QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2011 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from __________ to __________ |
94-3287832
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||
(State or other jurisdiction of
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(I.R.S. Employer
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|
incorporation or organization)
|
Identification No.)
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|
900 Saginaw Drive
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||
Redwood City, California
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94063
|
|
(Address of Principal Executive Offices)
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(Zip Code)
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Accelerated filer [x]
|
Smaller reporting company [ ]
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PART I. FINANCIAL INFORMATION
|
||
Item 1. Condensed Financial Statements (unaudited)
|
||
a. Condensed Balance Sheets at September 30, 2011 and June 30, 2011
|
3
|
|
b. Condensed Statements of Operations for the three months ended September 30, 2011 and 2010
|
||
c. Condensed Statements of Cash Flows for the three months ended September 30, 2011 and 2010
|
||
d. Notes to Condensed Financial Statements
|
||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
||
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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||
Item 4. Controls and Procedures
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||
PART II. OTHER INFORMATION
|
||
Item 1A. Risk Factors
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||
Item 6. Exhibits
|
||
SIGNATURES
|
September 30, 2011
|
June 30, 2011
|
||||||
(Unaudited)
|
(Note 1)
|
||||||
Assets
|
|||||||
Current assets
|
|||||||
Cash and cash equivalents
|
$
|
5,912
|
$
|
7,832
|
|||
Short-term investments
|
3,162
|
1,493
|
|||||
Accounts receivable
|
262
|
327
|
|||||
Inventories
|
778
|
840
|
|||||
Prepaid expenses and other current assets
|
289
|
160
|
|||||
Total current assets
|
10,403
|
10,652
|
|||||
Property and equipment, net
|
1,271
|
714
|
|||||
Restricted cash
|
104
|
104
|
|||||
Total assets
|
$
|
11,778
|
$
|
11,470
|
|||
Liabilities and stockholders' equity
|
|||||||
Current liabilities
|
|||||||
Accounts payable
|
$
|
1,100
|
$
|
618
|
|||
Accrued compensation
|
369
|
530
|
|||||
Other accrued liabilities
|
365
|
289
|
|||||
Current portion of deferred revenue
|
738
|
738
|
|||||
Total current liabilities
|
2,572
|
2,175
|
|||||
Note payable and other non-current liabilities
|
2,362
|
433
|
|||||
Total liabilities
|
4,934
|
2,608
|
|||||
Commitments and contingencies
|
|||||||
Stockholders' equity
|
|||||||
Preferred stock, $0.001 par value: 5,000,000 shares authorized: no shares issued and outstanding at September 30, 2011 and June 30, 2011
|
—
|
—
|
|||||
Common stock, $0.001 par value: 65,000,000 shares authorized: 27,071,679 and 26,635,115 shares issued and outstanding at September 30, 2011 and June 30, 2011, respectively
|
27
|
27
|
|||||
Additional paid-in capital
|
134,320
|
133,281
|
|||||
Treasury stock at cost (66,227 shares at September 30, 2011 and June 30, 2011)
|
(596
|
) |
(596
|
) | |||
Accumulated comprehensive loss
|
(3
|
) |
(1
|
) | |||
Accumulated deficit
|
(126,904
|
) |
(123,849
|
) | |||
Total stockholders' equity
|
6,844
|
8,862
|
|||||
Total liabilities and stockholders' equity
|
$
|
11,778
|
$
|
11,470
|
Three months ended
|
|||||||
September 30,
|
|||||||
2011
|
2010
|
||||||
Net revenue
|
|||||||
Product sales, net
|
$
|
767
|
$
|
995
|
|||
License and development revenue
|
84
|
9,025
|
|||||
Royalty revenue
|
19
|
22
|
|||||
Total net revenue
|
870
|
10,042
|
|||||
Operating costs and expenses
|
|||||||
Cost of product sales
|
827
|
944
|
|||||
Research and development
|
1,557
|
1,375
|
|||||
Selling, general and administrative
|
1,541
|
1,495
|
|||||
Total operating costs and expenses
|
3,925
|
3,814
|
|||||
Income (loss) from operations
|
(3,055
|
)
|
6,228
|
||||
Interest income
|
1
|
8
|
|||||
Interest expense
|
—
|
(11
|
)
|
||||
Other income (expense), net
|
(1
|
)
|
(2
|
)
|
|||
Net income (loss)
|
$
|
(3,055
|
)
|
$
|
6,223
|
||
Basic net income (loss) per common share
|
$
|
(0.11
|
)
|
$
|
0.25
|
||
Diluted net income (loss) per common share
|
$
|
(0.11
|
)
|
$
|
0.24
|
||
Shares used in computing net income (loss) per common share
|
|||||||
Basic
|
26,806
|
24,623
|
|||||
Diluted
|
26,806
|
26,000
|
Three months ended
|
|||||||
September 30,
|
|||||||
2011
|
2010
|
||||||
Operating activities:
|
|||||||
Net income (loss)
|
$
|
(3,055
|
)
|
$
|
6,223
|
||
Adjustments to reconcile net cash provided by (used in) operating activities:
|
|||||||
Depreciation and amortization
|
162
|
193
|
|||||
Stock-based compensation expenses
|
136
|
244
|
|||||
Changes in assets and liabilities:
|
|||||||
Accounts receivable
|
65
|
12
|
|||||
Prepaid expenses and other current assets
|
(129
|
)
|
47
|
||||
Inventories
|
62
|
280
|
|||||
Accounts payable and other accrued liabilities
|
558
|
(148
|
)
|
||||
Accrued compensation
|
(161
|
)
|
(87
|
)
|
|||
Deferred revenue
|
(83
|
)
|
963
|
||||
Deferred rent
|
12
|
2
|
|||||
Net cash provided by (used in) operating activities
|
(2,433
|
)
|
7,729
|
||||
Investing activities:
|
|||||||
Purchases of property and equipment
|
(719
|
)
|
(7
|
)
|
|||
Purchases of short-term investments
|
(1,671
|
)
|
—
|
||||
Net cash used in investing activities
|
(2,390
|
)
|
(7
|
)
|
|||
Financing activities:
|
|||||||
Net proceeds from issuance of common stock
|
903
|
2,011
|
|||||
Proceeds from (Repayment of) notes payable
|
2,000
|
(1,400
|
)
|
||||
Net cash provided by financing activities
|
2,903
|
611
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(1,920
|
)
|
8,333
|
||||
Cash and cash equivalents at beginning of period
|
7,832
|
6,561
|
|||||
Cash and cash equivalents at end of period
|
$
|
5,912
|
$
|
14,894
|
Three months ended
|
||||||
September 30,
|
||||||
2011
|
2010
|
|||||
Cost of product sales
|
$
|
12
|
$
|
18
|
||
Research and development
|
39
|
54
|
||||
Selling, general and administrative
|
85
|
172
|
||||
Total
|
$
|
136
|
$
|
244
|
Three months ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
Numerator:
|
||||||||
Net income (loss)
|
$
|
(3,055
|
)
|
$
|
6,223
|
|||
Denominator:
|
||||||||
Weighted-average common shares outstanding
|
26,806
|
24,623
|
||||||
Less: Weighted-average unvested restricted stock
|
—
|
—
|
||||||
Denominator for basic net income (loss) per common share
|
26,806
|
24,623
|
||||||
Dilutive effect of stock options
|
—
|
403
|
||||||
Dilutive effect of unvested restricted stock awards
|
—
|
43
|
||||||
Dilutive effect of warrants
|
—
|
931
|
||||||
Denominator for diluted net income (loss) per share
|
26,806
|
26,000
|
||||||
Basic net income (loss) per common share
|
$
|
(0.11)
|
$
|
0.25
|
||||
Diluted net income (loss) per common share
|
$
|
(0.11)
|
$
|
0.24
|
September 30,
|
|||||
2011 |
2010
|
||||
Options to purchase common stock
|
3,629
|
1,519
|
|||
Unvested restricted stock awards
|
21
|
—
|
|||
Warrants
|
4,646
|
—
|
|||
Total
|
8,296
|
1,519
|
September 30,
|
||||||||
2011
|
2010
|
|||||||
Net income (loss)
|
(3,055 | ) | 6,223 | |||||
Change in unrealized gain (loss) on investments
|
(2 | ) | — | |||||
Comprehensive income (loss)
|
(3,057 | ) | 6,223 |
Quoted prices in active markets for identical assets or liabilities.
|
||
Level 2 -
|
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
Level 3 -
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
As of September 30, 2011
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||
Cash equivalents:
|
||||||||||||||
Money market funds
|
$
|
2,333
|
$
|
—
|
$
|
—
|
$
|
2,333
|
||||||
Short-term investments:
|
||||||||||||||
Corporate debt securities
|
—
|
2,912
|
—
|
2,912
|
||||||||||
Federal agency bond
|
—
|
250
|
—
|
250
|
||||||||||
Total assets at fair value
|
$
|
2,333
|
$
|
3,162
|
$
|
—
|
$
|
5,495
|
As of June 30, 2011
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||
Cash equivalents:
|
||||||||||||||
Money market funds
|
$
|
4,016
|
$
|
—
|
$
|
—
|
$
|
4,016
|
||||||
Short-term investments:
|
||||||||||||||
Corporate debt securities
|
—
|
1,243
|
—
|
1,243
|
||||||||||
Federal agency bond
|
—
|
250
|
—
|
250
|
||||||||||
Total assets at fair value
|
$
|
4,016
|
$
|
1,493
|
$
|
—
|
$
|
5,509
|
As of September 30, 2011 | ||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
|||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Corporate debt securities
|
$ | 2,915 | $ | — | $ | (3 | ) | $ | 2,915 | |||||||
Federal agency bond
|
$ | 250 | — | — | 250 | |||||||||||
Total
|
$ | 3,165 | $ | — | $ | (3 | ) | $ | 3,162 |
As of June 30, 2011 | ||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
|||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Corporate debt securities
|
$ | 1,244 | $ | — | $ | (1 | ) | $ | 1,243 | |||||||
Federal agency bond
|
250 | — | — | 250 | ||||||||||||
Total
|
$ | 1,494 | $ | — | $ | (1 | ) | $ | 1,493 |
September 30,
2011
|
June 30,
2011
|
|||||
Raw materials
|
$
|
286
|
$
|
341
|
||
Work in progress
|
236
|
112
|
||||
Finished goods
|
256
|
387
|
||||
$
|
778
|
$
|
840
|
Fiscal year ending June 30,
|
Operating
Leases
|
||||
2012 (remaining nine months)
|
$
|
476
|
|||
2013
|
652
|
||||
2014
|
688
|
||||
2015
|
728
|
||||
2016
|
124
|
||||
Total minimum lease payments
|
$
|
2,668
|
Contractual Obligations:
|
Total
|
Less Than
1 Year
|
1-3
Years
|
4-5
Years
|
More Than
5 Years
|
|||||||||||||||
Operating lease obligations
|
$ | 2,668 | $ | 476 | $ | 2,068 | $ | 124 | $ | — | ||||||||||
Notes payable, including interest
|
2,500 | 75 | 300 | 2,125 | — | |||||||||||||||
Total
|
$ | 5,168 | $ | 551 | $ | 2,368 | $ | 2,249 | $ | — |
Three months ended
|
|||||||
September 30,
|
|||||||
2011
|
2010
|
||||||
Net cash provided by (used in) operating activities
|
$
|
(2,433
|
)
|
$
|
7,729
|
||
Net cash used in investing activities
|
(2,390
|
)
|
(7
|
)
|
|||
Net cash provided by financing activities
|
2,903
|
611
|
|
●
|
the extent of our ongoing research and development programs and related costs, including costs related to the continued development of the MicroCutter XPRESS 30, the MicroCutter XCHANGE 30 and additional potential products in our anticipated MicroCutter product line;
|
|
|
●
|
our ability to enter into additional license, development and/or collaboration agreements with respect to our technology, and the terms thereof;
|
|
|
●
|
market acceptance and adoption of our current products or future products that we may commercialize;
|
|
●
|
our level of revenue;
|
|
●
|
costs associated with our sales and marketing initiatives and manufacturing activities;
|
|
●
|
costs and timing of obtaining and maintaining FDA and other regulatory clearances and approvals for our products and potential additional products;
|
|
|
●
|
securing, maintaining and enforcing intellectual property rights and the costs thereof;
|
|
●
|
the extent to which we access additional capital from Century, or under the Purchase Agreement with Aspire Capital, or under the ATM Agreement with MLV; and
|
|
●
|
the effects of competing technological and market developments.
|
|
●
|
achievement of broad acceptance for our current products or future products that we may commercialize;
|
|
●
|
achievement of U.S. regulatory clearance or approval for additional products; and
|
|
●
|
successful sales, manufacturing, marketing and distribution of our products.
|
|
●
|
the extent of our ongoing research and development programs and related costs, including costs related to the continued development of the MicroCutter XPRESS 30, the MicroCutter XCHANGE 30 and additional potential products in our anticipated MicroCutter product line;
|
|
●
|
our ability to enter into additional license, development and/or collaboration agreements with respect to our technology, and the terms thereof;
|
|
●
|
market acceptance and adoption of our current products or future products that we may commercialize;
|
|
●
|
our level of revenue;
|
|
●
|
costs associated with our sales and marketing initiatives and manufacturing activities;
|
|
●
|
costs and timing of obtaining and maintaining FDA and other regulatory clearances and approvals for our products and potential additional products;
|
|
●
|
securing, maintaining and enforcing intellectual property rights and the costs thereof;
|
|
●
|
the extent to which we access additional capital from Century, or under the Purchase Agreement with Aspire Capital, or under the ATM Agreement with MLV; and
|
|
●
|
the effects of competing technological and market developments.
|
|
●
|
the extent of our ongoing research and development programs and related costs, including costs related to the continued development of the MicroCutter XPRESS 30, the MicroCutter XCHANGE 30 and additional potential products in our anticipated MicroCutter product line;
|
|
●
|
our ability to enter into additional license, development and/or collaboration agreements with respect to our technology, and the terms thereof;
|
|
●
|
market acceptance and adoption of our current products or future products that we may commercialize;
|
|
●
|
our level of revenue;
|
|
●
|
costs associated with our sales and marketing initiatives and manufacturing activities;
|
|
●
|
costs and timing of obtaining and maintaining FDA and other regulatory clearances and approvals for our products and potential additional products;
|
|
●
|
securing, maintaining and enforcing intellectual property rights and the costs thereof;
|
|
●
|
the extent to which we access capital from Century, or under the Purchase Agreement with Aspire Capital, or under the ATM Agreement with MLV; and
|
|
●
|
the effects of competing technological and market developments.
|
|
●
|
warning letters, fines, injunctions, consent decrees and civil penalties;
|
|
●
|
customer notifications, repair, replacement, refunds, recall or seizure of our products;
|
|
●
|
operating restrictions, partial suspension or total shutdown of production;
|
|
●
|
delay in processing marketing applications for new products or modifications to existing products;
|
|
●
|
withdrawing approvals that have already been granted; and
|
|
●
|
criminal prosecution.
|
|
●
|
the FDA or other regulatory authorities suspend or place on hold a clinical trial, or do not approve a clinical trial protocol or a clinical trial;
|
|
●
|
the data and safety monitoring committee of a clinical trial recommends that a trial be placed on hold or suspended;
|
|
●
|
patients do not enroll in clinical trials at the rate we expect;
|
|
●
|
patients are not followed-up at the rate we expect;
|
|
●
|
clinical trial sites decide not to participate or cease participation in a clinical trial;
|
|
●
|
patients experience adverse side effects or events related to our products;
|
|
●
|
patients die or suffer adverse medical effects during a clinical trial for a variety of reasons, which may not be related to our product candidates, including the advanced stage of their disease and other medical problems;
|
|
●
|
third-party clinical investigators do not perform our clinical trials on our anticipated schedule or consistent with the clinical trial protocol and good clinical practices, or other third-party organizations do not perform data collection and analysis in a timely or accurate manner;
|
|
●
|
regulatory inspections of our clinical trials or manufacturing facilities may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials if investigators find us not to be in compliance with regulatory requirements;
|
|
●
|
third-party suppliers fail to provide us with critical components that conform to design and performance specifications;
|
|
●
|
the failure of our manufacturing processes to produce finished products that conform to design and performance specifications;
|
|
●
|
changes in governmental regulations or administrative actions;
|
|
●
|
the interim results of the clinical trial are inconclusive or negative;
|
|
●
|
pre-clinical or clinical data is interpreted by third parties in different ways; or
|
|
●
|
our trial design, although approved, is inadequate to demonstrate safety and/or efficacy.
|
|
●
|
reduced product size;
|
|
●
|
ease of use;
|
|
●
|
product quality and reliability;
|
|
●
|
multi-fire capability;
|
|
●
|
device cost-effectiveness;
|
|
●
|
degree of articultaion;
|
|
●
|
surgeon relationships; and
|
|
●
|
sales and marketing capabilities.
|
|
●
|
improved patient outcomes;
|
|
●
|
access to and acceptance by leading physicians;
|
|
●
|
product quality and reliability;
|
|
●
|
ease of use;
|
|
●
|
device cost-effectiveness;
|
|
●
|
training and support;
|
|
●
|
novelty;
|
|
●
|
physician relationships; and
|
|
●
|
sales and marketing capabilities.
|
|
●
|
maintaining product yields;
|
|
●
|
maintaining quality control and assurance;
|
|
●
|
providing component and service availability;
|
|
●
|
maintaining adequate control policies and procedures; and
|
|
●
|
hiring and retaining qualified personnel.
|
|
●
|
export restrictions and controls relating to technology;
|
|
●
|
the availability and level of reimbursement within prevailing foreign healthcare payment systems;
|
|
●
|
pricing pressure that we may experience internationally;
|
|
●
|
required compliance with existing and changing foreign regulatory requirements and laws;
|
|
●
|
laws and business practices favoring local companies;
|
|
●
|
longer payment cycles;
|
|
●
|
difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
|
|
●
|
political and economic instability;
|
|
●
|
potentially adverse tax consequences, tariffs and other trade barriers;
|
|
●
|
international terrorism and anti-American sentiment;
|
|
●
|
difficulties and costs of staffing and managing foreign operations; and
|
|
●
|
difficulties in enforcing intellectual property rights.
|
|
●
|
completion of development and commercial launch of our MicroCutter products, and the timing thereof;
|
|
●
|
market acceptance and adoption of our products;
|
|
●
|
regulatory clearance or approvals of or other regulatory developments with rest to our products;
|
|
●
|
volume and timing of orders for our products;
|
|
●
|
changes in earnings estimates, investors' perceptions, recommendations by securities analysts or our failure to achieve analysts' earnings estimates;
|
|
●
|
quarterly variations in our or our competitors' results of operations;
|
|
●
|
general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors;
|
|
●
|
the announcement of new products or product enhancements by us or our competitors;
|
|
●
|
announcements related to patents issued to us or our competitors and to litigation; and
|
|
●
|
developments in our industry.
|
|
●
|
completion of development, and commercialization, of our MicroCutter products, and the timing thereof;
|
|
●
|
FDA or other regulatory clearance or approval of our products;
|
|
●
|
demand for our products;
|
|
●
|
the performance of third-party contract manufacturers and component suppliers;
|
|
●
|
our ability to develop sales and marketing capabilities;
|
|
●
|
our ability to develop, introduce and market new or enhanced versions of our products on a timely basis; and
|
|
●
|
our ability to obtain and protect proprietary rights.
|
|
●
|
limit who may call a special meeting of stockholders;
|
|
●
|
establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings;
|
|
●
|
prohibit cumulative voting in the election of our directors, which would otherwise permit less than a majority of stockholders to elect directors;
|
|
●
|
prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; and
|
|
●
|
provide our board of directors with the ability to designate the terms of and issue a new series of preferred stock without stockholder approval.
|
Exhibit
No.
|
Description.
|
|
3.1
|
Amended and Restated Certificate of Incorporation of Cardica, Inc. Ö
|
|
3.2
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Cardica, Inc. (1)
|
|
3.3
|
Certificate of Correction of Certificate of Amendment of Amended and Restated Certificate of Incorporation of Cardica, Inc. (2)
|
|
3.4
|
Amended and Restated Bylaws of Cardica, Inc. (3)
|
|
4.1
|
Warrant dated March 17, 2000 exercisable for 36,870 shares of common stock (on a pre-split basis). Ö
|
|
4.2
|
Warrant dated October 31, 2002 exercisable for 180,052 shares of common stock (on a pre-split basis). Ö
|
|
4.3
|
Form of Warrant dated June 2007. (4)
|
|
4.4
|
Form of Warrant dated September 30, 2009. (5)
|
|
10.35
|
At The Market Issuance Sales Agreement, dated August 3, 2011, by and between Cardica, Inc., and McNicoll, Lewis & Vlak LLC. (6)
|
|
10.36
|
Distribution Agreement by and between Cardica, Inc. and Century Medical, Inc. dated September 2, 2011.†
|
|
10.37
|
Secured Note Purchase Agreement by and between Cardica, Inc. and Century Medical, Inc. dated September 2, 2011.†
|
|
10.38
|
Security Agreement by and between Cardica, Inc. and Century Medical, Inc. dated September 2, 2011.†
|
|
10.39
|
Form of Secured Promissory Note to Century Medical, Inc.
|
|
31.1
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
31.2
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
32.1*
|
Certification required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
|
|
101.INS#
|
XBRL Instance Document.
|
|
101.SCH#
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL#
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF#
|
XBRL Taxonomy Extension Definition.
|
|
101.LAB#
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
101.PRE#
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
Ö
|
Filed as exhibits to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on November 4, 2005, as amended, and incorporated herein by reference.
|
|
*
|
The certification attached as Exhibit 32.1 accompanying this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Cardica, Inc., under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q and irrespective of any general incorporation language contained in any such filing.
|
|
†
#
|
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment. Omitted portions of this exhibit have been filed separately with the Securities and Exchange Commission.
Pursuant to applicable securities laws and regulations, Cardica, Inc. is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as Cardica, Inc. has made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
|
|
(1)
|
Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 15, 2010 and incorporated herein by reference.
|
|
(2)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 16, 2010 and incorporated herein by reference.
|
|
(3)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 2008 and incorporated herein by reference.
|
|
(4)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2007 and incorporated herein by reference.
|
|
(5)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 29, 2009 and incorporated herein by reference.
|
|
(6)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 4, 2011 and incorporated herein by reference.
|
Date: November 9, 2011
|
/s/ Bernard A. Hausen
|
|
Bernard A. Hausen, M.D., Ph.D.
|
||
Date: November 9, 2011
|
/s/ Robert Y. Newell
|
|
Robert Y. Newell
|
||
Exhibit
No.
|
Description.
|
|
3.1
|
Amended and Restated Certificate of Incorporation of Cardica, Inc. Ö
|
|
3.2
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Cardica, Inc. (1)
|
|
3.3
|
Certificate of Correction of Certificate of Amendment of Amended and Restated Certificate of Incorporation of Cardica, Inc. (2)
|
|
3.4
|
Amended and Restated Bylaws of Cardica, Inc. (3)
|
|
4.1
|
Warrant dated March 17, 2000 exercisable for 36,870 shares of common stock (on a pre-split basis). Ö
|
|
4.2
|
Warrant dated October 31, 2002 exercisable for 180,052 shares of common stock (on a pre-split basis). Ö
|
|
4.3
|
Form of Warrant dated June 2007. (4)
|
|
4.4
|
Form of Warrant dated September 30, 2009. (5)
|
|
10.35
|
At The Market Issuance Sales Agreement, dated August 3, 2011, by and between Cardica, Inc., and McNicoll, Lewis & Vlak LLC. (6)
|
|
10.36
|
Distribution Agreement by and between Cardica, Inc. and Century Medical, Inc. dated September 2, 2011.†
|
|
10.37
|
Secured Note Purchase Agreement by and between Cardica, Inc. and Century Medical, Inc. dated September 2, 2011.†
|
|
10.38
|
Security Agreement by and between Cardica, Inc. and Century Medical, Inc. dated September 2, 2011.†
|
|
10.39
|
Form of Secured Promissory Note to Century Medical, Inc.
|
|
31.1
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
31.2
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
32.1*
|
Certification required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
|
|
101.INS#
|
XBRL Instance Document.
|
|
101.SCH#
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL#
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF#
|
XBRL Taxonomy Extension Definition.
|
|
101.LAB#
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
101.PRE#
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
Ö
|
Filed as exhibits to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission on November 4, 2005, as amended, and incorporated herein by reference.
|
|
*
|
The certification attached as Exhibit 32.1 accompanying this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Cardica, Inc., under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q and irrespective of any general incorporation language contained in any such filing.
|
|
†
#
|
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment. Omitted portions of this exhibit have been filed separately with the Securities and Exchange Commission.
Pursuant to applicable securities laws and regulations, Cardica, Inc. is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as Cardica, Inc. has made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
|
|
(1)
|
Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 15, 2010 and incorporated herein by reference.
|
|
(2)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 16, 2010 and incorporated herein by reference.
|
|
(3)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 19, 2008 and incorporated herein by reference.
|
|
(4)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2007 and incorporated herein by reference.
|
|
(5)
|
Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 29, 2009 and incorporated herein by reference.
|
|
(6)
|
Filed as an exhibit to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 4, 2011 and incorporated herein by reference.
|
Distribution Agreement
by and between
Cardica, Inc.
a Delaware Corporation
and
Century Medical, Inc.
a Japanese Corporation
Dated as of September 2, 2011
|
1.1
|
“Competing Products”
|
1.2
|
“Contract Year”
|
1.3
|
“First Commercial Sale”
|
1.4
|
“Initial Term”
|
1.5
|
“Note Agreement”
|
1.6
|
“Party” or “Parties”
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-1 | |
Century Medical, Inc. | Initial AH |
1.7
|
“Premarketing Term”
|
1.8
|
“Products”
|
1.9
|
“Territory”
|
2.1
|
Appointment as DISTRIBUTOR by COMPANY.
|
2.2
|
Subdistributors.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-2 | |
Century Medical, Inc. | Initial AH |
3.1
|
Consideration for Distribution Rights.
|
3.2
|
Term.
|
4.1
|
Duties of DISTRIBUTOR.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-3 | |
Century Medical, Inc. | Initial AH |
4.2
|
Product Approvals.
|
5.1
|
Duties of COMPANY.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-4 | |
Century Medical, Inc. | Initial AH |
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-5 | |
Century Medical, Inc. | Initial AH |
6.1
|
DISTRIBUTOR’s Expenses.
|
6.2
|
COMPANY’s Expenses.
|
7.1
|
Records and Reports.
|
7.2
|
Adverse Experience Reporting.
|
7.3
|
Recall.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-6 | |
Century Medical, Inc. | Initial AH |
8.1
|
Purchase Prices and Terms.
|
8.2
|
Risk of Loss, Deliveries.
|
8.3
|
Acceptance and Cancellation of Orders.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-7 | |
Century Medical, Inc. | Initial AH |
8.4
|
Product Specifications.
|
8.5
|
Taxes.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-8 | |
Century Medical, Inc. | Initial AH |
8.6
|
Purchase Levels.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-9 | |
Century Medical, Inc. | Initial AH |
9.1
|
Claim, Suit or Action.
|
9.2
|
Product Liability Insurance.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-10 | |
Century Medical, Inc. | Initial AH |
10.1
|
Warranties.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-11 | |
Century Medical, Inc. | Initial AH |
10.2
|
Rejection of Products.
|
11.1
|
Trademark License.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-12 | |
Century Medical, Inc. | Initial AH |
11.2
|
Duty to Preserve Confidentiality.
|
11.3
|
Proprietary.
|
12.1
|
Indemnity.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-13 | |
Century Medical, Inc. | Initial AH |
12.2
|
Infringing Products.
|
13.1
|
Cancellation for Cause.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-14 | |
Century Medical, Inc. | Initial AH |
13.2
|
Obligations upon Cancellation or Termination.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-15 | |
Century Medical, Inc. | Initial AH |
If Change in Control termination occurs during:
|
Then the Change of Control Termination Fee shall be equal to:
|
Multiplied by a factor of
|
Period from the Effective Date up to the end of Contract Year 3
|
Termination not permitted due to a Change in Control (defined below).
|
|
Contract Years 4 or 5
|
DISTRIBUTOR’s gross profit from the Products in the twelve (12) month period immediately preceding termination of this Agreement
|
[ * ]
|
the Renewal Period
|
[ * ]
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-16 | |
Century Medical, Inc. | Initial AH |
14.1
|
Force Majeure.
|
14.2
|
Relationship between Parties.
|
14.3
|
Successors, Nonassignability.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-17 | |
Century Medical, Inc. | Initial AH |
14.4
|
Survival of Obligations.
|
14.5
|
Remedies.
|
14.6
|
Notices.
|
14.7
|
Disputes.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-18 | |
Century Medical, Inc. | Initial AH |
14.8
|
Unenforceable Terms.
|
14.9
|
Waivers.
|
14.10
|
Governing Law; Headings.
|
14.11
|
Entire Agreement, Modification.
|
14.12
|
Further Assurances.
|
14.13
|
Schedule.
|
14.14
|
Counterparts.
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-19 | |
Century Medical, Inc. | Initial AH |
By:
|
/s/ Bernard Hausen | ||
Name:
|
Bernard Hausen, MD | ||
Title:
|
President & CEO |
By:
|
/s/ Akira Hoshino | ||
Name:
|
Akira Hoshino | ||
Title:
|
President & CEO |
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-20 | |
Century Medical, Inc. | Initial AH |
Microcutter Xpress 30
|
EXW Transfer Price
|
4 deployments
|
$[ * ] each
|
6 deployments
|
$[ * ] each
|
8 deployments
|
T.B.D.
|
Microcutter Xpress 45
|
|
4 deployments
|
$[ * ] each
|
6 deployments
|
$[ * ] each
|
8 deployments
|
T.B.D.
|
Xchange
|
T.B.D.
|
fleXchange (5mm)
|
T.B.D.
|
30mm
|
|
45mm
|
Distribution Agreement |
September 2, 2011
|
||
Cardica, Inc. | Initial BH | page-21 | |
Century Medical, Inc. | Initial AH |
1.
|
Amount and Terms of the Secured Loan
|
2.
|
The Closings
|
4.
|
Representations and Warranties of the Purchaser
|
5.
|
Events of Default; Remedies; Covenants
|
6.
|
Conditions to Closing
|
7.
|
Miscellaneous
|
If to the Company:
|
Cardica, Inc.
900 Saginaw Drive
Redwood City, California 94063
Telephone No.: (650) 364-9975
Facsimile No.: (650) 364-3134
Attention: Robert Y. Newell
|
With a copy to:
|
Cooley LLP
3175 Hanover Street
Palo Alto, California 94304
Telephone No.: (650) 843-5000
Facsimile No.: (650) 849-7400
Attention: Suzanne Sawochka Hooper, Esq.
|
If to the Purchaser:
|
Century Medical, Inc.
1-11-2 Osaki, Shinagawa-ku
Tokyo 141-8588, Japan
Telephone No.: +81-3-3491-1552
Facsimile No.: +81-3-3491-0577
Attention: Mr. Shunzo Saegusa
or such other address as may be designated in writing hereafter, in the same manner, by such Person.
|
With a copy to:
|
O’Melveny & Myers LLP
Meiji Yasuda Seimei Bldg., 11F
2-1-1 Marunouchi, Chiyoda-ku
Tokyo 100-0005, Japan
Facsimile No.: +81-3-5293-2780
Attention: Dale Araki, Esq.
|
Company:
|
||
Cardica, Inc.
|
||
By:
|
/s/ Bernard Hausen | |
Name:
|
Bernard Hausen, MD | |
Title:
|
President & CEO |
Purchaser:
|
||
Century Medical, Inc.
|
||
By:
|
/s/ Akira Hoshino | |
Name:
|
Akira Hoshino | |
Title:
|
President & CEO |
Address Of Grantor
900 Saginaw Drive
Redwood City, CA 94063
|
Cardica, Inc., as Grantor
By: /s/ Bernard Hausen
Printed Name: Bernard Hausen, MD
Title: President
|
Taxpayer Identification Number of Grantor
94-3287832
|
Jurisdiction of Organization of Grantor
Delaware
|
Accepted And Acknowledged By:
Century Medical, Inc.
By: /s/ Akira Hoshino
Printed Name: Akira Hoshino
Title: President & CEO
|
|
Entity
|
Address
|
Cardica, Inc.
|
900 Saginaw Drive
Redwood City, CA 94063
|
Patent Number
|
Title
|
|
1
|
6,371,964
|
Trocar for Use in Deploying an Anastomosis Device and Method of Performing Anastomosis
|
2
|
6,402,764
|
Everter and Threadthrough System for Attaching Graft Vessel to Anastomosis Device
|
3
|
6,419,681
|
Implantable Medical Device Such as an Anastomosis Device
|
4
|
6,428,550
|
Sutureless Closure and Deployment System for Connecting Blood Vessels
|
5
|
6,461,320
|
Method and System for Attaching a Graft to a Blood Vessel
|
6
|
6,471,713
|
System for Deploying an Anastomosis Device and Method of performing anastomosis
|
7
|
6,537,288
|
Implantable Medical Device Such as an Anastomosis Device
|
8
|
6,652,541
|
Method of Sutureless Closure for Connecting Blood Vessels
|
9
|
6,666,832
|
Surgical Measurement Tool
|
10
|
6,673,088
|
Tissue Punch
|
11
|
6,719,769
|
Integrated Anastomosis Tool with Graft Vessel Attachment Device and Cutting Device
|
12
|
6,786,914
|
Sutureless Closure and Deployment System for Connecting Blood Vessels
|
13
|
6,821,286
|
System for Preparing a Graft Vessel for Anastomosis
|
14
|
6,893,449
|
Device for Cutting and Anastomosing Tissue
|
15
|
6,955,679
|
Everter and Threadthrough System for Attaching Graft Vessel to Anastomosis Device
|
16
|
6,962,595
|
Integrated Anastomosis System
|
17
|
7,004,949
|
Method and System for Attaching a Graft to a Blood Vessel
|
18
|
7,014,618
|
Surgical Measurement Tool
|
19
|
7,029,482
|
Integrated Anastomosis System
|
20
|
7,041,110
|
Method and System for Attaching a Graft to a Blood Vessel
|
21
|
7,048,751
|
Implantable Medical Device Such as an Anastomosis Device
|
22
|
7,172,608
|
Sutureless Closure and Deployment System for Connecting Blood Vessels
|
23
|
7,175,637
|
Sutureless Closure and Deployment System for Connecting Blood Vessels
|
24
|
7,223,274
|
Method of Performing Anastomosis
|
25
|
7,309,343
|
Method for Cutting tissue
|
26
|
7,335,216
|
Tool for Creating an Opening in Tissue
|
27
|
7,357,807
|
Integrated Anastomosis Tool with Graft Vessel Attachment Device and Cutting Device
|
28
|
7,427,261
|
System for Preparing a Graft Vessel for Anastomosis
|
29
|
7,455,677
|
Anastomosis Device Having a Deployable Section
|
30
|
7,468,066
|
Trocar for Use in Deploying an Anastomosis Device and Method of Performing Anastomosis
|
31
|
7,520,885
|
Functional Package for an Anastomosis Procedure
|
32
|
7,611,523
|
Method for Sutureless Connection of Vessels
|
33
|
8,012,164
|
Method and Apparatus for Creating an Opening in the Wall of a Tubular Vessel
|
34
|
DE69934319T2
|
Method and System for Attaching a Graft to a Blood Vessel
|
35
|
ES2277445
|
Method and System for Attaching a Graft to a Blood Vessel
|
36
|
68251BE/2007 (Italy)
|
Method and System for Attaching a Graft to a Blood Vessel
|
37
|
DE 100 84 618
|
Trocar for Use in Deploying an Anastomosis Device and Method of Performing Anastomosis
|
38
|
DE 100 84 620
|
Sutureless Closure and Deployment System for Connecting Blood Vessels
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39
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EP 1105069
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Method and System for Attaching a Graft to a Blood Vessel
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No. SN-1
Up to U.S. $4,000,000
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Redwood City, CA
_________, 2011
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Cardica, Inc.
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By: /s/
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Name:
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Title:
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Agreed to and Accepted: | ||||
Century Medical, Inc. | ||||
By: /s/
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Name:
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Title:
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Advance No.
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Date of Advance or Payment
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Amount of Advance
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1
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_____, 2011
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U.S. $_________
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Date: November 9, 2011
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/s/ Bernard A. Hausen, M.D., Ph.D.
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Bernard A. Hausen, M.D., Ph.D.
President, Chief Executive Officer, Chief Medical
Officer and Director
(Principal Executive Officer)
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Date: November 9, 2011
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/s/ Robert Y. Newell
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Robert Y. Newell
Vice President, Finance, Chief Financial Officer and Secretary
(Principal Financial Officer)
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1.
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The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2011, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and
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2.
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The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Bernard A. Hausen, M.D., Ph.D.
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/s/ Robert Y. Newell
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Bernard A. Hausen, M.D., Ph.D.
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Robert Y. Newell
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Chief Executive Officer
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Chief Financial Officer
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Condensed Balance Sheets (Unaudited) (Note1) (Parentheticals) (USD $) | Sep. 30, 2011 | Jun. 30, 2011 |
---|---|---|
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 65,000,000 | 65,000,000 |
Common stock, shares issued | 27,071,679 | 26,635,115 |
Common stock, shares outstanding | 27,071,679 | 26,635,115 |
Treasury stock shares | 66,227 | 66,227 |
Condensed Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data | 3 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Product sales, net | $ 767 | $ 995 |
License and development revenue | 84 | 9,025 |
Royalty revenue | 19 | 22 |
Total net revenue | 870 | 10,042 |
Cost of product sales | 827 | 944 |
Research and development | 1,557 | 1,375 |
Selling, general and administrative | 1,541 | 1,495 |
Total operating costs and expenses | 3,925 | 3,814 |
Income (loss) from operations | (3,055) | 6,228 |
Interest income | 1 | 8 |
Interest expense | (11) | |
Other income (expense), net | (1) | (2) |
Net income (loss) | $ (3,055) | $ 6,223 |
Basic net income (loss) per common share (in Dollars per share) | $ (0.11) | $ 0.25 |
Diluted net income (loss) per common share (in Dollars per share) | $ (0.11) | $ 0.24 |
Basic (in Shares) | 26,806 | 24,623 |
Diluted (in Shares) | 26,806 | 26,000 |
Document And Entity Information | 3 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 07, 2011 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CARDICA INC | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --06-30 | |
Entity Common Stock, Shares Outstanding | 27,071,679 | |
Amendment Flag | false | |
Entity Central Index Key | 0001178104 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Accelerated Filer | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2012 | |
Document Fiscal Period Focus | Q1 |
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Note 7 - Inventories | 3 Months Ended | |||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Text Block] |
NOTE
7 - INVENTORIES
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Note 3 - Net Income (Loss) Per Share | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] |
Basic net income
(loss) per common share is calculated by dividing the net
income (loss) by the weighted-average number of common shares
outstanding for the period less the weighted-average unvested
common shares subject to repurchase and without consideration
of potential common shares. Diluted net income
(loss) per common share is computed by dividing the net
income (loss) by the weighted-average number of common shares
outstanding for the period less the weighted average unvested
common shares and dilutive potential common shares for the
period determined using the treasury-stock
method. For purposes of this calculation, options
and warrants to purchase stock and unvested restricted stock
awards are considered to be potential common shares and are
only included in the calculation of diluted net income (loss)
per share when their effect is dilutive.
The
following table sets forth the computation of basic and
diluted net income (loss) per share (in thousands, except per
share data):
The following
table sets forth the outstanding securities not included in
the diluted net income (loss) per common share calculation
for the three months ended September 30, 2011 and 2010
because their effect would be antidilutive (in
thousands):
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Note 9 - Note Payable | 3 Months Ended |
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Sep. 30, 2011 | |
Debt Disclosure [Text Block] |
NOTE
9 – NOTE PAYABLE
In
connection with the Distribution Agreement with Century,
the Company entered into a secured note purchase agreement
and a related security agreement pursuant to which Century
agreed to loan to the Company up to an aggregate of $4.0
million, drawable by the Company in one or more tranches,
subject to certain conditions (see Note 8, Distribution,
License, Development and Commercialization Agreements),
upon written request to Century made before December 31,
2012. On September 30, 2011, the Company
received a $2.0 million loan from Century under this
facility, which bears 5% annual interest. The note is
secured by all of the Company's assets including its
intellectual property excluding intellectual property
related to the Company's MicroCutter product line. Interest
on the loan is payable quarterly in arrears on the last
business day of March, June, September and December through
to September 30, 2016, the maturity date. Due
to the timing of the receipt of the loan, the Company is
evaluating whether the note is at a market rate of interest
and whether, due to the exclusive distribution rights
granted to Century under the Distribution Agreement, there
are multiple elements associated with the arrangement with
Century that should be accounted for separately. The
Company will finalize its assessment during the second
quarter of fiscal 2012.
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Note 10 - Amended Lease Agreement | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||
Operating Leases of Lessee Disclosure [Table Text Block] |
NOTE
10 – AMENDED LEASE AGREEMENT
On
November 11, 2010, the Company entered into an amendment to
its facility lease (the “Lease Amendment”).
Pursuant to the Lease Amendment, the term of the lease was
extended by four years, through August 31, 2015, and the
Company was granted an improvement allowance of $148,070 to
be used in connection with the construction of alterations
and refurbishment of improvements in the premises. In
addition, under the Lease Amendment, the Company was granted
an option to further extend the lease for a period of two
years beyond August 31, 2015 (the “Option Term”),
with the annual rent payable by the Company during the Option
Term to be equal to the annual rent for comparable buildings,
as described in the Lease Amendment. Under the operating
lease, the Company is required to maintain a letter of credit
with a restricted cash balance at the Company’s bank. A
certificate of deposit of $100,000 was recorded as restricted
cash in the condensed balance sheet as of September 30, 2011
and June 30, 2011, related to the letter of credit.
Future
minimum lease payments under the Company’s
non-cancelable operating leases having initial terms of a
year or more as of September 30, 2011, including
the Lease Amendment, are as follows (in thousands):
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Note 8 - License, Development and Commercialization Agreements | 3 Months Ended |
---|---|
Sep. 30, 2011 | |
Intangible Assets Disclosure [Text Block] |
Century
On
September 2, 2011, the Company signed a distribution
agreement (the “Distribution Agreement”) with
Century Medical, Inc. (“Century”) with respect to
distribution of the Company’s planned MicroCutter
products in Japan. Under the terms of a secured
note purchase agreement, Century agreed to loan the Company
an aggregate of up to $4.0 million at a 5% annual interest
rate, with principal due five years after the first draw by
the Company under the agreement, subject to certain
conditions. On September 30, 2011, the
Company received a $2.0 million loan from Century under this
facility, which bears 5% annual interest. Interest
on the loan is payable quarterly in arrears on the last
business day of March, June, September and December through
to September 30, 2016, the maturity
date. Century’s obligation to provide an
additional loan to the Company under the facility was subject
to the successful deployment, in Century’s sole
discretion, of certain of the Company’s MicroCutter
products in wet lab environments, before a specified date, or
at such other date as mutually agreed upon between the
parties. The Company expects to complete the remaining
deployments within the next several months. In return for the
loan commitment, the Company granted Century exclusive
distribution rights to the Company’s planned
MicroCutter product line in Japan and a right of first
negotiation for distribution rights in Japan to future
products. Century will be responsible for securing regulatory
approval from the Ministry of Health in Japan for the
MicroCutter product line. After approval for marketing in
Japan, the Company would sell MicroCutter units to Century,
who would then sell the MicroCutter devices to their
customers in Japan.
On August 16, 2010, the
Company entered into a license agreement with Intuitive
Surgical (the “License Agreement”) pursuant to
which the Company granted to Intuitive Surgical a worldwide,
sublicenseable, exclusive license to use the Company’s
intellectual property in the robotics field in diagnostic or
therapeutic medical procedures, but excluding vascular
anastomosis applications, for an upfront license fee of $9.0
million. The Company is also eligible to receive a contingent
payment related to achieving a certain sales volume. Each
party has the right to terminate the License Agreement in the
event of the other party’s uncured material breach or
bankruptcy. Following any termination of the License
Agreement, the licenses granted to Intuitive Surgical will
continue, and except in the case of termination for the
Company’s uncured material breach or insolvency,
Intuitive Surgical’s payment obligations will continue
as well. Under the License Agreement, Intuitive Surgical has
rights to improvements in the Company’s technology and
intellectual property over a specified period of time.
The Company
adopted Accounting Standards Update ("ASU") No. 2009-13,
which addresses the accounting for multiple-element
arrangements, on July 1, 2010 on a prospective basis. Under
this guidance, the Company determined that there were two
substantive deliverables under the License Agreement
representing separate units of accounting: license rights to
technology that existed as of August 16, 2010 and license
rights to technology that may be developed over the following
three years. The $9.0 million upfront license payment and
$1.0 million premium on the stock purchase by Intuitive
Surgical (see Note 2, Stockholders’ Equity) were
aggregated and allocated to the two units of accounting based
upon the relative estimated selling prices of the
deliverables. The relative estimated selling prices of the
deliverables were determined using a probability weighted
expected return model with significant inputs relating to the
nature of potential future outcomes and the probability of
occurrence of future outcomes. Based upon the relative
estimated selling prices of the deliverables, $9.0 million of
the total consideration of $10.0 million was allocated to the
license rights to technology that existed as of August 16,
2010 that has been recognized as revenue in the three months
ended September 30, 2010 and $1.0 million was allocated to
technology that may be developed over the following three
years that is being recognized as revenue ratably over that
three year period. In total, the revenue recognized for the
three months ended September 30, 2011and 2010 related to this
arrangement was $84,000 and $9.0 million, respectively, and,
as of September 30, 2011, $628,000 had been recorded as
deferred revenue related to this arrangement.
Cook
Incorporated
In June 2007, the
Company entered into, and in September 2007 and in June 2009
amended, a license, development and commercialization
agreement with Cook Incorporated (“Cook”) to
develop and commercialize a specialized device, referred to
as the PFO device, designed to close holes in the heart from
genetic heart defects known as patent foramen ovales, or
PFOs. Under the agreement, Cook funded certain development
activities and the Company and Cook jointly developed the
device. The Company’s significant
deliverables under the arrangement were the license rights
and the associated development activities. These
deliverables were determined to represent one unit of
accounting as there was no stand-alone value to the license
rights. If developed, Cook would receive an exclusive,
worldwide, royalty-bearing license, with the right to grant
sublicenses, to make, have made, use, sell, offer for sale
and import the PFO device. Under
this agreement, the Company received payments of $1.0 million
and $1.7 million in fiscal years ended June 30, 2009 and
2008, respectively. The Company received no payments in
fiscal 2011 or 2010 and did not record any license and
development revenue under the agreement for the three months
ended September 30, 2011 or
2010. Amounts paid but not yet earned on the
project are recorded as deferred revenue until such time as
the related development expenses for certain project
activities are incurred. A total of $403,000 under
this agreement had been recorded as deferred revenue as of
September 30, 2011 and June 30,
2011. The Company is entitled to receive from Cook
up to a total of an additional $275,000 in future payments if
development milestones under the agreement are achieved. The
Company is also entitled to receive a royalty based on Cook's
annual worldwide sales of the PFO device, if
any. On January 6, 2010, the Company and Cook
mutually agreed to suspend work on the PFO project and,
accordingly, the Company does not anticipate receiving any
additional payments or recording any additional revenue
related to this agreement in the foreseeable future.
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Note 1 - Summary Of Significant Accounting Polices | 3 Months Ended |
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Sep. 30, 2011 | |
Significant Accounting Policies [Text Block] |
Cardica,
Inc. (“Cardica”, the “Company”,
“we”, “our” or “us”) was
incorporated in the state of Delaware on October 15, 1997, as
Vascular Innovations, Inc. On November 26, 2001, the Company
changed its name to Cardica, Inc. Historically,
the Company’s business focused on the design,
manufacture and marketing of proprietary automated
anastomotic systems used by cardiac surgeons to perform
coronary bypass surgery. The Company has re-focused its
business on the development of an endoscopic MicroCutter
product line intended for use by thoracic, bariatric,
colorectal and general surgeons. The first product that the
Company is developing in its planned MicroCutter product line
is the MicroCutter XPRESS™ 30, the first true
multi-fire endolinear MicroCutter device based on the
Company’s proprietary “staple-on-a-strip”
technology, which would expand the Company’s commercial
opportunity into additional surgical markets. In
addition, the Company is developing the MicroCutter
XPRESS™ 45, a planned multi-fire endolinear MicroCutter
device with a 45 millimeter staple line, the MicroCutter
XCHANGE™ 30, a planned cartridge based MicroCutter
device with a 5 millimeter shaft diameter and a 30 millimeter
staple line, the MicroCutter FLEXCHANGE™ 30, a planned
cartridge based MicroCutter device with a flexible shaft to
facilitate endoscopic procedures requiring cutting and
stapling, and the MicroCutter XPRESS™ 60, a planned
cutting and stapling device specifically designed for the
bariatric and thoracic surgery markets. The Company initiated
first-in-man use of the current version of the MicroCutter
XPRESS 30, with the Conformité Européene, in Europe
in July 2011, and the Company continues to refine the product
prior to commercial launch in Europe. Following
the completion of the internal design verification process
for the MicroCutter XPRESS 30 necessary to apply the
Comformité Européene to this product for commercial
use in Europe on June 30, 2011, the Company has determined
that there is alternative future use in various research and
development projects for equipment, tooling and materials
related to the MicroCutter product line and has begun to
capitalized such assets into prepaid expenses and other
current assets or property and equipment.
The Company has incurred cumulative
net losses of $126.9 million through September 30, 2011
and negative cash flows from operating activities and
expects to incur losses for the next several years.
Management plans to continue to finance the Company’s
operations with equity or debt issuances or through
collaboration arrangements. There is no guarantee that such
funding will be available to the Company on acceptable terms,
or at all, or that such funding will be received in a timely
manner, if at all. If adequate funds are not available, the
Company may be required to delay, reduce the scope of, or
eliminate one or more of its development or commercialization
programs. There is no guarantee that the Company will be able
to reduce its expenditures without materially and adversely
affecting the business.
The
accompanying financial statements have been prepared assuming
the Company will continue to operate as a going concern,
which contemplates the realization of assets and the
settlement of liabilities in the normal course of business.
The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the outcome of this
uncertainty related to the Company’s ability to
continue as a going concern.
Basis
of Presentation
The accompanying
unaudited condensed financial statements of Cardica have been
prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”) for interim
financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required
by GAAP for complete financial statements. The unaudited
interim condensed financial statements have been
prepared on the same basis as the annual financial
statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments necessary for
the fair statement of balances and results have been
included. The results of operations of any interim period are
not necessarily indicative of the results of operations for
the full year or any other interim period.
The accompanying
condensed financial statements should be read in conjunction
with the audited financial statements and notes thereto for
the fiscal year ended June 30, 2011 included in the
Company’s Form 10-K filed with the Securities and
Exchange Commission on September 12, 2011.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP
generally requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements. Actual results could differ from these
estimates.
The
Company recognizes revenue when four basic criteria are met:
(1) persuasive evidence of an arrangement exists; (2) title
or rights have transferred; (3) the fee is fixed or
determinable; and (4) collectability is reasonably assured.
The Company uses contracts and customer purchase orders to
determine the existence of an arrangement. The Company uses
contractual terms, shipping documents and third-party proof
of delivery to verify that title or rights have transferred.
The Company assesses whether the fee is fixed or determinable
based upon the terms of the agreement associated with the
transaction. To determine whether collection is probable, the
Company assesses a number of factors, including past
transaction history with the customer and the
creditworthiness of the customer. If the Company determines
that collection is not reasonably assured, then the
recognition of revenue is deferred until collection becomes
reasonably assured, which is generally upon receipt of
payment.
The Company
records product sales net of estimated product returns and
discounts from the list prices for its products. The amounts
of product returns and the discount amounts have not been
material to date. The Company includes shipping and handling
costs in cost of product sales.
Payments
that are contingent upon the achievement of a substantive
milestone are recognized in their entirety in the period in
which the milestone is achieved subject to satisfaction of
all revenue recognition criteria at that
time. Revenue generated from license fees and
performing development services are recognized when it is
earned and non-refundable upon receipt of payments, over the
period of performance, or upon incurrence of the related
development expenses in accordance with contractual terms,
based on the actual costs incurred to date plus overhead
costs for certain project activities. Amounts paid but not
yet earned on a project are recorded as deferred revenue
until such time as the related development expenses plus
overhead costs for certain project activities are
incurred.
Inventories
are recorded at the lower of cost or market on a first-in,
first-out basis. The Company periodically assesses the
recoverability of all inventories, including materials,
work-in-process and finished goods, to determine whether
adjustments for impairment are required. Inventory
that is obsolete or in excess of forecasted usage is written
down to its estimated net realizable value based on
assumptions about future demand and market
conditions. Reduced demand may result in the need
for inventory write-downs in the near term.
Inventory write-downs are charged to cost of product sales
and establish a lower cost basis for the inventory.
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Note 4 - Comprehensive Income (Loss) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] |
Comprehensive income (loss) is
comprised of net income (loss) and unrealized gains/losses on
available-for-sale securities, if any, as follows (in
thousands):
|
Note 5 - Fair Value Measurements | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] |
Accounting
Standards Codification (“ASC”) 820, “Fair
Value Measurements and Disclosures,” defines
fair value as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or
liability in an orderly transaction between market
participants at the measurement date. ASC 820 establishes a
three-level fair value hierarchy that prioritizes the inputs
used to measure fair value. The three levels of inputs used
to measure fair value are as follows:
The Company does
not have any liabilities that are measured at fair value. All
assets that are measured at fair value have been segregated
into the most appropriate level within the fair value
hierarchy based on the inputs used to determine the fair
value at the measurement date. These assets measured at fair
value are summarized below (in thousands):
Funds held in money market
instruments, are included in Level 1 as their fair values are
based on market prices/quotes for identical assets in active
markets. Corporate debt securities and a federal agency bond
are valued primarily using market prices/quotes for
similar assets and/or other sources of observable information
and are included in Level 2.
As
of September 30, 2011, the Company’s material current
financial assets and liabilities not carried at fair value,
including its trade accounts receivable and accounts payable,
were reported at their current carrying values which
approximate fair value given the short-term nature of these
instruments with maturity dates of less than one
year. We are currently assessing whether the carrying
value of the note payable to Century Medical, Inc. (see Note
9 - Note Payable) approximates its fair
value.
|
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M
3 Months Ended Cash, Cash Equivalents, and Short-term Investments [Text Block]
As
of September 30, 2011
$
2,915
$
—
$
(3
)
$
2,915
$
250
—
—
250
$
3,165
$
—
$
(3
)
$
3,162
As
of June 30, 2011
$
1,244
$
—
$
(1
)
$
1,243
250
—
—
250
$
1,494
$
—
$
(1
)
$
1,493
In Thousands3 Months Ended Net income (loss) $ (3,055) $ 6,223 Depreciation and amortization 162 193 Stock-based compensation expenses 136 244 Accounts receivable 65 12 Prepaid expenses and other current assets (129) 47 Inventories 62 280 Accounts payable and other accrued liabilities 558 (148) Accrued compensation (161) (87) Deferred revenue (83) 963 Deferred rent 12 2 Net cash provided by (used in) operating activities (2,433) 7,729 Purchases of property and equipment (719) (7) Purchases of short-term investments (1,671) Net cash used in investing activities (2,390) (7) Net proceeds from issuance of common stock 903 2,011 Proceeds from (Repayment of) notes payable 2,000 (1,400) Net cash provided by financing activities 2,903 611 Net increase (decrease) in cash and cash equivalents (1,920) 8,333 Cash and cash equivalents at beginning of period 7,832 6,561 Cash and cash equivalents at end of period $ 5,912 $ 14,894 3 Months Ended Stockholders' Equity Note Disclosure [Text Block]