-----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, QHpZV/jSJxHERNX10k2qZ3VJCsX7+WjGIPIxXU5r2vQSA9+bW+swXSETy3uKjADm N/s1kkwxnm14I1zBAs3fhg== 0000927016-98-001872.txt : 19980508 0000927016-98-001872.hdr.sgml : 19980508 ACCESSION NUMBER: 0000927016-98-001872 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980507 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NITINOL MEDICAL TECHNOLOGIES INC CENTRAL INDEX KEY: 0001017259 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 954090463 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21001 FILM NUMBER: 98613008 BUSINESS ADDRESS: STREET 1: 263 SUMMER STREET CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6177370930 MAIL ADDRESS: STREET 1: 263 SUMMER STREET CITY: BOSTON STATE: MA ZIP: 02210 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 March 31, 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: 0-21001 Nitinol Medical Technologies, Inc. ---------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 95-4090463 - ------------------------------- ------------ (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 27 Wormwood Street, Boston, Massachusetts 02210 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) 617-737-0930 ------------ (Registrant's Telephone Number, Including Area Code) N/A --- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 April 29, 1998, there were 9,824,826 shares of Common Stock, $.001 par value per share, outstanding. NITINOL MEDICAL TECHNOLOGIES, INC. INDEX -----
Part 1. Financial Information Page Number --------------------- ----------- Item 1. Financial Statements. Consolidated Balance Sheets at December 31, 1997 1 and March 31, 1998 Consolidated Statements of Operations for the 3 Three Months Ended March 31, 1998 and 1997 Consolidated Statements of Cash Flows for the 4 Three Months Ended March 31, 1998 and 1997 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of 10 Financial Condition and Results of Operations. Item 3. Quantitative and Qualitative Disclosures about 14 Market Risk. Part II. Other Information ----------------- Item 2. Changes in Securities and Use of Proceeds. 15 Item 6. Exhibits and Reports on Form 8-K. 15 Signatures 16 Exhibits 17 Exhibit 27.1 Financial Data Schedule
PART I FINANCIAL INFORMATION Item 1. Financial Statements. NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AT AT MARCH 31, DECEMBER 31, ASSETS 1998 1997 ------------ ------------- Current assets: Cash and cash equivalents......................................................... $ 6,062,275 $ 5,561,445 Marketable securities............................................................. 19,138,836 20,822,405 Accounts receivable, net of allowances for doubtful accounts of $145,000 and $125,000 as of March 31, 1998 and December 31, 1997, respectively................................................. 2,576,526 2,317,408 Inventories....................................................................... 1,204,482 1,071,265 Prepaid expenses and other current assets......................................... 1,197,357 1,110,271 ------------ ------------ Total current assets............................................. 30,179,476 30,882,794 ------------ ------------ Property and equipment, at cost: Laboratory and computer equipment................................................. 1,131,682 1,091,380 Leasehold improvements............................................................ 1,124,258 1,135,583 Equipment under capital lease..................................................... 948,155 948,155 Office furniture and equipment.................................................... 151,701 143,640 ------------ ------------ 3,355,796 3,318,758 Less-Accumulated depreciation and amortization.................................... 975,117 845,512 ------------ ------------ 2,380,679 2,473,246 ------------ ------------ Investments in long-term marketable securities............................................ 2,772,174 1,478,058 Other assets.............................................................................. 227,105 171,415 ------------ ------------ $ 35,559,434 $ 35,005,513 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable.................................................................. $ 545,662 $ 166,248 Accrued expenses.................................................................. 859,712 986,128 Current portion of capital lease obligation....................................... 169,811 168,736 Deferred revenue.................................................................. -- 300,000 ------------ ------------ Total current liabilities........................................ 1,575,185 1,621,112 ------------ ------------ Capital lease obligation, net of current portion.......................................... 568,003 612,458 Stockholders' equity Common stock, $.001 par value- Authorized-30,000,000 shares Issued and outstanding-9,823,186 shares at March 31, 1998 and December 31, 1997.............................................. 9,824 9,824 Additional paid-in capital............................................................. 36,610,997 36,610,997
Accumulated deficit................................... (3,204,575) (3,848,878) ------------ ------------ Total stockholders' equity.................... 33,416,246 32,771,943 ------------ ------------ $ 35,559,434 $ 35,005,513 ============ ============
The accompanying Notes are an integral part of these Consolidated Financial Statements. -2- NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 1997 ----------- ----------- Revenues: Product sales......................................................... $ 2,608,885 $ 1,899,043 License fees.......................................................... 768,299 250,000 Product development................................................... 1,453 30,640 ----------- ----------- 3,378,637 2,179,683 ----------- ----------- Expenses: Cost of product sales................................................. 1,019,679 895,593 Research and development.............................................. 764,435 752,753 General and administrative............................................ 680,201 676,226 Selling and marketing................................................. 320,897 137,741 ----------- ----------- 2,785,212 2,462,313 ----------- ----------- Income (loss) from operations.................................... 593,425 (282,630) ----------- ----------- Interest expense........................................................... (15,727) (9,430) Interest income............................................................ 398,605 411,921 ----------- ----------- 382,878 402,491 ----------- ----------- Income before provision for income taxes......................... 976,303 119,861 Provision for income taxes................................................. 332,000 40,5000 ----------- ----------- Net income............................................................ $ 644,303 $ 79,361 =========== =========== Basic net income per common share.......................................... $ 0.07 $0.01 =========== =========== Weighted average common shares outstanding................................. 9,823,186 9,437,676 =========== =========== Diluted net income per common share........................................ $ 0.06 $ 0.01 =========== =========== Diluted weighted average common shares outstanding......................... 10,952,494 10,938,656 =========== ===========
The accompanying Notes are an integral part of these Consolidated Financial Statements. -3- NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 1997 -------------- -------------- Cash flows from operating activities: Net income.................................................................. 644,303 79,361 Adjustments to reconcile net income to net cash provided by (used in) operating activities- Depreciation and amortization....................................... 131,994 111,170 Changes in assets and liabilities- Accounts receivable........................................ (259,117) (13,466) Inventories................................................ (133,217) (181,153) Prepaid expenses and other current assets.................. (87,086) (387,618) Accounts payable........................................... 379,414 (34,816) Accrued expenses........................................... (126,416) (96,387) Deferred revenue........................................... (300,000) -- -------------- -------------- Net cash provided by (used in) operating activities... 249,875 (522,909) -------------- -------------- Cash flows from investing activities: Maturities of marketable securities......................................... 389,453 1,617,884 Purchases of property and equipment......................................... (37,038) (81,091) Decrease in other assets.................................................... (58,080) (65,963) -------------- -------------- Net cash provided by investing activities............. 294,335 1,470,830 -------------- -------------- Cash flows from financing activities: Payments of capital lease obligations....................................... (43,380) (24,376) Exercise of stock options................................................... -- 59,998 -------------- -------------- Net cash provided by (used in) financing activities... (43,380) 35,622 -------------- -------------- Net increase in cash and cash equivalents......................................... 500,830 983,543 Cash and cash equivalents, beginning of period.................................... 5,561,445 4,082,486 -------------- -------------- Cash and cash equivalents, end of period.......................................... $ 6,062,275 $ 5,066,029 ============== ============== Supplemental disclosure of cash flow information: Cash paid during the period for- Interest........................................................... $ 15,727 $ 9,430 ============== ============== Taxes.............................................................. $ 7,824 $ 7,500 ============== ============== Supplemental disclosure of non-cash investing and financial transactions: Equipment under capital lease obligation................................... $ -- $ 24,079 ============== ==============
The accompanying Notes are an integral part of these Consolidated Financial Statements. -4- NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Operations Nitinol Medical Technologies, Inc. (the Company) designs, develops, and markets innovative medical devices that utilize advanced technologies and are delivered by minimally invasive procedures. The Company's products are designed to offer alternative approaches to existing complex treatments, thereby reducing patient trauma, shortening procedure, hospitalization and recovery times and lowering overall treatment costs. The Company's patented medical devices include self-expanding stents, vena cava filters and septal repair devices. At this time, the Company's stents have been commercially launched in Europe and in the United States for certain indications, its vena cava filters are marketed in the United States and abroad, and its CardioSEAL Septal Occluder is in the clinical trials stage in the United States and is sold commercially in Europe and other international markets. The Company is subject to a number of risks similar to those of other companies in this stage of development, including uncertainties regarding the development of commercially viable products, competition from alternative procedures and larger companies, dependence on key personnel and government regulation. 2. Interim Financial Statements The accompanying Consolidated Financial Statements as of March 31, 1998 and for the three month period then ended are unaudited. In management's opinion, these unaudited Consolidated Financial Statements have been prepared on the same basis as the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the period ending December 31, 1997 as filed with the Securities and Exchange Commission on March 17, 1998 and include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for such interim periods. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results expected for the fiscal year ending December 31, 1998. 3. Reclassifications Certain prior period amounts have been reclassified to conform to current period's presentation. 4. Cash and Cash Equivalents and Investments in Marketable Securities -5- NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In accordance with Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities, the Company has classified its marketable securities and long-term investments as held-to-maturity. Held-to-maturity securities represent those securities which the Company has the intent and ability to hold to maturity and which are reported at amortized cost. The Company considers all investments with maturities of 90 days or less from the date of purchase to be cash equivalents. Investments with maturities greater than one year from the balance sheet date are considered to be long-term investments. Cash and cash equivalents, which are carried at cost and approximate market, consist of the following at:
MARCH 31, DECEMBER 31, 1998 1997 ---- ---- Cash $1,112,790 $1,626,074 Cash equivalents-- Commercial paper 3,966,017 2,964,195 Money market 983,468 971,176 ---------- ---------- $6,062,275 $5,561,445 ---------- ----------
Marketable securities, with a weighted average maturity of approximately six months and three months at March 31, 1998 and December 31, 1997, respectively, are carried at cost and approximate market and consist of the following at:
MARCH 31, DECEMBER 31, 1998 1997 ---- ---- Held-to-maturity-- Eurodollar bonds $ 9,876,571 $10,619,598 Commercial paper 5,000,000 5,985,895 Corporate debt securities 2,732,301 2,388,681 Zero coupon bonds 1,179,987 1,162,233 Medium-term notes 349,977 665,998 ----------- ----------- $19,138,836 $20,822,405 =========== ===========
Long-term investments, with a weighted average maturity of approximately 15 months and 15 1/2 months at March 31, 1998 and December 31, 1997, respectively, are carried at cost and approximate market and consist of the following at: -6- NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MARCH 31, DECEMBER 31, 1998 1997 ---- ---- Held-to-maturity-- Eurodollar bonds $1,665,197 $ Corporate debt securities 604,914 975,590 Medium-term notes 502,063 502,468 ---------- ---------- $2,772,174 $1,478,058 ========== ==========
In addition, the following amounts of interest receivable generated from the Company's cash and cash equivalents, marketable securities, and long- term investments are included in prepaid expenses and other current assets and in other assets in the accompanying balance sheets at:
MARCH 31, DECEMBER 31, 1998 1997 ---- ---- Short-term interest receivable $561,480 $476,559 Long-term interest receivable 24,403 5,676 -------- -------- $585,883 $482,235 ======== ========
5. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following at:
MARCH 31, DECEMBER 31, 1998 1997 ---- ---- Components $ 591,524 $ 625,381 Finished Goods 612,958 445,884 ---------- ---------- $1,204,482 $1,071,265 ========== ==========
Finished goods consist of materials, labor and manufacturing overhead. -7- NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 6. Depreciation and Amortization The Company provides for depreciation and amortization by charges to operations using the straight-line method, which allocates the cost of property and equipment over the following estimated useful lives:
Asset Classification Estimated Useful Life -------------------- --------------------- Laboratory and computer equipment 3-7 Years Leasehold improvements Life of Lease Equipment under capital leases Life of Lease Office furniture and equipment 5-10 Years
7. Net Income per Common and Common Equivalent Share In 1997, the Company adopted SFAS No. 128, Earnings per Share, effective December 15, 1997. SFAS No. 128 establishes standards for computing and presenting earnings per share and applies to entities with publicly held common stock or potential common stock. Calculations of basic and diluted net income per share are as follows:
March 31, 1998 1997 ---- ---- Net income available to common stockholders $ 644,303 $ 79,361 ============ =========== Weighted average common shares outstanding 9,823,186 9,437,676 Potential common stock pursuant to stock options 1,129,308 1,500,980 ------------ ----------- Diluted weighted average shares outstanding 10,952,494 10,938,656 ============ =========== Basic income per share $ .07 $ .01 ============ =========== Diluted income per share $ .06 $ .01 ============ ===========
8. Lease Finance Facility Agreement In June 1997, the Company entered into a $1.0 million lease finance facility agreement with a bank under which the Company leases equipment at an interest -8- NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) rate that is 200 basis points above the bank's cost of funds. Leases under this agreement are payable in equal monthly installments over a period of 36-60 months and expire through March 2003. Borrowings of $376,000 and $250,000 have been made under this agreement by the Company and its affiliate, Image Technologies Corporation ("ITC"), respectively, of which $332,000 and $218,000 was outstanding as of March 31, 1998 for the Company and ITC, respectively. On April 1, 1998, the Company entered into a new agreement with the bank that provides the Company and ITC with similar terms and the option to borrow up to $750,000 through March 31, 2003. No borrowings have been made under this new agreement. The Company also has outstanding borrowings of $406,000 under an expired lease finance facility agreement with the same bank. The Company guarantees the outstanding leases of ITC under these agreements. 9. Accrued Expenses Accrued expenses consist of the following at:
MARCH 31, DECEMBER 31, 1998 1997 ---- ---- Income taxes payable $316,176 $ (8,000) Royalties 146,196 116,012 Payroll and payroll related 90,081 252,425 Leasehold improvements -- 48,553 Other accrued expenses 307,259 577,138 -------- -------- $859,712 $986,128 ======== ========
-9- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This Quarterly Report on Form 10-Q, other than the historical financial information, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements involve known and unknown risks, uncertainties or other factors which may cause actual results, performance or achievement of the Company to be materially different from any future results, performance, or achievement expressed or implied by such forward-looking statements. Factors that might cause such a difference include uncertainties in market demand and acceptance, government regulation and approvals, and intellectual property rights and litigation, the impact of healthcare reform programs and competitive products and pricing, risks associated with technology and product development and commercialization, potential product liability, management of growth and dependence on significant corporate relationships and other risks detailed in the Company's Annual Report on Form 10-K for the period ending December 31, 1997 as filed with the Securities and Exchange Commission on March 17, 1998. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31, 1997 Revenues. Revenues for the three months ended March 31, 1998 increased to $3.4 million from $2.2 million for the three months ended March 31, 1997 (a 55% increase). Product sales increased to $2.6 million for the three months ended March 31, 1998 from $1.9 million for the three months ended March 31, 1997 (a 37% increase) primarily due to increased unit sales of vena cava filters and CardioSEAL Septal Occluders during the three months ended March 31, 1998 as compared with the three months ended March 31, 1997. License fees for the three months ended March 31, 1998 increased to $768,000 from $250,000 for the three months ended March 31, 1997 (a 207% increase). Specifically, the Company recorded $375,000 in minimum quarterly license fees, $300,000 in milestone payments and $93,000 in cost reduction incentives from Boston Scientific Corporation ("Boston Scientific") related to its stent technology in the three months ended March 31, 1998. The three months ended March 31, 1997 included $250,000 of minimum royalty payments. Product development revenues from Boston Scientific (which consist of reimbursement of certain costs incurred by the Company) decreased to $1,500 for the three months ended March 31, 1998 from $31,000 for the three months ended March 31, 1997 (a 95% decrease), due to the completion of the Company's transfer of its stent technology to Boston Scientific in November 1995, which resulted in a significant reduction of stent development costs incurred by the Company on behalf of Boston Scientific. Cost of Product Sales. Cost of product sales increased to $1.0 million for the three months ended March 31, 1998 from $896,000 for the three months ended March 31, 1997 (a 12% increase) primarily due to the increase in unit sales of the vena cava -10- filter and CardioSEAL Septal Occluder. Cost of product sales, as a percent of product sales, decreased to 38% for the three months ended March 31, 1998 from 47% for the three months ended March 31, 1997. This decrease primarily reflects the impact of the Company's reorganization of its vena cava filter operations during the second quarter of 1997, which has resulted in lower per unit manufacturing costs for the vena cava filter. Research and Development. Research and development expenses increased to $764,000 for the three months ended March 31, 1998 from $753,000 for the three months ended March 31, 1997 (a 1% increase). The increase reflects increased activity in the Company's development programs for vena cava filters and other products under development. Increased expenses resulted primarily from increases in personnel and related costs and engineering expenses. The Company received reimbursement from Boston Scientific for $1,500 and $31,000 of these expenses in the three months ended March 31, 1998 and 1997, respectively, which amounts are also included in revenues. General and Administrative. General and administrative expenses for the three months ended March 31, 1998 were $680,000 and remained relatively consistent with the $676,000 of expenses recorded in the three month period ended March 31, 1997 (a 1% increase). The increase is the result of the Company's expanded scope of operations. Selling and Marketing. Selling and marketing expenses increased to $321,000 for the three months ended March 31, 1998 from $138,000 for the three months ended March 31, 1997 (a 133% increase). The increase related primarily to marketing activities related to the CardioSEAL Septal Occluder in connection with the commencement of commercial sales of this product in Europe and other international markets in June 1997. Interest Income, Net. Interest income, net was $383,000 for the three months ended March 31, 1998 as compared to $402,000 for the three months ended March 31, 1997 (a 5% decrease). The decrease was primarily a result of the Company's investments earning slightly lower interest rates and lower average cash and investment balances during the three months ended March 31, 1998, as compared to the three months ended March 31, 1997. Income Taxes. The Company had a provision for income taxes of $332,000 and $40,500 for the three months ended March 31, 1998 and 1997, respectively, based on an operating income of $976,000 and $120,000 for the respective periods and an estimated effective tax rate of 34%. LIQUIDITY AND CAPITAL RESOURCES In the three months ended March 31, 1998, the Company's operations provided cash of $250,000. In the three months ended March 31, 1997, the Company's operations utilized cash of $523,000, which was used primarily for working capital. -11- Purchases of property and equipment for use in its research and development, manufacturing and general and administrative activities amounted to $37,000 and $81,000 for the three months ended March 31, 1998 and 1997, respectively. In June 1997, the Company entered into a $1.0 million equipment lease line of credit agreement with the bank without covenants. Borrowings of $376,000 and $250,000 have been made under this agreement by the Company and its affiliate, Image Technologies Corporation ("ITC"), respectively, of which $332,000 and $218,000 was outstanding as of March 31, 1998, respectively. On April 1, 1998, the Company entered into a new agreement with the bank that provides the Company and ITC with similar terms and the option to borrow up to $750,000 through March 31, 2003. No borrowings have been made under this new agreement. The Company also has outstanding borrowings of $406,000 under an expired lease finance facility agreement with the same bank. The Company guarantees the outstanding leases of ITC under these agreements. In connection with the Company's acquisition of a 23% ownership interest in ITC, the Company extended to ITC a credit line of up to $2.0 million of senior debt. The Company anticipates that it will begin funding the operations of ITC in May 1998 through this credit line for a period of approximately twelve months. Any credit extended to ITC under this credit line will bear interest at a rate equal to ten percent (10%) per annum. The Company is party to various other significant contractual arrangements, including salaries and fees for current employees and consultants, the number of which is likely to increase as additional agreements are entered into and additional personnel are retained. The Company also has committed to purchase certain minimum quantities of the vena cava filter from a supplier through June 2001. See Note 8 to the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 17, 1998. All of these arrangements require cash payments by the Company over varying periods of time. Certain of these arrangements are cancelable on short notice and certain require termination or severance payments as part of any early termination. The Company has reviewed its internal computer systems and their capability of recognizing the year 2000 and years thereafter. The Company expects that any costs related to ensuring that systems will be year 2000 compliant will not be material to the financial condition or results of operations of the Company. The Company believes that its existing resources and cash flow from current operations will be sufficient to fund its current level of operations and planned new product development, including increased working capital requirements and capital expenditures, for the foreseeable future. The Company expects to expend substantial resources to complete development of the Company's products, to seek regulatory clearances or approvals, to build its marketing, sales and manufacturing organizations and to conduct further research and development. -12- The Company may require additional funds for its research and product development programs, preclinical and clinical testing, operating expenses, regulatory processes, manufacturing and marketing programs and potential licenses and acquisitions. Any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants. The Company's capital requirements will depend on numerous factors, including the sales of its products, the progress of its research and development programs, the progress of preclinical and clinical testing, the time and cost involved in obtaining regulatory approvals, the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, competing technological and market developments, developments and changes in the Company's existing research, licensing and other relationships and the terms of any collaborative, licensing and other arrangements that the Company may establish. -13- Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not Applicable -14- PART II OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds. ----------------------------------------- (c) Recent Sales of Unregistered Securities. During the quarterly period --------------------------------------- ended March 31, 1998, the Company granted options to employees and directors to purchase an aggregate of 160,100 shares, including: (i) incentive stock options under the 1996 Stock Option Plan to purchase 100,100 shares at a weighted average exercise price of $7.49; (ii) non-qualified stock options under the 1996 Stock Option Plan for Non- Employee Directors to purchase 10,000 shares at a weighted average exercise price of $7.38; (iii) non-qualified stock options under the 1996 Stock Option Plan to purchase 25,000 shares at a weighted average exercise price of $10.50; and iv) non-qualified stock options to purchase 25,000 shares at an exercise price of $10.50. (d) Uses of Proceeds from Registered Securities. There has been no change ------------------------------------------- to the information previously provided by the Company on its Quarterly Report on Form 10-Q for the period ended September 30, 1997, as amended, relating to securities sold by the Company pursuant to its Registration Statement on Form S-1 (Registration No. 333-06463), which was declared effective on September 27, 1996. Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits. -------- 27.1 Financial Data Schedule (b) Reports on Form 8-K. -------------------- The Company did not file any Reports on Form 8-K during the quarter ended March 31, 1998. -15- 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. NITINOL MEDICAL TECHNOLOGIES, INC. Date: May 6, 1998 By: /s/Thomas M. Tully ------------------------------------------- Thomas M. Tully President and Chief Executive Officer Date: May 6, 1998 By: /s/Theodore I. Pincus ------------------------------------------- Theodore I. Pincus Executive Vice President and Chief Financial Officer -16- EXHIBIT INDEX Exhibits - -------- 27.1 Financial Data Schedule -17- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 6,062,275 21,911,010 2,721,526 145,000 1,204,482 30,179,476 3,355,796 975,117 35,559,434 1,575,185 0 0 0 9,824 33,406,422 35,559,434 2,608,885 3,378,637 1,019,679 1,765,533 0 0 (382,878) 976,303 332,000 644,303 0 0 0 644,303 .07 .06
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