<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period
ended September 30, 1997 Commission File Number 0-20991
CAMBRIDGE HEART, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3679946
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 OAK PARK DRIVE
BEDFORD, MASSACHUSETTS 01730
(Address of principal executive offices) (Zip Code)
781-271-1200
(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
---------- --------
Number of shares outstanding of each of the issuer's classes of common stock
as of November 7, 1997;
Class Number of Shares Outstanding
- --------------------------------------- ----------------------------
Common Stock, par value $.001 per share 10,595,933
<PAGE>
CAMBRIDGE HEART, INC.
INDEX
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEET AT DECEMBER 31, 1996 AND
SEPTEMBER 30, 1997 3
STATEMENT OF OPERATIONS
FOR THE THREE MONTH AND NINE MONTH
PERIODS ENDED SEPTEMBER 30, 1996 AND 1997 4
STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1996 AND 1997 5
NOTES TO CONDENSED FINANCIAL
STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
ITEM 5. OTHER INFORMATION 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES
This Quarterly Report on Form 10-Q contains forward-looking statements.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
and similar expressions are intended to identify forward-looking statements.
The important factors discussed below under the caption "Certain Factors That
May Affect Future Operating Results," among others, could cause actual results
to differ materially from those indicated by forward-looking statements made
herein and presented elsewhere by management from time to time.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents....................... $18,588,583 $ 7,854,315
Marketable securities........................... - 6,569,271
Accounts receivable, net........................ 420,984 460,500
Inventory....................................... 251,788 274,848
Prepaid expenses and other current assets....... 384,422 269,967
----------- ------------
Total current assets.......................... 19,645,777 15,428,901
Fixed assets, net............................... 423,159 632,604
Other assets.................................... 160,523 107,373
----------- ------------
$20,229,459 $ 16,168,878
=========== ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable................................ $ 202,377 $ 283,504
Accrued expenses................................ 283,333 183,180
License fees payable............................ 14,011 7,530
----------- ------------
Total current liabilities..................... 499,721 474,214
----------- ------------
Stockholder's equity:
Common stock, $.001 par value; 20,000,000 shares
authorized; 10,214,783 and 10,545,433 shares
issued and outstanding at December 31, 1996
and September 30, 1997, respectively.......... 10,215 10,550
Additional paid-in-capital...................... 29,216,646 29,285,031
Accumulated deficit............................. (9,115,685) (13,552,792)
----------- ------------
20,111,176 15,742,789
Less: deferred compensation..................... (381,438) (48,125)
----------- ------------
Total stockholders' equity.................... 19,729,738 15,694,664
----------- ------------
$20,229,459 $ 16,168,878
=========== ============
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CAMBRIDGE HEART, INC.
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
------------------------------------ -----------------------------------
1996 1997 1996 1997
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenue............................................... $ 235,305 $ 340,179 $ 500,007 $ 1,077,658
Cost of goods sold.................................... 246,416 331,528 553,747 969,245
----------- ----------- ----------- -----------
(11,111) 8,651 (53,740) 108,413
Cost and expenses:
Research and development.............................. 628,105 757,814 1,514,437 2,786,755
Selling, general and administrative................... 580,023 742,622 1,383,610 2,466,643
----------- ----------- ----------- -----------
Loss from operations................................ (1,219,239) (1,491,785) (2,951,787) (5,144,985)
Interest income....................................... 158,192 242,525 238,506 707,878
----------- ----------- ----------- -----------
Net loss.............................................. $(1,061,047) $(1,249,260) $(2,713,281) $(4,437,107)
=========== =========== =========== ===========
Net loss per share.................................... $ (0.12) $ (0.43)
=========== ===========
Weighted average common
shares outstanding................................... 10,495,282 10,406,818
=========== ===========
Pro forma net loss per share.......................... $ (0.11) $ (0.32)
=========== ===========
Pro forma weighted average common and
common equivalent shares outstanding................. 9,300,478 8,501,685
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
1996 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(2,713,281) $ (4,437,107)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation.............................................. 41,011 133,182
Amortization of deferred compensation..................... 44,875 155,438
Changes in assets and liabilities:
Increase in accounts receivable......................... (203,365) (39,516)
Increase in inventory................................... (160,947) (23,060)
(Increase) decrease in prepaid expenses and other
current assets......................................... (346,873) 114,455
(Increase) decrease in other assets..................... (121,416) 53,150
Increase (decrease) in accounts payable
and accrued expenses................................... 197,529 (19,026)
Decrease in license fees payable........................ -- (6,481)
----------- ------------
Net cash used for operating activities.................. (3,262,467) (4,068,965)
----------- ------------
Cash flows from investing activities:
Net purchase of marketable securities..................... -- (6,569,271)
Purchase of fixed assets.................................. (145,261) (342,627)
----------- ------------
Net cash used for investing activities.................. (145,261) (6,911,898)
----------- ------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance
costs................................................... 19,680,794 246,595
----------- ------------
Net cash provided by financing activities................. 19,680,794 246,595
----------- ------------
Net increase (decrease) in cash and cash equivalents...... 16,273,066 (10,734,268)
Cash and cash equivalents at beginning
of period............................................... 3,948,147 18,588,583
----------- ------------
Cash and cash equivalents at end
of period............................................... $20,221,213 $ 7,854,315
=========== ============
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE>
CAMBRIDGE HEART, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. NATURE OF BUSINESS
Cambridge Heart, Inc. (the "Company"), was incorporated in Delaware on
January 16, 1990 and is engaged in the research, development and
commercialization of products for the non-invasive diagnosis of cardiac
disease.
2. BASIS OF PRESENTATION
The condensed financial statements 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 omitted pursuant to such rules and
regulations. These condensed financial statements should be read in
conjunction with the financial statements and the notes thereto included in
the Company's Annual Report on Form 10-K, dated March 31, 1997. In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position of the
Company as of September 30, 1997, and the results of its operations and
its cash flows for the three and nine month periods ended September 30,
1996 and 1997, have been made. The results of operations for such interim
periods are not necessarily indicative of the results for the full year or
any future period.
Certain amounts in the three and nine month periods ended September 30,
1996 have been reclassified to conform to the current period presentation.
These reclassifications had no effect on the Company's reported net loss.
3. INVENTORIES
Inventories, consisting primarily of purchased components, are stated at
the lower of cost or market. Cost is determined using the first in, first
out (FIFO) method.
4. NET LOSS AND PRO FORMA NET LOSS PER SHARE
Net loss per share is determined by dividing net loss by the weighted
average number of shares of common stock outstanding during the period.
Common share equivalents, consisting of common stock options and warrants
and convertible preferred stock, have been excluded from the calculation as
their effect is anti-dilutive.
Pro forma net loss per share is determined by dividing net loss by the
weighted average number of shares of common stock and certain common share
equivalents outstanding during the period, as discussed below. Common
stock equivalents have been excluded from the
6
<PAGE>
calculation as their effect is anti-dilutive, except that, pursuant to
Securities and Exchange Commission Staff Accounting Bulletin No. 83, common
share equivalents issued and common stock sold at prices below the offering
price in the twelve month period preceding the initial filing of the
Company's Registration Statement on Form S-1 and through the effective date
of the initial public offering have been included in the calculation as if
outstanding for all periods through June 30, 1996.
On August 2, 1996, the date of the Company's initial public offering, all
outstanding shares of the Company's convertible preferred stock were
converted to 4,455,708 shares of common stock. The pro forma net loss per
share information included in the accompanying statement of operations for
the three and nine month periods ended September 30, 1996 reflect the
impact on pro forma net loss per share of such conversion as of the
beginning of the period using the if-converted method.
Historical net loss per share has not been presented for the three and nine
month periods ended September 30, 1996 on the basis that it is irrelevant
due to the significant change in the Company's capital structure and
resultant loss per share which resulted upon conversion of the convertible
preferred stock.
5. RECENTLY ENACTED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128"). SFAS 128 specifies modifications to the calculation of earnings per
share from that currently used by the Company. Under SFAS 128, "basic
earnings per share" will be calculated based upon the weighted average
number of common shares actually outstanding, and "diluted earnings per
share" will be calculated based upon the weighted average number of common
shares, dilutive common share equivalents and other dilutive convertible
securities outstanding. SFAS 128 is effective in the Company's fourth
quarter of 1997 and will be adopted at that time, with retroactive
restatement of all prior periods. The Company has determined that adoption
of the provisions of SFAS 128 will not have a material impact on its
reported results of operations for the periods presented. The adoption of
SFAS 128 will have no effect on the Company's financial position or cash
flows.
In October 1997, the Accounting Standards Executive Committee issued
Statement of Position 97-2, "Software Revenue Recognition" ("SOP 97-2").
SOP 97-2 provides guidance on the timing and amounts of revenue recognition
for licensing, selling, leasing, or otherwise marketing computer software,
including software incorporated into other products. This SOP supersedes
SOP 91-1 (also entitled "Software Revenue Recognition") and is effective
for transactions entered into in fiscal years beginning after December 15,
1997. The Company is currently reviewing SOP 97-2 to determine the impact,
if any, of adopting SOP 97-2 on the Company's financial position and
results of operations.
7
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Cambridge Heart, Inc., a Delaware corporation (the "Company") is engaged in
the research, development and commercialization of products for the non-invasive
diagnosis of cardiac disease. The Company has generated limited revenues from
the shipment of units of its first product and has experienced substantial net
losses since its inception, and expects to incur substantial and increasing net
losses for the foreseeable future. The Company believes that its research and
development expenses will increase significantly in the future as it develops
additional products and funds clinical trials of its products. The Company's
research and development expenses may also increase in the future as it
supplements its internal research and development with additional third party
technology licenses and potential product acquisitions. The Company also expects
that its selling, general and administrative expenses will continue to increase
in connection with the Company's continued expansion of its sales and marketing
activities. Revenues generated from the sale of the Company's products will
depend upon numerous factors, including the timing of regulatory actions,
progress of product development, the extent to which the Company's products gain
market acceptance, varying pricing promotions and volume discounts to customers,
competition and the availability of third party reimbursement. The Company has
incurred cumulative net losses since inception through September 30, 1997 of
approximately $13,553,000.
RESULTS OF OPERATIONS
The Company's principal product is the CH 2000 System. The system received
510(k) clearance from the U.S. Food and Drug Administration (the "FDA") in
February 1996 and the Company's proprietary HiRes/TM/ disposable electrode
received 510(k) clearance in August 1996. This electrode enables the CH 2000
System to measure T-wave alternans and perform more accurate electrocardiogram
("i") readings.
The Company is actively conducting and supporting clinical trials in order
to obtain expanded labeling claims from the FDA for its principal product, the
CH 2000 System, and to further establish the clinical efficacy of T-wave
alternans for risk prediction in patients prone to ventricular
tachycardia/fibrillation. The results of one such trial were presented on
November 12, 1997, at the 70th Scientific Session of the American Heart
Association by Professor Stefan Hohnloser of J.W. Goethe University, Frankfurt,
Germany. In this study, 65 patients receiving an implantable cardioverter-
defibrillator underwent invasive electrophysiological study ("EPS") and non-
invasive risk stratification, including the measurement of T-wave alternans
utilizing the Company's CH 2000 System. Professor Hohnloser reported that, on
the basis of this study, the measurement and analysis of T-wave alternans was
found to be more accurate than invasive EPS in predicting recurrences of
ventricular tachycardia and ventricular fibrillation, the abnormal heart rhythms
associated with cardiac arrest and sudden cardiac death.
THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1997
Revenues for the three months ended September 30, 1996 and 1997 were
$235,000 and $340,000, respectively. The revenues for the nine months ended
September 30, 1996 and 1997 were $500,000 and $1,078,000, respectively. This
increase of product revenue reflects continued international shipments of the CH
2000 System plus an increase in domestic shipments following the FDA clearances
to sell the CH 2000 in February 1996, and the Hi Res/TM/ electrode in August
1996. The Company sells its products internationally through distributors.
During the nine months ended September 30, 1997, the Company expanded its
domestic distribution channel to include a direct sales force in addition to
manufacturer's representatives. Revenues from domestic sales during the three
and nine month periods ended September 30, 1996 were $20,000 and $132,000,
respectively, as compared to $139,000 and $388,000 in the corresponding 1997
periods, respectively. The cost of goods sold for the quarter ended September
30, 1996 was $246,000 compared to $332,000 for the quarter ended September 30,
1997. Cost of goods sold for the nine months ended September 30, 1996 and 1997
amounted to $554,000 and $969,000, respectively. The Company has incurred a
number of fixed costs as it has expanded its manufacturing operations. As the
volume of production increases, the Company expects that the cost of goods sold
will decrease as a percentage of revenue.
Research and development expenses increased from $628,000 in the quarter
ended September 30, 1996 to $758,000 in the same period a year later. Research
and Development expenses for the nine months ended September 30, 1996 and 1997
were $1,514,000 and $2,787,000 respectively. This increase was principally due
to increased staffing in engineering and software development, as well as higher
clinical trial expenses. The Company expects to continue to selectively increase
personnel in this area and expand clinical trials.
General and administrative expenses increased from $580,000 in the quarter
ended September 30, 1996 to $743,000 in the same period in 1997. General and
administrative expenses for the nine months ended September 30, 1996 and 1997
amounted to $1,384,000 and $2,467,000, respectively. Most of this increase was
due to increases in staffing in management, sales and marketing.
During the nine months ended September 30, 1997, the Company had several
management changes. The Company recorded total expenses of $230,000 during the
nine months associated with severance and other costs related to these changes.
8
<PAGE>
Interest income was $158,000 for the three months ended September 30, 1996
compared to $243,000 for the same period in 1997. Interest income for the nine
months ended September 30, 1996 and 1997 amounted to $239,000 and $708,000,
respectively. This increase reflects the investment of the proceeds of the
initial public offering of the Company's common stock in August 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company initially financed operations primarily from the sale of
convertible preferred stock. Through June 30, 1996, the Company had raised
$9,065,000 (net of stock issuance costs) from the sales of equity securities,
with net proceeds of $5,697,000 received in 1993 and $3,353,000 received in
1995. On August 2, 1996, the Company raised approximately $19,650,000 (net of
stock issuance costs) from the sale of 2,437,750 shares of common stock in the
Company's initial public offering. In conjunction with the initial public
offering, 4,455,708 shares of preferred stock were converted to common stock.
As of September 30, 1997, the Company had cash, cash equivalents and
marketable securities of $14,424,000. The proceeds of the equity offerings have
been used primarily to fund operating losses of $13,553,000, reflecting
expenditures made primarily to support research and development activities, to
support a marketing and sales organization, and to support an administrative
infrastructure and the investment of approximately $1,156,000 in property and
equipment as of September 30, 1997. In 1996, the Company used $4,674,000 to
fund operating activities.
The Company expects its capital expenditures to increase as it continues to
commercialize its products, particularly in connection with the manufacture of
its proprietary Hi-Res/TM/ electrodes. The Company does not expect capital
expenditures to exceed an aggregate of $3,000,000 over the next two years.
Under the terms of various license, consulting and technology agreements,
the Company is required to pay royalties on sales of its products. Minimum
license maintenance fees under these license agreements, which are creditable
against royalties otherwise payable for each year, range from $20,000 to $45,000
per year in total through 2008. The Company is committed to pay an aggregate of
$450,000 of such minimum license maintenance fees subsequent to September 30,
1997. As part of these agreements, the Company is also committed to meet certain
development and sales milestones, including a requirement to spend a minimum of
$200,000 in any two-year period for research and development, clinical trials,
marketing, sales and/or manufacturing of products related to certain technology
covered by the consulting and technology agreements.
The Company anticipates that its existing capital resources, including the
amounts raised in the initial public offering, will be adequate to satisfy its
capital requirements until at least the end of 1998. There may be circumstances,
however, that would accelerate the Company's use of this capital. If this
occurs, the Company may from time to time incur indebtedness or issue, in public
or private transactions, equity or debt securities. However, there can be no
assurance that suitable debt or equity financing will be available to the
Company on acceptable terms, if at all.
CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
The foregoing forward-looking statements involve risks and uncertainties.
As a direct or indirect result of any or a combination of any of the following
factors, the Company's actual results may differ significantly from the results
discussed in such forward-looking statements: The Company has a history of
operating losses and there is no assurance of market acceptance of the Company's
principal product, the CH 2000 System. The Company's products, product
development activities, manufacturing processes and sales and marketing are
subject to extensive and rigorous regulation by the FDA and comparable agencies
in foreign countries. The process of obtaining marketing clearance or approval
for new medical devices from the FDA can be
9
<PAGE>
costly and time consuming, and there can be no assurance that such clearance or
approval will be granted for the Company's future products on a timely basis, if
at all, or that the FDA review will not involve delays that will adversely
affect the Company's ability to commercialize additional products or expand
permitted uses of existing products. The medical device market is characterized
by intensive development efforts and rapidly advancing technology and is highly
competitive, and there can be no assurance that the Company will keep pace with
advancing technology and competitive innovations. The Company's future success
will depend, in part, on its ability to continue to develop patentable products,
enforce its patents and obtain patent protection for its products both in the
United States and in other countries. However, patent positions of medical
device companies, including the Company, are generally uncertain and involve
complex legal and factual questions. No assurance can be given that patents will
issue from any patent applications owned by or licensed to the Company or that,
if patents do issue, the claims allowed will be sufficiently broad to protect
the Company's technology. In addition, no assurance can be given that any issued
patents owned by or licensed to the Company will not be challenged, invalidated
or circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company. The Company has limited manufacturing and marketing
experience and is dependent upon certain key suppliers. The Company is also
dependent upon certain key management personnel and consultants. The Company has
limited international sales and operations experience. The manufacture and sale
of medical devices entails significant risk of product liability claims in the
event that the use of such devices is alleged to have resulted in adverse
effects to a patient. The Company's product liability insurance coverage is
limited. For additional and more comprehensive discussion of the risks
associated with ownership of Common Stock of the Company, please see the
Company's Registration Statement filed on Form S-1 with the Securities and
Exchange Commission on May 31, 1996 and the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 31, 1997. As a result
of these and other factors, there can be no assurance that the Company will not
experience material fluctuations in future operating results on a quarterly or
annual basis.
USE OF PROCEEDS
The Company's Securities Act registration statement on Form S-1 (SEC File
No. 333-04879) became effective on August 2, 1996. The offering commenced on
August 2, 1996 and all registered securities were sold prior to the termination
of the offering. The managing underwriters for the offering were Goldman, Sachs
& Co. and Bear, Stearns & Co. Inc. The Company registered 2,437,750 shares of
Common Stock at an aggregate offering price to the public of $21,939,750. All of
the Company's registered shares were sold. Selling stockholders registered
62,250 shares of Common Stock at an aggregate offering price to the public of
$560,250. All of the shares registered by selling stockholders were sold. Total
expenses incurred to date in connection with the issuing and distribution of the
securities registered for underwriting discounts and commissions and other
expenses are approximately $2,289,750. In connection with the offering, there
were no direct or indirect payments to directors, officers, general partners of
the Company or their associates, persons owning ten percent or more of any class
of the Company's equity securities or to any affiliates of the Company. The net
offering proceeds to the Company after deducting the total expenses was
approximately $19,650,000. To date, the Company has used approximately $586,000
for the purchase and installation of machinery and equipment and approximately
$6,200,000 for working capital. In connection with these expenditures, there
were no direct or indirect payments outside of the ordinary course of business
to directors, officers, general partners of the Company or their associates,
persons owning ten percent or more of any class of the Company's equity
securities or to any affiliates of the Company.
RECENTLY ENACTED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
SFAS 128 specifies modifications to the calculation of earnings per share from
that currently used by the Company. Under SFAS 128, "basic earnings per share"
will be calculated based upon the weighted average number of common shares
actually outstanding, and "diluted earnings per share" will be calculated based
upon the weighted average number of common shares, dilutive common share
equivalents and other dilutive convertible securities outstanding. SFAS 128 is
effective in the Company's fourth quarter of 1997 and will be adopted at that
time. The Company has determined that the provisions of SFAS 128 would not have
a material impact on its reported results of operations for the periods
presented. The adoption of SFAS 128 will have no effect on the Company's
financial position or cash flows.
In October 1997, the Accounting Standards Executive Committee issued
Statement of Position 97-2, "Software Revenue Recognition" ("SOP 97-2"). SOP 97-
2 provides guidance on the timing and amounts of revenue recognition for
licensing, selling, leasing, or otherwise marketing computer software, including
software incorporated into other products. This SOP supersedes SOP 91-1 (also
entitled "Software Revenue Recognition") and is effective for transactions
entered into in fiscal years beginning after December 15, 1997. The Company is
currently reviewing SOP 97-2 to determine the impact, if any, of adopting SOP
97-2 on the Company's financial position and results of operations.
Item 5. OTHER INFORMATION
In August 1997, Jeffrey M. Arnold was appointed Chairman of the Board of
Directors replacing Marlene Krauss who retired from the Board of Directors.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. The exhibits listed in the Exhibit Index filed as part of this report
are filed as part of or are included in this report.
b. The Company filed no reports on Form 8-K during the quarter for which
this report is filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CAMBRIDGE HEART, INC.
Date: November 12, 1997 By: /s/ Jeffrey M. Arnold
---------------------------------------
Jeffrey M. Arnold
Chairman, President, Chief
Executive Officer and Acting Chief
Financial Officer
11
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
11 Statement re Computation of Net Loss and Pro Forma
Net Loss per Share
27 Financial Data Schedule
<PAGE>
Exhibit 11
Cambridge Heart, Inc.
Computation of Net Loss and Pro Forma Net Loss per Share
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30, September 30, September 30,
1996 1997 1996 1997
------ ----- ----- ------
<S> <C> <C> <C> <C>
Net Loss $(1,061,047) $(1,249,260) $(2,713,281) $(4,437,107)
=========== =========== =========== ===========
Weighted average shares outstanding:
a. Shares attributable to common stock outstanding 10,495,282 10,406,818
=========== ===========
Net loss per share $ (0.12) $ (0.43)
=========== ===========
Pro forma weighted average shares outstanding:
a. Shares attributable to common stock outstanding 7,702,234 4,695,368
b. Shares attributable to certain
common stock options (1) -- 303,097
c. Shares attributable to the assumed conversion of
Series A and B convertible preferred stock
outstanding upon closing of initial
public offering 1,598,244 3,503,220
----------- -----------
Pro forma weighted average common and common
equivalent shares outstanding 9,300,478 8,501,685
=========== ===========
Pro forma net loss per share $ (0.11) $ (0.32)
=========== ===========
</TABLE>
- ----------------
(1) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No.
83, stock options issued during the twelve months prior to the filing of
Company's initial registration statement on Form S-1 have been included in
the above computation as if outstanding for periods through June 30, 1996,
even if such impact is anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED SEPTEMBER 30, 1997 FINANCIAL STATEMENT AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,854,315
<SECURITIES> 6,569,271
<RECEIVABLES> 510,500
<ALLOWANCES> 50,000
<INVENTORY> 274,848
<CURRENT-ASSETS> 15,428,901
<PP&E> 890,523
<DEPRECIATION> 257,919
<TOTAL-ASSETS> 16,168,878
<CURRENT-LIABILITIES> 474,214
<BONDS> 0
0
0
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</TABLE>
