
Net cash (used in) investing activities (993,587) (96,127)
- ------------------------------------------------------------------------
Cash flows from financing activities:
Repayment of long-term obligations (472,775) (39,503)
Proceeds from issuance of notes payable 684,549 41,100
Net proceeds from issuance of stock 453,959 145,000
Payments received on note receivable 0 22,595
- ------------------------------------------------------------------------
Net cash provided by
financing activities 665,733 169,192
- ------------------------------------------------------------------------
Exchange rate changes (87,497) 100,609
- ------------------------------------------------------------------------
Net increase in cash and
cash equivalents 56,714 28,165
Cash and cash equivalents at beginning
of period 814,603 718,630
- ------------------------------------------------------------------------
Cash and cash equivalents at end
of period $ 871,317 $ 746,795
- ------------------------------------------------------------------------
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
UROPLASTY, INC. and Subsidiaries
FOOTNOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The financial statements included in this Form 10-QSB have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. 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, although management believes
the disclosures are adequate to make the information presented not misleading.
The results of operations for any interim period are not necessarily
indicative of results for a full year. These statements should be read in
conjunction with the financial statements and related notes included in the
Company's Annual Report on Form 10-KSB for the year ended March 31, 1997.
The financial statements presented herein as of December 31, 1997 and for
the three/nine months ended December 31, 1997 and 1996 reflect, in the
opinion of management, all material adjustments consisting only of normal
recurring adjustments necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim periods.
(2) Property, Plant and Equipment
In November, 1997 the Company purchased a facility in the Netherlands, where
the Company's International Headquarters is established.
The purchase price for the facility, which includes land was approximately
$590,000. The building has an estimated useful life of 40 years and will be
depreciated on a straight line basis.
(3) Long term debt
In connection with the acquisition, discussed in note 2, the Company issued a
long-term Note Payable to finance the purchase.
Proceeds of the Note were $646,000. The Note Payable bears interest at a rate
of 5% annually and is scheduled to be repaid monthly over a twenty-year period.
The note is collateralized by the inventory, general assets and the building
of Uroplasty B.V., wholly owned subsidiary of the Company. The collateral on
the note will be reduced to the building only when the note is reduced to
$575,000. The note has various restrictions convenants which can cause the
note to become payable on demand.
(4) Earnings Per Share
During the third quarter of fiscal 1998, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
No. 128"). SFAS No. 128 requires presentation of both Basic EPS and
Diluted EPS on the face of the statement of operations. Basic EPS, which
replaces primary EPS, is computed by dividing net income available to
stockholders by the weighted average number of common shares outstanding during
the period. Unlike the computation of primary EPS, Basic EPS excludes the
dilutive effect of stock options. Diluted EPS replaces fully diluted EPS and
gives effect to all dilutive potential common shares outstanding during the
period. In computing Diluted EPS, the average stock price for the period is
used in determing the number of shares assumed to be purchased from exercise of
stock options rather than the higher of the average or the ending stock price as
used in the computation of fully diluted EPS.
<PAGE>
UROPLASTY, INC. and Subsidiaries
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Set forth below is management's discussion and analysis of financial
condition and results of operations for the nine months and quarters ended
December 31, 1997 and 1996.
Liquidity and Capital Resources
Uroplasty and its wholly-owned subsidiaries' capital resources are
derived from existing sales of the Company's products. As of December 31,
1997, the Company had approximately $871,000 in cash and cash equivalents.
Management believes the success being experienced with Macroplastique
Implants(R) will continue to have an increasing effect on the monthly sales
level, however, in the event sales do not increase, management believes that
operating expenses can be reduced in order to limit the use of its cash
resources without significantly impairing its ability to develop the
Macroplastique Implant market, which would be slowed under such circumstances.
There is currently no financing arrangement in place for Uroplasty's
working capital needs, and the Registrant has no material unused sources of
liquidity other than its cash reserves and its accounts receivable balances.
In November, 1997, due to the expansion of the Company, Uroplasty B.V. in
The Netherlands purchased an office building for the International
Headquarters. The purchase price of the building was $590,000 and was fully
financed through the issuance of a Note Payable. Interest payments and
repayments of the debt will amount to $5,000 a month over a 20-year period.
Management believes there are equity financing opportunities
available from a number of sources. Management believes the development
of the market for Macroplastique in various sales territories outside the
United States and the completion of an IDE and subsequent PMA for introduction
of Macroplastique into the US market would proceed more rapidly with an
increase in capital. The Company is currently considering the cost benefit of
new equity financing.
Financing other than cash generated by product sales will be necessary to
pursue an Investigational Device Exemption (IDE) application and Premarket
Approval Application (PMA) for Macroplastique with the United States Food
and Drug Administration (FDA).
Results of Operations.
During the nine months ended December 31, 1997, net sales were $3,174,654
compared to $2,415,923 during the nine months ended December 31, 1996 and
$1,108,051, and $906,250 for the three months ended December 31, 1997 and 1996
respectively. This increase of $758,731 (31%) for the nine months ended and
$201,801 (22%) for the three months ended is the result of substantially
higher sales of the Macroplastique Implant products as a result from
increased market penetration by existing distribution outlets. Sales of
Macroplastique are approximately 90% of total sales.
It is expected that Macroplastique sales will continue to grow through
further market penetration by existing distribution outlets, expansion of
its distribution network and the introduction of innovations in
Macroplastique implantation.
Management believes there will be upward pressure on selling, general and
administrative expenses as efforts continue to increase awareness
and acceptance of Macroplastique. Additionally, management anticipates
increased expenditures for research and development projects for fiscal 1998.
Operating expenses increased 21% from $1,605,020 for the nine months ended
December 31, 1996 to $1,947,552 for the nine months ended December 31, 1997
and 33% from $549,776 for the three months ended December 31, 1996 to $733,161
for the three months ended December 31, 1997 respectively. The increase in
operating expenses for the nine-month and three-month periods ended December
31, 1997 are primarily attributable to an increase in the number of employees
and the initiation of several research and development projects.
The operating profit for the nine months ended December 31, 1997 was $532,258,
compared to $239,547 for the same period last year. The operating profit for
the three months ended December 31, 1997 was $139,295, compared to $125,181
for the same period last year.
Income tax expense for the 3 months and 9 months ended December 31, 1997 was
$51,176 and $100,831, respectively, compared to $0 in the prior year comparable
periods. The Income tax expense results from foreign income, which cannot
be offset by the Company's US operating loss carry forward.
For the nine months ended December 31, 1997 a net income totaled of
$374,506, compared to $160,314 for the nine months ended December 31, 1996
and $80,841 compared to $91,021 for the three months ended December 31, 1997
and 1996, respectively.
The Registrant sells Macroplastique and its related ancillary products, and
Bioplastique(TM)Implants for use in augmenting other soft tissues.
Management's current objectives are to focus on growth in sales and
market penetration of the Macroplastique Implant line for incontinence and
Vesicoureteric reflux treatment.
<PAGE>
UROPLASTY, INC. and Subsidiaries
PART II - OTHER INFORMATION
Except for the following none of the items contained in PART II of
Form 10-QSB are applicable to the Company for the quarter ended
December 31, 1997.
ITEM 5. OTHER INFORMATION
This Form 10QSB contains certain forward-looking statements. For this purpose,
any statements contained in this Form 10QSB that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may", "will", "expect", "believe",
"anticipate", "estimate", or "continue" or comparable terminology are intended
to indicate forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, including the following: the
fluctuation in the Company's operating results; the impact of competition;
new product development cycles and the market acceptance of the Company's
products; the Company's ability to protect its intellectual property rights
and to resolve any intellectual property disputes on reasonable terms; the
ability of the Company to continue to build its distribution network; and
obtaining and maintaining government approvals.
No other information.
<PAGE>
UROPLASTY, INC. and Subsidiaries
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UROPLASTY, INC
Dated: February 11, 1998 By /s/ DANIEL G. HOLMAN
Daniel G. Holman
Chairman, President and CEO
(Principal Executive and Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Mar-31-1998
<PERIOD-START> Apr-01-1997
<PERIOD-END> Dec-31-1997
<CASH> 871,317
<SECURITIES> 0
<RECEIVABLES> 628,573
<ALLOWANCES> 0
<INVENTORY> 226,654
<CURRENT-ASSETS> 1,899,251
<PP&E> 1,212,540
<DEPRECIATION> 185,122
<TOTAL-ASSETS> 3,014,240
<CURRENT-LIABILITIES> 401,656
<BONDS> 0
<COMMON> 41,705
0
0
<OTHER-SE> 1,929,678
<TOTAL-LIABILITY-AND-EQUITY> 3,014,240
<SALES> 3,174,654
<TOTAL-REVENUES> 3,174,654
<CGS> 694,844
<TOTAL-COSTS> 694,844
<OTHER-EXPENSES> 1,947,552
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,676)
<INCOME-PRETAX> 475,337
<INCOME-TAX> 100,831
<INCOME-CONTINUING> 374,506
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 374,506
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
