<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 June 30, 2000
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.)
1400 Providence Highway
Norwood, MA 02062
(Address of principal
executive offices)
(781) 762-2080
(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:
5,179,521 shares of Common stock, no par value,
outstanding at July 31, 2000.
<PAGE>
UROMED CORPORATION
FORM 10-Q
For the quarterly period ended June 30, 2000
Table of contents Page No.
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet at June 30, 2000 (unaudited) and December
31, 1999 3
Condensed Statement of Operations for the three and six months
ended June 30, 2000 and 1999 (unaudited) 4
Condensed Statement of Cash Flows for the six months ended
June 30, 2000 and 1999 (unaudited) 5
Notes to Condensed Financial Statements 6 - 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10 -15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Part II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders 16
Item 6. Exhibits 16
Signatures 17
2
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
UROMED CORPORATION
CONDENSED BALANCE SHEET
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,157 $ 3,485
Short-term investments 7,399 14,377
Accounts receivable 826 585
Inventories 1,202 841
Prepaid expenses and other assets 1,108 475
--------- ---------
Total current assets 15,692 19,763
Fixed assets, net 96 143
Other assets 1,795 1,970
--------- ---------
$ 17,583 $ 21,876
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 220 $ 145
Accrued expenses 821 1,347
--------- ---------
Total current liabilities 1,041 1,492
--------- ---------
Convertible subordinated notes 14,393 17,393
--------- ---------
Stockholders' equity:
Common stock 107,258 107,164
Other stockholders' deficit (105,109) (104,173)
--------- ---------
Total stockholders' equity 2,149 2,991
--------- ---------
$ 17,583 $ 21,876
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Item 1. Financial Statements (continued)
UROMED CORPORATION
CONDENSED 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>
2000 1999 2000 1999
-------- -------- -------- --------
Revenues $ 1,234 $ 675 $ 2,235 $ 1,118
-------- -------- -------- --------
Costs and expenses:
Cost of revenues 1,025 736 1,758 1,341
Research and development 347 586 650 1,339
Marketing and sales 648 605 1,279 1,042
General and administrative 203 408 662 1,023
Restructuring - - - ( 80)
-------- -------- -------- --------
Total costs and expenses 2,223 2,335 4,349 4,665
-------- -------- ------- --------
Loss from operations ( 989) (1,660) ( 2,114) ( 3,547)
Interest income 222 263 452 580
Interest expense ( 241) ( 385) ( 520) ( 791)
-------- -------- -------- --------
Loss before extraordinary gain
on early retirement of debt (1,008) (1,782) (2,182) (3,758)
Extraordinary gain on early
retirement of debt - - 1,259 701
-------- -------- -------- --------
Net loss $(1,008) $(1,782) $( 923) $(3,057)
======== ======== ======== ========
Basic and diluted per share
amounts:
Loss before extraordinary
gain on early retirement
of debt $ (.19) $ (.34) $ (.42) $ (.73)
Extraordinary gain on
early retirement of debt - - .25 .14
-------- -------- -------- --------
Net loss $ (.19) $ (.34) $ (.17) $ (.59)
======== ======== ======== ========
Basic and diluted weighted
average common shares
outstanding 5,177 5,181 5,164 5,183
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Item 1. Financial Statements (continued)
UROMED CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
<S> <C> <C>
2000 1999
--------- ---------
Net cash used in operating activities $ (3,705) $ (4,726)
--------- ---------
Cash flows from investing activities:
(Purchases) sales of short-term
investments, net 6,993 (1,449)
Purchase of fixed assets (31) -
Decrease in other assets - 196
--------- ---------
Net cash provided by (used for)
investing activities 6,962 (1,253)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock 94 3
Purchase of common stock - (15)
Repurchase of convertible subordinated notes (1,679) (621)
--------- ---------
Net cash provided by (used for)
financing activities (1,585) (633)
--------- ---------
Net (decrease) increase
in cash and cash equivalents 1,672 (6,612)
Cash and cash equivalents, beginning of period 3,485 11,576
--------- ---------
Cash and cash equivalents, end of period $ 5,157 $ 4,964
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 508 $ 736
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Item 1. Financial Statements (continued)
UROMED CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. Nature of Business
UroMed Corporation (the "Company"), a Massachusetts corporation, was
incorporated in October 1990 and is dedicated to establishing itself as a leader
in providing interventional urological products, with a primary emphasis on the
treatment of prostate cancer. The Company has also developed and acquired
technology in urinary incontinence products.
2. Basis of Presentation
The condensed balance sheet at June 30, 2000 and the condensed statement of
operations for the three and six months ended June 30, 2000 and 1999 and the
condensed statement of cash flows for the six months ended June 30, 2000 and
1999 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 balance sheet as of
December 31, 1999 has been derived from the audited consolidated financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
These condensed financial statements should be read in conjunction with the
Company's audited financial statements and related footnotes for the year ended
December 31, 1999, which may be found in the Company's 1999 Annual Report on
Form 10-K.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving
Stock Compensation - an Interpretation of APB Opinion No. 25". FIN 44 clarifies
the application of APB Opinion No. 25 ("APB 25"), including the following:
definition of an employee for purposes of applying APB 25; the criteria for
determining whether a plan qualifies as a non-compensatory plan; the accounting
consequences of varioius modifications to the terms of previously fixed stock
options or awards; and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred after either December
15, 1998 or January 12, 2000. The Company does not expect the application of FIN
44 to have a material impact on the Company's financial position or results of
operations.
In December 1999, the U.S. Securities and Exchange Commission ("SEC) issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 summarizes the SEC's views in applying generally accepted
accounting principles to selected revenue recognition issues in financial
statements. In June 2000, the SEC issued Staff Accounting Bulletin 101B, an
amendment to SAB 101, which delays the implementation of SAB 101. The
application of the guidance in SAB 101 will be required in the Company's fourth
quarter of 2000. The Company is currently determining the impact that SAB 101
will have on its financial position and results of operations.
3. Inventories
Inventories are stated at the lower of cost or market, cost being
determined using the first-in, first-out method.
The components of inventory at June 30, 2000 are as follows:
(in thousands)
Raw materials $ 210
Work in process 194
Finished goods 798
------
Total Inventory $1,202
======
6
<PAGE>
4. Comprehensive Loss
FASB Statement No. 130, "Reporting Comprehensive Income", establishes
standards for the reporting and display of comprehensive income or loss and its
components in the financial statements. The Company's comprehensive loss for
the three months and six months ended June 30, 2000 and 1999 was as follows
(in thousands):
Three months ended Three months ended
June 30, 2000 June 30, 1999
-------------- --------------
Net loss ($1,008) ($1,782)
Unrealized gain (loss)
on investments
available-for-sale - (5)
-------- --------
Total comprehensive loss ($1,008) ($1,787)
======== ========
Six months ended Six months ended
June 30, 2000 June 30, 1999
-------------- --------------
Net loss ($ 923) ($3,057)
Unrealized gain (loss)
on investments
available-for-sale 14 (43)
-------- --------
Total comprehensive loss ($ 909 ) ($3,100)
======== ========
5. Early Retirement of Debt
In March 2000 and in March 1999, the Company repurchased, at a discount,
portions of its outstanding 6% Convertible Subordinated Notes due October 15,
2003 ( the "Notes"). These repurchases occurred in unsolicited open market
transactions, with persons who are not affiliated to the Company.
During March 2000, the Company repurchased $3,000,000 in aggregate
principal amount of its Notes for $1,680,000 in cash. As a result of this
repurchase $61,000 of deferred financing fees were written off, and an
extraordinary gain of $1,259,000 was reported in the condensed statement of
operations for the six months ended June 30, 2000.
During March 1999, the Company repurchased $1,350,000 in aggregate
principal amount of its Notes for $621,000 in cash. As a result of this
transaction $28,000 of deferred financing fees were written off and an
extraordinary gain of $701,000 was reported in the condensed statement of
operations for the six months ended June 30, 1999.
7
<PAGE>
6. Segment Reporting
The Company has determined its reportable segments based on its method of
internal reporting, which disaggregates its business by product category. The
Company's reportable segments are (i) its prostate cancer and incontinence
business, which includes the Cavermap surgical aid, the I-125 brachytherapy
seeds and needles and all consumer and surgical incontinence products, and (ii)
its breast cancer business, which includes all development efforts for its
proposed BreastExam, BreastView and BreastCheck products. On April 15, 1999, the
Company disposed of its Breast Cancer business through a spin-out to a separate
corporation in which the Company holds an approximate one-third interest.
The accounting policies of the segments are the same as those described in
Note 2, "Summary of Significant Accounting Policies" in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999. The Company evaluates
the performance of its operating segments based on operating results which
represents income or loss before interest income and expense and extraordinary
gain on early retirement of debt. There are no intersegment revenues.
The tables below presents information about the Company's segments for the
three months and six months ended June 30, 2000 and 1999. Asset information by
segment is not reported, because the Company does not produce such information
internally (in thousands):
Prostate cancer
and Breast
Incontinence Cancer Totals
---------------- -------- --------
Three months ended June 30, 2000
Revenues $ 1,234 $ - $ 1,234
Depreciation (32) - (32)
Operating Loss (659) - (659)
Three months ended June 30, 1999
Revenues $ 675 $ - $ 675
Depreciation (416) - (416)
Operating Loss (1,211) - (1,211)
The following are reconciliations of the operating loss amounts presented
above to corresponding totals in the accompanying financial statements:
Three months ended June 30, 2000 1999
--------------------------------------------------------------------
Total for reportable segments $ (659) $ (1,211)
Corporate (330) (428)
Interest income 222 263
Interest expense (241) (406)
---------- ----------
Loss before extraordinary
gain on the early retirement
of debt $ (1,008) $ (1,782)
========== ==========
There were no product sales to a customer in Japan during the three months
ended June 30. 2000. Product sales to a customer in Japan for the three months
ended June 30, 1999 were approximately 12% of total product sales for that
period.
8
<PAGE>
Prostate cancer
and Breast
Incontinence Cancer Totals
---------------- -------- --------
Six months ended June 30, 2000
Revenues $ 2,235 $ - $ 2,235
Restructuring - - -
Depreciation (78) - (78)
Operating Loss (1,387) - (1,387)
Six months ended June 30, 1999
Revenues $ 1,118 $ - $ 1,118
Restructuring 80 - 80
Depreciation (835) (9) (844)
Operating Loss (2,233) (422) (2,655)
The following are reconciliations of the operating loss amounts presented
above to corresponding totals in the accompanying financial statements:
Six months ended June 30, 2000 1999
--------------------------------------------------------------------
Total for reportable segments $ (1,387) $ (2,655)
Corporate (727) (892)
Interest income 452 580
Interest expense (520) (791)
---------- ----------
Loss before extraordinary
gain on the early retirement
of debt $ (2,182) $ (3,758)
========== ==========
There were no product sales to a customer in Japan during the six months
ended June 30. 2000. Product sales to a customer in Japan for the three months
ended June 30, 1999 were approximately 17% of total product sales for that
period.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This Management's Discussion and Analysis should be read together with
"Forward-Looking Statements and Associated Risks" contained later in this
report.
Overview
The Company is dedicated to establishing itself as a leader in providing
interventional urological products, with primary emphasis on the treatment of
prostate cancer. The Company seeks to market a portfolio of products including
its two main proprietary products for the treatment of prostate cancer: the
CaverMap Surgical Aid, available to aid physicians in preserving vital nerves
during prostate cancer surgery, and the Symmetra I-125 radioactive seeds used in
a brachytherapy procedure to treat localized prostate cancer. The Company's
product portfolio also includes brachytherapy introducer needles and fascia lata
used in incontinence surgical procedures. UroMed, through its approximate
one-third ownership of Assurance Medical, Inc., has supported the development of
electronic palpation technology in order to aid physicians in the mission of
finding suspicious breast lumps earlier. The Company also continues to dedicate
resources to the development and/or acquisition of product lines that fit into
its strategic platform.
Results of Operations
Revenues
The Company's revenues for the second quarter of 2000 increased 83% to $1.2
million as compared to $0.7 million in the second quarter of 1999. For the first
six months of 2000 revenues increased 100% to $2.2 million as compared to $1.1
million for the first six months of 1999. The increases in 2000 are the result
of increased sales levels for the CaverMap Surgical Aid, the Symmetra I-125 seed
and AlloSling fascia lata. The increases in the CaverMap Surgical Aid and the
AlloSling fascia lata are due to the Company being further along in the
marketing and distribution plans for these products. The Symmetra I-125 seed
shipments commenced in test markets during the third quarter of 1999 and was
released for full scale distribution during the first quarter of 2000. The
Company has entered into and continues to seek partnerships to capitalize on its
incontinence products and technology.
Cost of revenues
Cost of revenues for the second quarter of 2000 increased 39% to $1.0
million as compared to $0.7 million in the second quarter of 1999. For the first
six months of 2000 cost of revenues increased 31% to $1.8 million as compared to
$1.3 million for the first six months of 1999. The major component of both
increases is the increase in variable direct material costs as a result of
increased revenue levels in 2000 when compared to 1999. Additionally, 2000
includes $0.2 million in costs associated with scrapping Symmetra I-125 seeds
that decayed to radioactive strength ranges not considered saleable.
10
<PAGE>
Operating Expenses
Research and development expenses in the second quarter of 2000 decreased
41% to $0.3 million as compared to $0.6 million in the second quarter of 1999.
For the first six months of 2000 research and development expenses decreased 51%
to $0.7 million from $1.3 million for the first six months of 1999. Major
components of the decrease in the second quarter 2000 as compared to the second
quarter of 1999 are as follows: $0.2 million reduction in CaverMap related
spending; and a $0.1 million reduction in spending to support the development of
the production capability for Symmetra. Major components of the decrease for the
first six months of 2000 as compared to the first six months of 1999 are as
follows: $0.3 million reduction in CaverMap related spending; $0.2 million
reduction in Assurance Medical related expenses as Assurance Medical was spun
out into a separate corporation in April 1999; and a $0.1 million reduction in
support of the development of the production capability for Symmetra.
Marketing and sales expenses in the second quarter of 2000 increased 7% to
$0.6 million as compared to the second quarter of 1999. For the first six months
of 2000 marketing and sales expenses increased 23% to $1.3 million as compared
to $1.0 million for the first six months of 1999. The increase in the second
quarter of 2000 as compared to the second quarter of 1999 is due to increased
sales activity and sales headcount. For the first six months of 2000 as compared
to the first six months of 1999 the major components of the increase are as
follows: $0.2 million reduction in Assurance Medical related expenses; $0.3
million increase in sales compensation due to an increased headcount; and a $0.2
million increase in Symmetra related marketing expenses.
General and administrative expenses in the second quarter of 2000 decreased
50% to $0.2 million as compared to $0.4 million in the second quarter of 1999.
For the first six months of 2000, general and administrative expenses decreased
35% to $0.7 million from $1.0 million for the first six months of 1999. The
decrease in the second quarter of 2000 as compared to the second quarter of 1999
is a result of $0.2 million in proceeds received for an asset previously written
off as a general and administrative expense in 1998. The major components of the
decrease for the first six months of 2000 as compared to the first six months of
1999 are as follows: $0.2 million reduction due to the receipt of proceeds for
an asset previously written off; and $0.1 million reduction in Assurance Medical
related expenses.
11
<PAGE>
Restructuring
In March 1999, the Company entered into a lease termination agreement in
respect to the facility that it committed to abandoning during the fourth
quarter of 1998. Based upon the terms of this agreement, the Company's cost of
exiting this facility were $80,000 less than the Company's original estimates
that were included within the restructuring liability as of December 31, 1998.
As a result, the Company reversed $80,000 of the restructuring liability during
the first quarter of 1999. The remaining balance was paid out in cash during
1999.
Interest income and interest expense
Interest income in the second quarter of 2000 decreased 16% to $0.2 million
as compared to $0.3 million in the second quarter of 1999. For the first six
months of 2000 interest income decreased 22% to $0.5 million from $0.6 million
for the first six months of 1999. These decreases were attributable to the
reduced size of the Company's investment portfolio, caused by the need to fund
the Company's operations and to repurchase a portion of its 6% Convertible
Subordinated Notes due October 15, 2003 (the "Notes").
Interest expense in the second quarter of 2000 decreased 37% to $0.2
million as compared to $0.4 million in the second quarter of 1999. For the first
six months of 2000 interest expense decreased 34% to $0.5 million from $0.8
million for the first six months of 1999. These decreases were attributable to
the reduction in outstanding Convertible Subordinated Notes due to repurchases
thereof during 1999 and 2000.
Extraordinary gain on early retirement of debt
In March 2000 and in March 1999, the Company repurchased, at a discount,
portions of its outstanding 6% Convertible Subordinated Notes due October 15,
2003 ( the "Notes"). These repurchases occurred in unsolicited open market
transactions, with persons who are not affiliated to the Company.
During March 2000, the Company repurchased $3.0 million in aggregate
principal amount of its Notes for $1.7 million in cash. As a result of this
repurchase, an extraordinary gain of $1.3 million has been reported in the
condensed statement of operations for the six months ended June 30, 2000.
During March 1999, the Company repurchased $1.4 million in aggregate
principal amount of its Notes for $0.6 million in cash. As a result of this
repurchase, an extraordinary gain of $0.7 million had been reported in the
condensed statement of operations for the six months ended June 30, 1999.
12
<PAGE>
Liquidity and Capital Resources
Cash and short-term investments totaled $12.6 million at June 30, 2000,
compared to $17.9 million at December 31, 1999. At June 30, 2000, the Company's
funds were invested in corporate debt obligations and money market funds.
Net cash used in operating activities of $3.7 million during the six months
ended June 30, 2000 was primarily a result of the net loss before extraordinary
gain of $2.2 million for the six months ended June 30, 2000. In addition, there
was a cash outflow of $0.5 million in the form of an advance payment to Bebig
(manufacturer of Symmetra seeds) and $0.4 million in increased inventory to
support current sales and demand levels.
Net cash provided by investing activities was $7.0 million during the six
months ended June 30, 2000 due primarily to net sales of short-term investments.
Net cash used for financing activities was $1.6 million during the six
months ended June 30, 2000, as a result of the $1.7 million used to repurchase
$3.0 million in aggregate principal amount of Notes.
In October 1996, the Company completed the sale of $69.0 million of its 6%
Convertible Subordinated Notes due October 15, 2003 (the "Notes"). Through June
2000, the Company repurchased a total of $54.6 million in aggregate principal
amount of its Notes resulting in an outstanding principal balance of the Notes
at June 30, 2000 of $14.4 million. The Company is considering from time to time
additional repurchases of its Notes. Any repurchases of Notes may be made on the
open market or in privately negotiated transactions. The Company plans to fund
such purchases from its working capital.
The Board of Directors of the Company authorized a Common Stock repurchase
program in 1999 (the "Repurchase program"). The Company is authorized to
repurchase up to one million shares of the outstanding Common Stock, from time
to time, subject to prevailing market conditions. As of June 30, 2000, the
Company has repurchased approximately 240,000 shares of its Common Stock for
$573,000 as part of the Repurchase program. Purchases pursuant to the Repurchase
program may be made on the open market or in privately negotiated transactions.
The Company plans to fund such purchases from its working capital. The Company
did not repurchase any common stock during the first six months of 2000.
The Company's common stock is presently listed on the Nasdaq SmallCap
Market ("Nasdaq SmallCap") under the symbol URMD. The Nasdaq SmallCap has
continued listing requirements that must be maintained by all the companies it
lists. The Company may not be able to comply with all of the Nasdaq SmallCap
continued listing requirements for the entire year of 2000. There is no
assurance that the Company's common stock will continue to be listed on the
Nasdaq SmallCap or that the movement of the Company's common stock from the
Nasdaq SmallCap to another stock exchange or to over-the-counter bulletin board
will not have a material adverse effect on the market value or liquidity of the
Company's common stock.
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 at least the next twelve months. The Company's future
long-term liquidity and capital requirements depend on numerous factors,
including the development of the Company's marketing capability and market
acceptance of the CaverMap Surgical Aid and the Symmetra I-125 seed. 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.
13
<PAGE>
RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving
Stock Compensation - an Interpretation of APB Opinion No. 25". FIN 44 clarifies
the application of APB Opinion No. 25 ("APB 25"), including the following:
definition of an employee for purposes of applying APB 25; the criteria for
determining whether a plan qualifies as a non-compensatory plan; the accounting
consequences of varioius modifications to the terms of previously fixed stock
options or awards; and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred after either December
15, 1998 or January 12, 2000. The Company does not expect the application of FIN
44 to have a material impact on the Company's financial position or results of
operations.
In December 1999, the U.S. Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements". SAB 101 summarizes the SEC's views in applying generally
accepted accounting principles to selected revenue recognition issues in
financial statements. In June 2000, the SEC issued Staff Accounting Bulletin
101B, an amendment to SAB 101, which delays the implementation of SAB 101. The
application of the guidance in SAB 101 will be required in the Company's fourth
quarter of 2000. The Company is currently determining the impact that SAB 101
will have on its financial position and results of operations.
14
<PAGE>
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
Certain statements contained in this Quarterly Report on Form 10-Q 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 CaverMap Surgical Aid, the Symmetra I-125
brachytherapy seed and introducer needle including the timing and extent of
sales, (ii) the continued marketing activities for the commercial launch of the
Symmetra I-125 brachytherapy seeds, (iii) the Company's planned uses for its
cash and other liquid resources, and (iv) 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, and the development of partnerships and/or strategic alliances for all
incontinence and breast care products and related assets and technology. 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 CaverMap Surgical Aid and Symmetra I-125 seeds
will gain market acceptance among physicians in the United States.
- - The uncertainty that the Company will be able to develop and maintain
an effective sales force and implement a successful marketing campaign
for the CaverMap Surgical Aid and the Symmetra I-125 brachytherapy
seed in the United States.
- - The Company's dependence on others, including the supplier of
Symmetra I-125 seeds Bebig Isotepentechnik and Umweltdiagnostik GmbH of
Berlin, Germany, for its products and raw materials and certain other
components of its products, including certain materials available only
from single sources.
- - The uncertain protection afforded the Company by its patents and/or
other intellectual property rights relating to the Company's products.
- - The uncertainty as to whether the Company will be able to 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 and 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.
- - The uncertainty of the size of the potential markets of the Company's
products.
Other relevant risks are described in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 under the headings
"Forward-Looking Statements and Associated Risks" and "Risk Factors", and
are incorporated herein by reference.
15
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company does not use derivative financial instruments. Less than 10% of
the Company's sales in the first six months of 2000 were to foreign customers,
primarily in Europe. All such foreign sales are denominated in U.S. dollars. The
Company believes, based on a hypothetical ten percent adverse movement in
foreign currency exchange rates for the European Euro, the potential losses in
future earnings and cash flows are immaterial, although the actual effects may
differ materially from the hypothetical analysis.
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 12, 2000 the Company held its Special Meeting of Stockholders to
consider and vote upon the following three proposals:
(1) A proposal to elect two Class III directors of the Company, each to
hold a three-year term.
(2) A proposal to adopt the Company's Second Amended and Restated 1991
Stock option Plan.
(3) A proposal to ratify the appointment of PricewaterhouseCoopers LLP
as independent accountants of the Company for the year ended
December 31, 2000.
Results with respect to the voting on each of the above proposals were as
follows:
Withheld
For Authority
------------- -------------
(1) Election of Directors
John G. Simon 3,649,604 174,256
Richard A. Sandberg 3,645,091 178,769
For Against Abstain
------------- --------- ----------
(2) Adoption of the Company's
Second Amended and
Restated 1991 Stock
Option Plan 3,536,428 271,745 15,687
For Against Abstain
------------- --------- ----------
(3) Ratification of
PricewaterhouseCoopers
LLP as independent
accountants 3,801,308 16,587 5,965
Item 6. Exhibits
27 Financial Data Schedule
16
<PAGE>
Page 17
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 14, 2000 /s/ Daniel Muscatello
-------------- ----------------------------------
Daniel Muscatello, President and
Chief Executive Officer
Date: August 14, 2000 /s/ Domenic C. Micale
-------------- -----------------------------------
Domenic C. Micale, Vice President
of Finance and Administration, and
Treasurer
<PAGE>
Page 18
