-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BNa3cN0hvGeDXjCz7ohbEaQM/xEDmFKA0W81KT0nyNYtBv34cCQwc85u3bjldZUn /9Tjr+YF+XdqONewGVDopA== 0000950124-98-006783.txt : 19981123 0000950124-98-006783.hdr.sgml : 19981123 ACCESSION NUMBER: 0000950124-98-006783 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 DATE AS OF CHANGE: 19981120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KENSEY NASH CORP CENTRAL INDEX KEY: 0001002811 STANDARD INDUSTRIAL CLASSIFICATION: 3841 IRS NUMBER: 363316412 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27120 FILM NUMBER: 98753127 BUSINESS ADDRESS: STREET 1: 55 E UWCHLAN AVE STREET 2: STE 204 CITY: EXTON STATE: PA ZIP: 19341 BUSINESS PHONE: 6105947156 MAIL ADDRESS: STREET 1: 55 EAST UWCHLAN AVE STREET 2: STE 201 CITY: EXTON STATE: PA ZIP: 19341 10-Q 1 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: SEPTEMBER 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From __________ to __________. Commission File Number: 0-27120 KENSEY NASH CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 36-3316412 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) MARSH CREEK CORPORATE CENTER, 55 EAST UWCHLAN AVENUE, SUITE 204, EXTON, PENNSYLVANIA 19341 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (610) 524-0188 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of October 31, 1998, there were outstanding 7,459,272 shares of Common Stock, par value $.001, of the registrant. 1 2 KENSEY NASH CORPORATION QUARTER ENDED SEPTEMBER 30, 1998 INDEX
PAGE ---- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of September 30, 1998 (Unaudited) and June 30, 1998 ....................... 3 Condensed Consolidated Statements of Operations for the three months ended September 30, 1998 and 1997 (Unaudited) ............ 4 Condensed Consolidated Statements of Stockholders' Equity as of September 30, 1998 (Unaudited) and June 30, 1998 .............................. 5 Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 1998 and 1997 (Unaudited) ............ 6 Notes to Condensed Consolidated Financial Statements (Unaudited) ............... 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .................................. 9 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................................... 13 SIGNATURES ....................................................................................... 14
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS KENSEY NASH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
- - ------------------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, JUNE 30, ASSETS 1998 1998 CURRENT ASSETS: (Unaudited) Cash and cash equivalents $ 537,055 $ 1,407,684 Short-term investments 6,206,386 6,368,866 Trade receivables 2,006,103 1,369,960 Royalties receivable (Note 2) 721,967 645,784 Other receivables (including approximately $66,000 and $59,000 at September 30, 1998 and June 30, 1998, respectively, due from employees) 369,760 225,424 Inventory (Note 3) 844,363 1,027,326 Prepaid expenses and other 313,545 200,169 ------------ ------------ Total current assets 10,999,179 11,245,213 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT, AT COST: Leasehold improvements 4,009,064 4,006,066 Machinery, furniture and equipment 3,843,645 3,599,827 Construction in progress 207,160 191,154 ------------ ------------ Total property, plant and equipment 8,059,869 7,797,047 Accumulated depreciation (3,088,070) (2,843,785) ------------ ------------ Net property, plant and equipment 4,971,799 4,953,262 ------------ ------------ OTHER ASSETS: Restricted investments (Note 4) 1,914,418 1,914,418 Property under capital leases, net 52,544 61,181 Acquired patents, net of accumulated amortization of $190,937 and $127,291 at September 30, 1998 and June 30, 1998, respectively 3,801,472 3,865,118 ------------ ------------ Total other assets 5,768,434 5,840,717 ------------ ------------ TOTAL $ 21,739,412 $ 22,039,192 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 791,370 $ 639,605 Accrued expenses 552,375 551,573 Current portion of line of credit, obligation under patent acquisition agreement and capital lease obligations 638,379 577,891 Deferred revenue 48,700 53,120 ------------ ------------ Total current liabilities 2,030,824 1,822,189 ------------ ------------ DEFERRED REVENUE - ROYALTIES (Note 2) 1,276,874 1,979,580 LINE OF CREDIT, OBLIGATION UNDER PATENT ACQUISITION AGREEMENT and OBLIGATION UNDER CAPITAL LEASES, long-term portion 2,197,672 2,373,960 ------------ ------------ Total liabilities 5,505,370 6,175,729 ------------ ------------ COMMITMENTS AND CONTINGENCIES (Note 4) STOCKHOLDERS' EQUITY: Preferred stock, $.001 par value, 100,000 shares authorized, no shares issued or outstanding at September 30, 1998 and June 30, 1998 Common stock, $.001 par value, 25,000,000 shares authorized, 7,459,272 shares issued and outstanding at September 30, 1998 and June 30, 1998 7,459 7,459 Capital in excess of par value 37,597,381 37,597,381 Accumulated deficit (21,370,798) (21,741,377) ------------ ------------ Total stockholders' equity 16,234,042 15,863,463 ------------ ------------ TOTAL $ 21,739,412 $ 22,039,192 ============ ============
See notes to condensed consolidated financial statements. 3 4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - - -------------------------------------------------------------------------------------- THREE MONTHS ENDED SEPTEMBER 30, ----------------------------------- 1998 1997 REVENUES (Notes 1 and 2): Net sales $ 1,376,978 $ 534,061 Research and development 769,108 733,331 Royalty income 1,405,411 297,898 ------------- ------------- Total revenues 3,551,497 1,565,290 ------------- ------------- OPERATING COSTS AND EXPENSES: Cost of products sold 1,278,373 816,090 Research and development 1,397,771 1,185,385 Selling, general and administrative 573,529 364,217 ------------- ------------- Total operating costs and expenses 3,249,673 2,365,692 ------------- ------------- INCOME (LOSS) FROM OPERATIONS 301,824 (800,402) ------------- ------------- OTHER INCOME: Interest income 134,713 133,665 Interest expense (65,959) (14,584) Other 1 1,641 ------------- ------------- Total other income - net 68,755 120,722 ------------- ------------- INCOME (LOSS) BEFORE INCOME TAXES 370,579 (679,680) Provision for Income Taxes (Note 5) ------------- ------------- NET INCOME (LOSS) $ 370,579 $ (679,680) ============= ============= EARNINGS (LOSS) PER COMMON SHARE and EARNINGS (LOSS) PER COMMON SHARE - $ 0.05 $ (0.09) ============= ============= assuming dilution (Note 1) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 1) 7,465,754 7,205,400 ============= =============
See notes to condensed consolidated financial statements. 4 5
KENSEY NASH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - - ---------------------------------------------------------------------------------------------------------------------------------- CAPITAL COMMON STOCK IN EXCESS -------------------------- OF PAR ACCUMULATED SHARES AMOUNT VALUE DEFICIT TOTAL BALANCE, JUNE 30, 1997 7,198,251 $ 7,198 $ 34,203,807 $ (22,084,059) $ 12,126,946 Exercise of stock options 61,021 61 556,174 556,235 Shares issued under Patent Acquisition Agreement 200,000 200 2,837,400 2,837,600 Net income 342,682 342,682 ----------- -------- ------------- --------------- ------------- BALANCE, JUNE 30, 1998 7,459,272 7,459 37,597,381 (21,741,377) 15,863,463 Net income 370,579 370,579 ----------- -------- ------------- --------------- ------------- BALANCE, SEPTEMBER 30, 1998 (Unaudited) 7,459,272 $ 7,459 $ 37,597,381 $ (21,370,798) $ 16,234,042 =========== ======== ============= =============== =============
See notes to condensed consolidated financial statements. 5 6
KENSEY NASH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - - --------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED SEPTEMBER 30, ------------------------------ 1998 1997 OPERATING ACTIVITIES: Net income (loss) $ 370,579 $ (679,680) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 316,568 210,577 Changes in assets and liabilities which used cash: Accounts receivable (856,662) 453,842 Prepaid expenses and other current assets (113,376) (63,300) Inventory 182,963 (88,584) Accounts payable and accrued expenses 152,567 (415,538) Deferred revenue (707,126) (70,432) ----------- ----------- Net cash used in operating activities (654,487) (653,115) ----------- ----------- INVESTING ACTIVITIES: Additions to property, plant and equipment (262,822) (145,456) Sale of investments 162,480 2,819,550 ----------- ----------- Net cash (used in) provided by investing activities (100,342) 2,674,094 ----------- ----------- FINANCING ACTIVITIES: Principal payments under capital leases (9,483) (12,174) Repayments of patent acquisition obligation (106,317) Exercise of stock options 152,290 ----------- ----------- Net cash (used in) provided by financing activities (115,800) 140,116 ----------- ----------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (870,629) 2,161,095 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,407,684 868,180 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 537,055 $ 3,029,275 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 65,959 $ 14,584 =========== =========== Cash paid for income taxes $ $ =========== ===========
See notes to condensed consolidated financial statements. 6 7 KENSEY NASH CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- CONDENSED CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PRESENTATION The condensed consolidated balance sheet at June 30, 1998 and the condensed consolidated statement of stockholders' equity at June 30, 1998 have been condensed from the audited financial statements at that date. The condensed consolidated balance sheet at September 30, 1998, the condensed consolidated statements of operations for the three months ended September 30, 1998 and 1997 and the condensed consolidated statements of cash flows for the three months ended September 30, 1998 and 1997 have been prepared by Kensey Nash Corporation (the "Company") and have not been audited by the Company's Independent Auditors. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 1998 and for all periods presented have been made. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 1998 consolidated financial statements filed with the Securities and Exchange Commission on Form 10-K. The results of operations for the period ended September 30, 1998 are not necessarily indicative of operating results for the full year. CASH AND CASH EQUIVALENTS Cash and cash equivalents represent cash in banks and short-term investments having an original maturity of less than three months. EXPORT SALES Export sales from the Company's U.S. operations to unaffiliated customers in Europe totaled $29,910 and $22,485 for the three months ended September 30, 1998 and 1997, respectively. EARNINGS PER SHARE Earnings per share are calculated in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings per Share, which requires the Company to report both basic and diluted earnings per share ("EPS"). Basic and diluted EPS are computed using the weighted average number of shares of common stock outstanding, with common equivalent shares from options included in the diluted computation when their effect is dilutive. All previously disclosed earnings per share data have been recalculated to reflect the provisions of SFAS No. 128. NOTE 2 -- DEFERRED REVENUE - ROYALTIES Upon receipt of pre-market approval for the 8 French ("F") size Angio-Seal device (the "Angio-Seal") from the Food and Drug Administration (the "FDA") on September 30, 1996, the Company received a $3 million advance on future royalties under the Company's licensing agreement (the "Licensing Agreement") with its Strategic Alliance Partner. Such advance has been recorded as deferred revenue. The Licensing Agreement provides for certain minimum royalty payments ("Minimum Royalty") during the first five years after receiving FDA approval (each royalty year begins on October 1 and ends on September 30). As stipulated in the Licensing Agreement, the $3 million advance will be reduced in each period by 50% of royalties earned in excess of the Minimum Royalty in any royalty year. The remainder of royalties earned will be received as cash proceeds by the Company. At September 30, 1998, the Company had 7 8 exceeded the first and second royalty year (periods ended September 30, 1997 and September 30, 1998) Minimum Royalties by $352,310 and $3,093,942, respectively. The deferred revenue balance has been reduced by 50% of such total excess, to $1,276,874. As the Company cannot reasonably estimate the excess, if any, of future royalty payments over the Minimum Royalty in each year, the entire balance has been classified as long-term at September 30, 1998. NOTE 3 -- INVENTORY Inventory is stated at the lower of cost (determined by the average cost method which approximates first-in, first-out) or market. Inventory primarily includes the cost of material utilized in the processing of the Company's products and is as follows: SEPTEMBER 30, JUNE 30, 1998 1998 ------------- ---------- Raw materials $ 804,716 $ 971,357 Work in process 39,647 55,969 ---------- ---------- Total $ 844,363 $1,027,326 ========== ========== NOTE 4 -- COMMITMENTS AND CONTINGENCIES The Company has pledged $1,914,418 in investments as collateral to secure certain bank loans to employees which were used by such employees for the payment of taxes incurred by such employees as the result of the receipt of Common Stock in settlement of the employee stock rights. In exchange for the Company pledging collateral for such loans, each affected employee has pledged their Common Stock as collateral to the Company. The balance outstanding on such employee loans was $1,784,525 at September 30, 1998. NOTE 5 -- INCOME TAXES As of June 30, 1998, the Company had net operating loss carryforwards for federal and state tax purposes totaling $18.0 and $2.8 million, respectively. As such, no provision has been made for income taxes for the three months ended September 30, 1998. A portion of the NOL may be subject to various statutory limitations as to its usage. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company is a medical device company which has established three technology platforms; puncture closure (the Angio-Seal), biomaterials (collagen and resorbable polymers) and revascularization (the Aegis Vortex System) ("AVS"). The Company's operations are focused on the commercialization and continuing development of its proprietary principal product, the Angio-Seal Product Line, the continued expansion of its capabilities in biomaterials, and the development of its revascularization catheter system, the AVS. The Angio-Seal is a device for the sealing of arterial punctures created during diagnostic and therapeutic cardiovascular procedures such as angiography, angioplasty, atherectomy and the placement of stents. The Company participates in the puncture closure market primarily through its relationship with its Strategic Alliance Partner, which generates royalty income, research and development funding and sales revenue through the manufacture of clinical devices and components for the Angio-Seal. The Company has expanded its capabilities in absorbable biomaterials. The Company is currently manufacturing collagen products for third parties for use as delivery systems for various applications including bone growth proteins, artificial skin for burn victims and drug delivery for products in various stages of clinical trials. As a result of its absorbable polymer capabilities, the Company has entered into the orthopedic marketplace as an OEM supplier of specialized products. The Company's revascularization platform has been established to address a market opportunity in cardiology for the treatment of occluded saphenous vein bypass grafts and in-stent restenosis. The Company is developing the AVS utilizing its patent platform and in-house expertise to address these life threatening medical conditions. The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto contained elsewhere in this report. THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1997 Revenues for these periods consisted of net sales, research and development revenue, and royalty income. Revenues increased 127% to $3,551,000 in the three months ended September 30, 1998 from $1,565,000 in the three months ended September 30, 1997. Net sales of products increased 9 10 158% to $1,377,000 from $534,000 for the three months ended September 30, 1998 and 1997, respectively. Research and development revenues increased 5% to $769,000 from $733,000 for the three months ended September 30, 1998 and 1997, respectively. The increase in net sales was mainly attributable to an increase in Angio-Seal components sold to the Company's Strategic Alliance Partner, as a result of increased demand in the U.S. and European markets, as well as the Company initiating sales of commercial bioresorbable OEM products in the orthopedic marketplace. The increase in research and development revenues relates to increased activity in contract research and development from the Company's Strategic Alliance Partner for the 6F and 10F clinical trial programs and for additional sizes of and product enhancements to the Angio-Seal Product Line. Royalty income increased 372% to $1,405,000 from $298,000 in the three months ended September 30, 1998 and 1997, respectively. Approximately 75,000 Angio-Seal units were sold to end-users in the quarter ending September 30, 1998 compared to 22,000 units sold in the quarter ending September 30, 1997. The increase in royalty income reflected increased demand in the both the U.S. and European markets versus the same quarter a year earlier as well as an increase in total royalty per unit resulting from the Patent Acquisition Agreement. As the Company and its Strategic Alliance Partner continue to increase production and market the Angio-Seal in the United States and in Europe, the Company expects royalty income to become an increasingly significant source of revenue. Royalty rates are based on volume of units sold and are comparable in both the domestic and foreign licensing agreements with the Company's Strategic Alliance Partner. Cost of products sold increased 57% to $1,278,000 in the three months ended September 30, 1998 from $816,000 in the three months ended September 30, 1997. This increase primarily reflects greater net sales of products offset by favorable trends in gross margins. Research and development expense, including regulatory and clinical expense, increased 18% to $1,398,000 in the three months ended September 30, 1998 from $1,185,000 in the three months ended September 30, 1997. The Company has expanded the development of additional Angio-Seal sizes and biomaterials products, including resorbable polymers and collagen. In addition, the Company has significantly expanded its development in revascularization technology as it targets commencement of clinical trials on the AVS in the second half of fiscal year 1999. The Company expects research and development expense to continue at recent levels, if not slightly increase, as it continues development of additional sizes of the Angio-Seal, investigates and develops new products, conducts clinical trials and seeks regulatory approval for its products. Selling, general and administrative expense increased 57% to $574,000 in the three months ended September 30, 1998 from $364,000 in the three months ended September 30, 1997. This increase was primarily a result of additional legal expenses incurred due to the patent infringement suit against Perclose, Inc. which was initiated in March 1998. Interest expense increased 352% to $66,000 in the three months ended September 30, 1998 from $15,000 in the three months ended September 30, 1997. This increase was due to the Company's balance under the line of credit increasing from $500,000 to $2,000,000 as well as interest charges recorded in relation to the obligation under the Company's Patent Acquisition Agreement. Interest income increased to $135,000 in the three months ended September 30, 1998 from $134,000 in the three months ended September 30, 1997. Total cash and investment balances have remained consistent. LIQUIDITY AND CAPITAL RESOURCES Net cash used in the Company's operating activities during the three months ended September 30, 1998 and 1997 was $654,000 and $653,000, respectively. In the quarter ending September 30, 10 11 1998, changes in asset and liabilities used $1,342,000 of cash, which was offset by a net income of $371,000. In comparison, changes in asset and liabilities used $184,000 and the Company had a net loss of $680,000 in the three months ending September 30, 1997. Depreciation and amortization increased $106,000 in the three months ended September 30, 1998 from the three months ended September 30, 1997. Capital expenditures were $263,000 for the three months ended September 30, 1998, primarily representing leasehold improvements and machinery and equipment related to the continued expansion of the Company's manufacturing capabilities principally related to its collagen and polymer product lines. The Company's cash, cash equivalents and short-term investments were $6,743,000 at September 30, 1998. In addition, the Company has pledged $1,914,000 in investments (not included in the $6,743,000) as collateral to secure bank loans made to employees for the payment of taxes incurred by such employees as a result of their receipt of Common Stock in settlement of the employee stock rights at the time of the IPO. In exchange for the Company's pledging this collateral, the employees have pledged their Common Stock as collateral to the Company. The Company has a $2,000,000 bank revolving line of credit that converts to a term loan payable in 60 equal installments beginning January 1, 2000. The Company received a $3,000,000 royalty advance under the License Agreement upon receipt of FDA approval of the Angio-Seal in fiscal year 1997. This royalty advance continues to be reduced as the Company exceeded minimum royalty stipulations under the Licensing Agreement. In November 1997, the Company acquired patents under a Patent Acquisition Agreement in exchange for 200,000 shares of common stock and a series of eight quarterly cash payments, beginning on March 31, 1998, totaling $1.2 million. The patents have been recorded on the balance sheet at the value of the shares on the date of the agreement plus the present value of the $1.2 million cash and any legal and other related costs incurred to acquire such patents. The present value of the cash payments ($1.1 million) was recorded between short and long-term liabilities at December 31, 1997 and reduced to $773,000 upon payment of the third installment on September 30, 1998. YEAR 2000 COMPLIANCE The Company began work on the computer Year 2000 issue in fiscal year 1998 and expects to complete its efforts by the end of fiscal year 1999. Software applications, hardware and related technologies have been, or are in the process of being, upgraded or replaced to ensure that all systems are Year 2000 compliant. Replacing hardware or software in this fashion is considered a normal cost of doing business and is being expensed or capitalized as appropriate. The Company is also working with its significant suppliers and customers to address any impact of their Year 2000 issues on the Company. The Company does not warrant, however, that these companies' year 2000 compliance activities will be completely successful. Management does not anticipate that the costs of year 2000 compliance will have a material effect on the Company's results of operations, cash flows, or financial position. The Company anticipates that its results of operations will fluctuate for the foreseeable future due to a number of factors. Such factors include the Company's Strategic Alliance Partner's performance in the marketing, manufacturing and distribution of the Angio-Seal Product Line, the timing of future regulatory approvals in the United States and in countries outside of Europe including Japan, the results of ongoing and planned clinical trials for the Angio-Seal and other products, the acceptance of the Company's products in the marketplace and competitive products generally and in particular those designed for the sealing of arterial site punctures. The Company plans to continue to expend substantial resources to fund clinical trials to gain regulatory approvals and make additional marketing claims and to continue to expand research and development activities for the Angio-Seal, revascularization technology and biomaterials products. The Company believes cash generated from operations as well as funds available under financing arrangements with its bank will be sufficient to meet the Company's operating and capital requirements for the next twelve months. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions that a number of important factors could cause the Company's actual results for fiscal 1999 and beyond to differ materially from those in any forward-looking statements made by, or on behalf of, the Company. These important factors include, without limitation, the time, effort and priority level that the Company's Strategic Alliance Partner and its successors attach to the Angio-Seal and the Strategic Alliance Partner's ability to successfully market 11 12 and manufacture the Angio-Seal, the Company's ability to manufacture Angio-Seal components, the results of ongoing clinical trials and timing of additional regulatory approvals, announcements of technological innovations or the introduction of new products by the Company or its competitors, competition by rival developers of puncture closure devices, general business conditions in the healthcare industry and general economic conditions. Results of operations in any past period should not be considered indicative of the results to be expected for future periods. Fluctuations in operating results may also result in fluctuations in the price of the common stock. 12 13 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. A. Exhibits. None B. Reports on Form 8-K. None C. Financial Data Schedule 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KENSEY NASH CORPORATION Date: November 16, 1998 By: /s/ Joseph W. Kaufmann ------------------------------------- Joseph W. Kaufmann President and Chief Executive Officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JUN-30-1999 JUL-01-1998 SEP-30-1998 537,055 6,206,386 3,097,830 0 844,363 10,999,179 8,059,869 3,088,070 21,739,412 2,030,824 0 0 0 7,459 16,226,583 21,739,412 1,376,978 3,551,497 1,278,373 3,249,673 0 0 65,959 370,579 0 370,579 0 0 0 370,579 0.05 0.05
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