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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 June 30, 1997
Commission file number 000-23266
UroMed Corporation
(Exact name of registrant as specified in its charter)
Massachusetts 04 - 3104185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
64 A Street, Needham, Massachusetts 02194
(Address of principal executive offices)
(617) 433-0033
(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
---------- ----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
26,580,882 shares of Common stock, no par value, outstanding at July 15, 1997
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UROMED CORPORATION
FORM 10-Q
For the quarterly period ended June 30, 1997
Table of contents
Page No.
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet at June 30, 1997 and December 31, 1996... 3
Statement of Operations for the three months and
six months ended June 30, 1997 and June 30, 1996....... 4
Statement of Cash Flows for the six months ended
June 30, 1997 and June 30, 1996........................ 5
Notes to Financial Statements.......................... 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 8 - 11
Part II - OTHER INFORMATION
Item 2. Changes in Securities.................................. 12
Item 4. Submission of Matters to a Vote of Security Holders.... 12
Item 5. Other Information...................................... 12
Item 6. Exhibits and Reports on Form 8-K....................... 12
Signatures...................................................... 13
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Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UROMED CORPORATION
BALANCE SHEET
(In thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 30,
1997 1996
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ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents................. $ 29,598 $ 45,556
Short-term investments.................... 52,181 56,082
Accounts receivable, net.................. 5 70
Inventories............................... 663 587
Prepaid expenses and other assets......... 1,197 1,254
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Total current assets.................. 83,644 103,549
Fixed assets, net........................... 6,968 3,962
Other assets................................ 2,742 2,977
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$ 93,354 $ 110,488
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................... $ 654 $ 713
Accrued expenses.......................... 4,947 4,216
Deferred revenue.......................... 232 607
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Total current liabilities.............. 5,833 5,536
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Convertible subordinated notes.............. 69,000 69,000
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Stockholders' equity:
Preferred stock, $.01 par value;
500,000 shares authorized; none issued... -- --
Common stock, no par value; 50,000,000 shares
authorized; 26,610,826 and 26,446,257 shares
issued and outstanding at June 30, 1997 and
December 31, 1996, respectively......... 106,843 106,739
Additional paid-in capital................ 786 753
Net unrealized gain (loss) on investments
available-for-sale...................... (23) (31)
Deferred compensation..................... (185) (215)
Accumulated deficit....................... (88,900) (71,294)
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Total stockholders' equity........... 18,521 35,952
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$93,354 $110,488
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
UROMED CORPORATION
STATEMENT OF OPERATIONS
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- ---------- ---------- ----------
Revenues........................................................... $ 152 $ 661 $ 415 $ 1,319
--------- ---------- ---------- ----------
Costs and expenses:
Cost of revenues................................................ 935 1,357 1,936 2,688
Research and development........................................ 3,420 31,936 5,728 33,695
Marketing and sales............................................. 3,867 1,132 8,003 2,140
General and administrative...................................... 1,339 587 2,755 1,126
--------- ---------- ---------- ----------
Total costs and expenses..................................... 9,561 35,012 18,422 39,649
--------- ---------- ---------- ----------
Loss from operations............................................... (9,409) (34,351) (18,007) (38,330)
Interest income.................................................... 1,169 726 2,471 1,567
Interest expense................................................... (1,035) -- (2,070) (1)
--------- ---------- ---------- ----------
Net loss........................................................... $(9,275) $ (33,625) $ (17,606) $ (36,764)
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Net loss per share................................................. $ (.35) $ (1.33) $ (.66) $ (1.49)
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Weighted average common shares outstanding......................... 26,544 25,309 26,517 24,645
--------- ---------- ---------- ----------
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
UROMED CORPORATION
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
<S> <C> <C>
1997 1996
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Cash flows from operating activities:
Net loss................................................................................ $ (17,606) $ (36,764)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization......................................................... 888 314
Issuance of common stock in connection with acquisition of technology................. -- 23,000
Compensation expense related to previously issued stock options....................... 33 --
Changes in assets and liabilities:
Decrease in accounts receivable..................................................... 65 150
Increase in inventories............................................................. (76) (51)
Decrease (increase) in prepaid expenses and other current assets.................... 57 (227)
Increase in accounts payable and accrued expenses................................... 672 804
Decrease in deferred revenue........................................................ (375) (375)
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Net cash used in operating activities............................................ (16,342) (13,149)
Cash flows from investing activities:
Sale of short-term investments, net..................................................... 3,909 1,174
Purchase of fixed assets................................................................ (3,666) (824)
Increase in other assets................................................................ 37 33
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Net cash provided by investing activities........................................ 280 383
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Cash flows from financing activities:
Principal payments on capital lease obligations......................................... -- (12)
Proceeds from issuance of common stock, net of issuance costs........................... 104 116
---------- ----------
Net cash provided by financing activities........................................ 104 104
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Net decrease in cash and cash equivalents................................................. (15,958) (12,662)
Cash and cash equivalents, beginning of period............................................ 45,556 18,165
---------- ----------
Cash and cash equivalents, end of period.................................................. $ 29,598 $ 5,503
---------- ----------
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Supplemental disclosure of cash flow information:
Interest paid........................................................................... $ 2,070 $ 1
</TABLE>
The accompanying notes are an integral part of the financial statements.
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Item 1. Financial Statements (continued)
UROMED CORPORATION
NOTES TO FINANCIAL STATEMENTS
(In thousands, except per share data)
1. Nature of Business
UroMed Corporation (the "Company"), a Massachusetts corporation, was
incorporated in October 1990 to develop male and female health care products.
Its initial area of focus has been to develop, manufacture and market products
for the management of urological and gynecological disorders.
2. Basis of Presentation
The balance sheet at June 30, 1997, the statement of operations for the three
months and six months ended June 30, 1997 and 1996 and the statement of cash
flows for the six months ended June 30, 1997 and 1996 are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of
these financial statements have been included. Such adjustments consisted
only of normal recurring items. Interim results are not necessarily indicative
of results for a full year.
The financial statements should be read in conjunction with the Company's
audited financial statements and related footnotes for the year ended
December 31, 1996 which may be found in the Company's 1996 Annual Report
on Form 10-K.
3. Acquisition of Technology
On May 9, 1996, the Company acquired all of the incontinence technology of
the ASI Liquidating Trust, the successor to Advanced Surgical Intervention,
Inc., including the Miniguard-TM- Patch, an FDA-cleared prescription adhesive
patch placed externally against the urethral opening to help block leakage
in women with mild to moderate stress incontinence. The Company purchased
the Miniguard Patch and its related technology for $30.0 million,
consisting of $7.0 million in cash and $23.0 million in common stock. The
acquisition of this incontinence technology was accounted for as purchased
research and development and, as a result, the purchase price and related
expenses of $0.2 million were charged to operations in the second quarter
of 1996. During 1997, the Company changed the name Miniguard-TM- Patch to
Impress-TM- Softpatch.
4. Inventories
Inventories are stated at the lower of cost or market, cost being
determined using the first-in, first-out method. At June 30,1997,
inventories consisted of the following:
Raw materials......................... $ 389
Work in process....................... 71
Finished Goods........................ 203
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$ 663
------
------
5. Net Loss Per Share
Net loss per share is determined by dividing net loss by the weighted average
number of common shares outstanding during the period. All common stock
equivalent shares from stock options have been excluded from the
calculation of weighted average number of common shares outstanding because
their inclusion would be antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share". The
provisions of this statement are required to be adopted by the Company
during the fourth quarter of 1997. The adoption of this statement is not
expected to have any effect on earnings per share.
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6. Shareholder Rights Plan
In June 1997, UroMed's Board of Directors adopted a Shareholder Rights
Plan. This Plan provides shareholders with special purchase rights under
certain circumstances, including if any new person or group acquires 15
percent or more of the Company's outstanding common stock.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
The Company is a developer of male and female health care products. The
Company's initial area of focus has been on the development, manufacture
and marketing of products for the management of urological and
gynecological disorders. The Company's first four products, the
Reliance-Registered Trademark-Insert, the Impress-TM- Softpatch, the
recently acquired INTROL-Registered Trademark- Bladder Neck Support
Prosthesis and the PelvicFlex-TM- Personal Trainer video are intended
for the management of certain types of female urinary incontinence ("UI").
The Reliance Insert was cleared by the U.S. Food and Drug Administration
("FDA") for marketing in the United States in August 1996. The Reliance
Insert is a small, prescription, balloon-tipped, single-use plug
designed to be inserted in the urethra and inflated to block the flow of
urine from the bladder to the urethra. The Company has completed its
manufacturing and marketing scale-up and began the first phase of the
commercial launch of the Reliance Insert in the United States in
November 1996. The Company is continuing its commercialization of the
Reliance Insert throughout 1997. The Reliance Insert is also
commercially available through the Company's European distributors in
Germany, the United Kingdom, Finland, Norway, Sweden, Denmark, France
and The Netherlands.
The Impress Softpatch was cleared by the FDA for marketing in the United
States in May 1996. The Impress Softpatch is a small, prescription,
disposable adhesive patch designed to be placed externally against the
urinary opening to block the leakage of urine in mild to moderate UI
patients. The Company is developing the commercial manufacturing process
for the Impress Softpatch and also developing a marketing plan for the
commercial launch of the Impress Softpatch in the United States, which
is currently expected to occur in early 1998. During the remainder of
1997, the Company will conduct test marketing activities for the Impress
Softpatch in the United States.
On April 9, 1997, the Company acquired the product line, all associated
license rights and all other rights of Johnson & Johnson Medical, Inc.
and certain of its affiliates to the INTROL Bladder Neck Support
Prosthesis. The INTROL Bladder Neck Support Prosthesis, cleared for
marketing in the U.S. by the FDA in May of 1995, is a patented
intravaginal device which is designed to elevate the bladder neck to its
normal anatomical position, simulating the effect of bladder neck
suspension surgery. The Company initially serviced the small group of
physicians who had been trained and were involved in the limited post
FDA clearance marketing of INTROL. The Company initiated a broader
United States launch of INTROL to healthcare practitioners in July 1997.
In the short term, the Company expects a modest financial contribution
by adding INTROL to its product line.
In its initial focus on continence care, the Company provides an
integrated system of care for health professionals, patients and payors.
This system is complemented by a direct customer support and distributor
system. During the second quarter of 1997, two major health plans
approved patient reimbursement for UroMed's line of continence care
products, which are the Reliance Insert, the Impress Softpatch, the
INTROL Bladder Neck Support Prosthesis, and the PelvicFlex-TM- Personal
Trainer video. The Company is actively involved in marketing its system
of continence care to a range of payors in order to achieve broader
reimbursement coverage.
RESULTS OF OPERATIONS
The Company's revenues decreased by 77% to $0.2 million from $0.7
million in the second quarter of 1997 compared to the second quarter of
1996, and 69% to $0.4 million from $1.3 million for the first six months
of 1997 compared to the first six months of 1996. These decreases are
primarily due to the fact that there were no stocking shipments of the
Reliance Insert product to the Company's European distributors during
1997 and decreases in recognition of deferred revenue from a portion of
the advance payments received upon the signing of European
distributorship agreements, partially offset by small amounts of U.S.
sales of the Reliance Insert and the INTROL Bladder Neck Support
Prosthesis.
The Company had no additional shipments of the Reliance Insert to its
European distributors in the first half of 1997 due to their having
adequate initial stocking levels already in place. The Company expects
that international sales of the Reliance Insert will be minimal for the
remainder of 1997 due to distributors' expected sales volume in relation
to their inventory levels. The Company believes that international
product revenue will not be more than 10-15% of expected 1997 product
revenue.
Sales of the Reliance Insert in the U.S. in the second quarter and for
the first six months of 1997 were minimal due to a more
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modest than expected ramp-up of prescriptions by U.S. urologists, the
early stages of the Company's U.S. gynecology launch phase and the
early stages of the urethral insert market. As of June 30, 1997 the
Company had more than 2,500 physicians trained to prescribe the Reliance
Insert. In the second quarter of 1997, the Company continued its
gynecological training phase and a public relations campaign to patients
and physicians. The Company believes that its patient numbers will
continue to increase and will contribute to very modest product revenue
growth in the near term. The Company believes that results to date, with
respect to the Reliance Insert, illustrate the importance of continuing
with its plans for (1) training gynecologists, (2) reaching consumers,
(3) achieving reimbursement and (4) offering physicians, patients and
managed care providers a wider range of expanded treatment options. The
Company believes that each of these elements will be important to the
success of it continence care program, and it expects to see progress on
these fronts over the course of 1997. There can be no assurance that
these plans will continue to be the most effective strategy to attain
product revenue growth.
During the second quarter of 1997, the Company reallocated its resources
and eliminated certain Reliance-related positions to better align costs
with Reliance sales levels. In line with this initiative, the Company
is focusing additional efforts on accelerating internal development
activities outside of the continence care area and in-licensing
activities both within and outside of the continence care area.
Cost of revenues decreased by 31% to $0.9 million from $1.4 million in
the second quarter of 1997 compared to the second quarter of 1996 and
decreased 28% to $1.9 million from $2.7 million for the first six months
of 1997 as compared to the first six months of 1996. This decrease was
due to significantly lower variable product cost due to lower product
sales during the second quarter and first six months of 1997, but
approximately the same level of manufacturing-related overhead costs in
1997 as in these same periods in 1996. Cost of revenues significantly
exceeded product revenue for the 1996 and 1997 periods due to the
current level of variable product costs as well as the Company's
manufacturing-related overhead costs, relative to the low start-up
volume of production in the periods. The Company expects negative or low
gross margins for the near term and, accordingly, has considered this in
its valuation of inventory. There can be no assurance that the Company
will ever realize sufficient production volumes or otherwise reduce its
manufacturing costs in order to raise gross margins. The Company
anticipates increased expenditures in manufacturing in the next two
quarters as it continues with the process development and scale-up for
the Impress Softpatch. In addition, the Company expects to increase
future facilities spending in order to accommodate changes in, as well
as increases to, its manufacturing space for the Impress Softpatch and
the INTROL Bladder Neck Support Prosthesis.
The acquisition of technology for the Impress Softpatch during the
second quarter of 1996 was accounted for as purchased research and
development and, as a result, the purchase price of $30.0 million and
related expenses of $0.2 million were charged to operations in the
second quarter of 1996. This charge resulted in research and development
expenses decreasing by 89% to $3.4 million from $31.9 million in the
second quarter of 1997 as compared to the second quarter of 1996. For
the first six months of 1997, this charge resulted in research and
development expenses decreasing by 83% to $5.7 million from $33.7
million for the first six months of 1996.
Without the Impress Softpatch acquisition charge, research and
development expenses increased by 97% to $3.4 million from $1.7 million
in the second quarter of 1997 as compared to the second quarter of 1996,
and increased 64% to $5.7 million from $3.5 million for the first six
months of 1997 as compared to the first six months of 1996. The
increase in research and development costs was primarily due to
increased expenditures on the Impress Softpatch scale-up activities,
specific charges in relation to acquisition activity, and focusing
additional efforts and resources on accelerating internal development
activities outside of the continence care area and in-licensing
activities both within and outside of the continence care area.
The Company anticipates a net decrease in research and development
expenditures in the third quarter of 1997 as a result of the reduction
of specific charges in relation to acquisition activity as well as
restructuring efforts, partially offset by increased expenditures as it
continues with the process development and scale-up activities for the
Impress Softpatch, and increased spending on internal development
activities outside of the continence care area. The Company anticipates
an increase in research and development expenditures from the third
quarter of 1997 to the fourth quarter of 1997 as a result of increased
clinical and regulatory efforts in relation to internal development
activities outside of the continence care area.
Marketing and sales expenses increased by 242% to $3.9 million from $1.1
million in the second quarter of 1997 as compared to the second quarter
of 1996, and increased 274% to $8.0 million from $2.1 million for the
first six months of 1997 as compared to the first six months of 1996
This increase was the result of expenditures incurred in connection with
both the ramp-up and commencement of the U.S. launch of the Reliance
Insert, which began in November 1996 and continues throughout the second
quarter of 1997 and involves calling on gynecologists and a public
relations campaign to patients and physicians. Increases were also a
result of the commencement of test marketing activities for the Impress
Softpatch and in preparation for its broader based United States launch
in early 1998. Increases relate specifically to hiring marketing and sales
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personnel, costs to initiate an advertising and public relations
campaign, sales training and market research. The Company anticipates
decreased expenditures on sales and marketing in the third quarter of
1997 as a result of the effects of decreasing public relations expenses
and not continuing an advertising program in relation to the Reliance
launch, which it had initiated in the second quarter of 1997. The Company
anticipates increased sales and marketing expenditures from the third
quarter to the fourth quarter of 1997 due to increased costs in
connection with conducting the Impress Softpatch test market and
preparation for the national lauch of the Impress Softpatch in early
1998, as well as those in connection with internal development
activities.
General and administrative expenses increased by 128% to $1.4 million in
the second quarter of 1997 as compared to $0.6 million in the second
quarter of 1996, and increased 145% to $2.8 million from $1.1 million
for the first six months of 1997 as compared to the first six months of
1996. These increases are primarily due to costs to support the U.S.
launch of the Reliance Insert, including hiring additional
administrative personnel, increased systems and consulting expenses, and
amortization of deferred financing costs. The Company anticipates a
slight decrease in general and administrative expenses in the third
quarter of 1997 as a result of fewer support and system costs in
connection with the Reliance launch activities. The Company anticipates
an increase in general and administrative expenses from the third
quarter of 1997 to the fourth quarter of 1997 as a result of increased
support costs in connection with internal development activites.
Interest income increased by 61% to $1.2 million from $0.7 million in
the second quarter of 1997, as compared to the second quarter of 1996,
and increased by 58% to $2.5 million from $1.6 million for the first six
months of 1997 as compared to the first six months of 1996. The
increases were attributable to the significant increase in the Company's
interest-bearing cash equivalents and short-term investments as a result
of the issuance of the Company's 6% Convertible Subordinated Notes due
October 15, 2003 (the "Convertible Notes") in the fourth quarter of
1996, partially offset by lower interest rates on invested cash balances
in 1997.
Interest expense increased to $1.0 million in the second quarter of 1997
as compared to the second quarter in 1996, and increased to $2.1 million
for the first six months of 1997 as compared to the first six months of
1996 as a result of the issuance in October 1996 of the Convertible
Notes.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had cash, cash equivalents and short-term
investments totaling $81.8 million, a decrease of $19.8 million, or
19.5%, from $101.6 million at December 31, 1996. At June 30, 1997, the
Company's funds were invested in U.S. government obligations, corporate
debt obligations and money market funds.
Net cash used in operating activities of $16.3 million during the six
months ended June 30, 1997 was primarily a result of the net loss for the
period, which was partially offset by non-cash expenses of $0.9 million.
In addition, accounts payable and related accrued expenses together
increased by $0.7 million primarily as a result of interest accrued on
the Convertible Notes, conducting clinical studies and expenses incurred
in the commercialization of the Reliance Insert product and Impress
marketing and manufacturing scale-up activities. Deferred revenue
decreased by $0.4 million due to the recognition of revenue from a
portion of the advanced payments received upon the signing of European
distributorship agreements.
Net cash provided by investing activities was $0.3 million during the
six months ended June 30, 1997. Short-term investments decreased by $3.9
million due to a shift into investments with shorter maturities. Fixed
assets increased by $3.7 million as a result of purchases of additional
automated assembly and packaging equipment, production molds and
purchases of other machinery and equipment. At June 30, 1997, the
Company has outstanding commitments of approximately $5.7 million for
the purchase of automated assembly and packaging equipment for the
Impress Softpatch and other machinery and equipment, against which
advance and milestone payments of $3.2 million have already been made.
Net cash provided by financing activities was $0.1 million during the
six months ended June 30, 1997 primarily as the result of proceeds
received from the exercise of stock options and from purchases under the
employee stock purchase plan.
The Company believes that available cash, cash equivalents and short
term investments will be sufficient to meet the Company's operating
expenses and capital requirements for the foreseeable future. The
Company's future liquidity and capital requirements depend on numerous
factors, including, but not limited to, development of the Company's
marketing capability, market acceptance of the Reliance Insert, the
Impress Softpatch and the INTROL Bladder Neck Support
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Prosthesis, the uncertainty of medical reimbursement, development of the
Company's manufacturing capability and achieving acceptable cost of
production, the uncertain protection afforded the Company by its
intellectual property rights and/or patents relating to the Reliance
Insert, the Impress Softpatch and the INTROL Bladder Neck Support
Prosthesis, the development status of other potential products,
potential acquisitions and other potential strategic product
opportunities. There can be no assurance that the Company will not
require additional financing or that, if required, such financing will
be available on terms acceptable to the Company.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
Certain statements contained in this Quarterly Report may be considered
forward looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding (i) the planned progression of the
Company's commercialization strategies for the Reliance Insert, the
Impress Softpatch and the INTROL Bladder Neck Support Prosthesis, including
the timing and extent of initial or other sales in the United States and
abroad, (ii) the planned increases in manufacturing capacity for the
Reliance Insert and the Impress Softpatch, including the timing and extent
of expenditures needed for capital equipment and inventory production,
(iii) consumer acceptance of the use of the Reliance Insert, the Impress
Softpatch and the INTROL Bladder Neck Support Prosthesis as strategies for
the self-care of UI and the size and accessibility of the Company's target
markets, (iv) the Company's expectations regarding its research and
development and in-licensing activities, (v) the Company's planned uses for
its cash and other liquid resources and (vi) the extent of future revenues,
expenses and results of operations and the sufficiency of the Company's
financial resources to meet planned operational costs and other expenditure
needs. These forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties, many
of which are beyond the Company's control. Actual results could differ
materially from these forward-looking statements as a result of certain
factors, including those described below:
- The uncertainty that the Reliance Insert, the Impress Softpatch
and the INTROL Bladder Neck Support Prosthesis will gain market
acceptance either among physicians or UI sufferers in the United
States or in Europe and the risk that the adverse effects
experienced by some of the parties enrolled in clinical trials of
the Company's Reliance Insert, the Impress Softpatch and the INTROL
Bladder Neck Support Prosthesis will be more prevalent in
widespread consumer use of such products and that such effects will
affect the market acceptance of these products.
- The uncertainty that physicians will prescribe the Reliance
Insert in significant numbers.
- The uncertainty that patients using the Reliance Insert
will develop into long term users of the product.
- The dependence by the Company on the success of three products,
the Reliance Insert, the Impress Softpatch, and the INTROL Bladder
Neck Supoort Prosthesis, none of which have been widely marketed.
- The uncertainty that the Company will be able to develop the
ability to produce commercial quantities of its products and
produce such quantities at an acceptable cost.
- The uncertainty that the Company will be able to develop an
effective sales force and implement a successful marketing plan for
the Reliance Insert, the Impress Softpatch and the INTROL Bladder
Neck Support Prosthesis in the United States.
- The Company's dependence on others for raw materials and certain
components of its products, including certain materials available
only from single sources.
- The effect of competing products and surgical and non-surgical
alternative treatments for incontinence.
- The uncertainty that the Company will be able to develop an
effective distribution network and implement a successful
distribution strategy for the Company's products in the United
States, Europe and elsewhere.
- The uncertain protection afforded the Company by its patents
and/or other intellectual property rights relating to the Reliance
Insert, the Impress Softpatch and the INTROL Bladder Neck Support
Prosthesis.
- The uncertainty whether the Company will be able to achieve
widespread medical reimbursement for the Reliance Insert, the
Impress Softpatch or the INTROL Bladder Neck Support Prosthesis in
the United States or in all the European markets targeted for the
Company's products.
- The uncertainty whether the Company will be able to manufacture,
market and sell its products at prices that permit it to achieve
satisfactory margins in the production and marketing of its
products.
- Risks relating to FDA or other governmental oversight of the
Company's operations, including the possibility that the FDA could
impose costly additional labeling requirements on, or restrict the
marketing of, the Company's products, or suspend operations at one
or more of the Company's facilities.
Other relevant risks are described in the Company's Annual Report on
Form 10-K, for the year ended December 31, 1996 under the headings
"Forward-Looking Statements and Associated Risks" and "Risk Factors" are
incorporated herein by reference.
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Part II. OTHER INFORMATION
Item 2. Changes in Securities
In June 1997, the Board of Directors of the Company adopted a
Shareholder Rights Plan, see Item 5.
Item 4. Submission of Matters to a Vote of Security Holders
On May 9, 1997 the Company held its Special Meeting of Stockholders to
consider and vote upon the following two proposals:
(1) A proposal to elect two (2) Class III Directors of the Company, each
to hold a three-year term.
(2) A proposal to ratify the appointment of Price Waterhouse LLP as
independent accountants of the Company for the current fiscal year.
Results with respect to the voting on each of the above proposals were as
follows:
<TABLE>
<CAPTION>
Withheld
For Authority
------- -------------
<S> <C> <C> <C> <C> <C>
(1) Election of Directors:
John G. Simon 22,421,061 531,076
Richard A. Sandberg 22,424,551 527,586
For Against Abstain No Vote
------- ----------- ----------- ----------
(2) Approval of Price 22,915,624 18,509 18,004 --
Waterhouse LLP as independent
accountants
</TABLE>
Item 5. Other Information
In June 1997, the Board of Directors of the Company adopted a Shareholder
Rights Plan and in connection therewith declared a dividend of one
preferred share purchase right (the "Rights") for each outstanding share
of the Company's common stock, no par value. The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and State Street Bank and Trust Company, as Rights
Agent. The Rights and the Rights Agreement are described in greater detail
in the Company's Current Report on Form 8-K dated July 2, 1997, which is
incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
(1) On June 2, 1997 the Company filed a current report on Form 8-K to
file a press release to announce a restructuring of the Company's
operations.
(2) On July 2, 1997, the Company filed a current report on Form 8-K
relating to the Rights Agreement.
Page 12
<PAGE>
SIGNATURES
----------
Pursuant to 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.
UroMed Corporation
Date: August 5, 1997 /s/ John G. Simon
------------------------- --------------------------------
John G. Simon, President and
Chief Executive Officer
Date: August 5, 1997 /s/ Paul J. Murphy
------------------------- --------------------------------
Paul J. Murphy, Treasurer and
Chief Financial Officer (Principal
Financial and Accounting Officer)
Page 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE BALANCE SHEET AND
THE STATEMENT OF OPERATIONS FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON
FORM 10-Q.
</LEGEND>
<CIK> 0000917821
<NAME> UROMED-CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 29,598
<SECURITIES> 52,181
<RECEIVABLES> 5
<ALLOWANCES> 0
<INVENTORY> 663
<CURRENT-ASSETS> 83,644
<PP&E> 9,031
<DEPRECIATION> 2,063
<TOTAL-ASSETS> 93,354
<CURRENT-LIABILITIES> 5,833
<BONDS> 69,000
0
0
<COMMON> 106,843
<OTHER-SE> (88,322)
<TOTAL-LIABILITY-AND-EQUITY> 93,354
<SALES> 152
<TOTAL-REVENUES> 152
<CGS> 935
<TOTAL-COSTS> 9,561
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,035)
<INCOME-PRETAX> (9,275)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,275)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,275)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> (0.35)
</TABLE>
