-----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, QBAqYT3WxwsuraZOfvN+rY4SQgSE2aJOekR4cIkvAvbLw5PRDDQMaj2dFzVFXbL3 kOyiZ32CHq7tIvnZYiQ7tg== 0000897101-97-001113.txt : 19971031 0000897101-97-001113.hdr.sgml : 19971031 ACCESSION NUMBER: 0000897101-97-001113 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971030 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDAMICUS INC CENTRAL INDEX KEY: 0000833140 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 411533300 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-19467 FILM NUMBER: 97703490 BUSINESS ADDRESS: STREET 1: 15301 HGHWY 55 W CITY: PLYMOUTH STATE: MN ZIP: 55447 BUSINESS PHONE: 6125592613 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ___________ COMMISSION FILE NUMBER 0-19467 MEDAMICUS, INC. (Exact name of small business issuer in its charter) MINNESOTA 41-1533300 (State of Incorporation) (IRS Employer Identification No.) 15301 HIGHWAY 55 WEST, PLYMOUTH, MN 55447 (Address of principal executive office, including zip code) (612) 559-2613 (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, as amended, 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 ____ The number of shares of Registrant's Common Stock outstanding on September 30, 1997 was 4,108,199 Transitional Small Business Disclosure Format. Yes ____ No __X__ MEDAMICUS, INC. INDEX
- ------------------------------------------------------------------------------------------------- -------- Page # - ------------------------------------------------------------------------------------------------- -------- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Balance Sheets as of September 30, 1997 and December 31, 1996 3 Statements of Operations for the three and nine months ended September 30, 1997 and 1996 4 Statement of Shareholders' Equity for the nine months ended September 30, 1997 4 Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 5 Condensed Notes to the Financial Statements 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 6-9 PART II. OTHER INFORMATION ITEM 6(b). REPORTS ON FORM 8-K 10
MEDAMICUS, INC. BALANCE SHEETS (UNAUDITED)
SEP 30, 1997 DEC 31, 1996 ---------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 991,588 $ 1,205,783 Accounts receivable 941,725 1,346,289 Inventories 1,169,768 1,203,372 Prepaid expenses and other assets 92,106 60,300 - -------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 3,195,187 3,815,744 - -------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT: Equipment 1,925,838 1,819,901 Office furniture, fixtures and computers 494,215 437,053 Leasehold improvements 363,950 362,759 - -------------------------------------------------------------------------------------------- 2,784,003 2,619,713 Less accumulated depreciation and amortization (1,829,492) (1,477,554) - -------------------------------------------------------------------------------------------- NET PROPERTY AND EQUIPMENT 954,511 1,142,159 - -------------------------------------------------------------------------------------------- LONG-TERM INVESTMENTS, RESTRICTED 19,092 28,888 PATENT RIGHTS, NET OF ACCUMULATED AMORTIZATION OF $118,799 AND $102,613, RESPECTIVELY 21,819 34,221 - -------------------------------------------------------------------------------------------- TOTAL ASSETS $ 4,190,609 $ 5,021,012 - -------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Note payable to bank $ 418,844 $ 782,783 Accounts payable 714,523 1,109,640 Accrued expenses 230,619 174,399 Current installments of note payable to customer 6,422 14,400 Current installments of capital lease obligations 33,826 48,791 - -------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 1,404,234 2,130,013 - -------------------------------------------------------------------------------------------- LONG-TERM LIABILITIES: Note payable to customer, less current installments 0 2,822 Capital lease obligations, less current intallments 61,354 88,248 - -------------------------------------------------------------------------------------------- TOTAL LONG-TERM LIABILITIES 61,354 91,070 - -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- TOTAL LIABILITIES 1,465,588 2,221,083 - -------------------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY: Preferred stock-undesignated, authorized 1,000,000 shares, no shares issued or outstanding 0 0 Common stock-$.01 par value, authorized 9,000,000 shares, issued and outstanding 4,108,199 and 4,066,774 shares, respectively 41,082 40,668 Additional paid-in capital 8,568,250 8,515,636 Accumulated deficit (5,884,311) (5,756,375) - -------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 2,725,021 2,799,929 - -------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,190,609 $ 5,021,012 - --------------------------------------------------------------------------------------------
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS MEDAMICUS, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEP 30, 1997 SEP 30, 1996 SEP 30, 1997 SEP 30, 1996 --------------------------- --------------------------- Sales $ 1,711,548 $ 1,255,670 $ 5,280,446 $ 3,813,067 Cost of sales 974,433 858,147 2,946,491 2,517,745 - ------------------------------------------------------------------------------------------------------- GROSS PROFIT 737,115 397,523 2,333,955 1,295,322 - ------------------------------------------------------------------------------------------------------- OPERATING EXPENSES: Research and development 125,952 164,894 361,410 632,212 Selling, general and administrative 672,473 556,592 2,057,098 1,709,881 - ------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 798,425 721,486 2,418,508 2,342,093 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- OPERATING LOSS (61,310) (323,963) (84,553) (1,046,771) - ------------------------------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest expense (15,744) (13,841) (63,147) (66,071) Interest income 11,522 19,541 36,229 40,207 Other (3,743) (516) (16,465) (3,637) - ------------------------------------------------------------------------------------------------------- TOTAL OTHER INCOME (EXPENSE) (7,965) 5,184 (43,383) (29,501) - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- NET LOSS $ (69,275) $ (318,779) $ (127,936) $(1,076,272) - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- NET LOSS PER SHARE $ (0.02) $ (0.08) $ (0.03) $ (0.29) - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- WEIGHTED AVERAGE SHARES OUTSTANDING 4,108,199 4,060,774 4,084,742 3,760,409 - -------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS MEDAMICUS, INC. STATEMENT OF SHAREHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
Common Stock Additional -------------------- Paid-In Accumulated Shares Amount Capital Deficit Total - --------------------------------------------------------------------------------------------------------------------- BALANCES AT DECEMBER 31, 1996 4,066,774 $40,668 $8,515,636 $(5,756,375) $ 2,799,929 Stock options exercised 40,000 400 49,600 0 50,000 Common stock issued as sales incentive 1,425 14 3,014 0 3,028 Net loss for the nine months ended Sept 30, 1997 0 0 0 (127,936) (127,936) - --------------------------------------------------------------------------------------------------------------------- BALANCES AT SEPTEMBER 30, 1997 4,108,199 $41,082 $8,568,250 $(5,884,311) $ 2,725,021 - ---------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS MEDAMICUS, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEP 30, 1997 SEP 30, 1996 ---------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (127,936) $(1,076,272) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 368,124 277,222 Interest accretion on notes payable to private investors 0 22,037 Interest added to investments (1,193) (25) Common stock issued as sales incentive 3,028 0 Changes in operating assets and liabilities: Accounts receivable 404,564 (170,945) Inventories 33,604 (258,887) Prepaid expenses and other assets (31,806) (74,836) Accounts payable (395,117) 204,833 Accrued expenses 56,220 17,011 - ------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 309,488 (1,059,862) - ------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net of retirements (164,290) (295,019) Additions to patent rights (3,784) (1,505) Purchase of available-for-sale marketable securities, including reinvestment of securities which matured (19,011) (28,500) Sale of available-for-sale marketable securities, including sales of securities which matured 30,000 996,145 - ------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (157,085) 671,121 - ------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on capital lease obligations (41,859) (34,471) Proceeds from sale of stock, net of offering costs 0 1,635,321 Proceeds from exercise of stock options 50,000 20,400 Payments on notes payable to private investors 0 (500,000) Proceeds from (payments on) note payable to bank (363,939) 548,649 Payments on note payable to customer (10,800) (10,800) - ------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (366,598) 1,659,099 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (214,195) 1,270,358 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,205,783 143,273 - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 991,588 $ 1,413,631 - ------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 58,235 $ 44,034 SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Capital leases incurred on purchase of equipment $ 0 $ 128,589
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS CONDENSED NOTES TO FINANCIAL STATEMENTS THREE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) 1. BASIS OF PRESENTATION The financial statements included in this Form 10-QSB have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, pursuant to such rules and regulations, although management believes the disclosures are adequate to make the information presented not misleading. These statements should be read in conjunction with the Company's annual report on Form 10-KSB for the year ended December 31, 1996, filed by the Company with the Securities and Exchange Commission. The financial statements presented herein as of September 30, 1997 and for the three and nine months ended September 30, 1997 and 1996 reflect, in the opinion of management, all material adjustments consisting only of normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for these interim periods. 2. INVENTORIES Inventories are stated at the lower of cost, determined on a first-in, first-out (FIFO) basis, or market. Inventories consist of the following: SEPTEMBER 30, 1997 DECEMBER 31, 1996 ------------------------------------------ Purchased parts and subassemblies $ 685,967 $ 655,584 Work in process 307,719 412,520 Finished goods 176,082 135,268 ------------------------------------------ $ 1,169,768 $ 1,203,372 ========================================== 3. NET INCOME (LOSS) PER SHARE Net income (loss) per common share is determined by dividing the net loss by the weighted average number of shares of common stock outstanding. Common stock equivalents have been excluded from the calculation of net loss per share since they are antidilutive. The FASB has issued Statement No. 128, EARNINGS PER SHARE, which supersedes APB Opinion No. 15. Statement No. 128 requires the presentation of earnings per share by all entities that have common stock or potential common stock, such as option, warrants and convertible securities, outstanding that trade in a public market. Those entities that have only common stock outstanding are required to present basic earnings per-share amounts. All other entities are required to present basic and diluted per-share amounts. Diluted per-share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless the effect is to reduce a loss or increase the income per common stare from continuing operations. All entities required to present per-share amounts must initially apply Statement No. 128 for annual and interim periods ending after December 15, 1997. Earlier application is not permitted. The adoption of Statement No. 128 would have had no effect on reported earnings (loss) per share. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information that the Company's management believes is relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read in conjunction with the accompanying financial statements and footnotes. RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996 Total revenues were $5,280,446 for the nine months ended September 30, 1997 compared to $3,813,067 for the nine months ended September 30, 1996, representing a 38.5% increase. Sales of vessel introducers, primarily to Medtronic under an exclusive distribution arrangement, were $3,055,780 for the nine months ended September 30, 1997, compared to $2,351,918 for the nine months ended September 30, 1996. This increase was primarily due to two factors. First, Medtronic rebuilt its inventories of introducers during the first four months of 1997 which were depleted during the third quarter of 1996 because of a component supply problem. Second, Medtronic's sales of introducers to their customers has increased in 1997 over 1996 which has led to increased purchases from the Company. The Company expects introducer sales in the fourth quarter to be consistent with third quarter sales. Contract manufacturing sales were $311,646 for the nine months ended September 30, 1997, compared to $338,666 for the nine months ended September 30, 1996. This decrease was primarily due to two factors. First, one of the Company's contract manufacturing customers decided to manufacture their product internally during 1997. While the Company benefited from some additional orders from them during the second quarter, the Company does not anticipate any additional business from them. Second, the Company's other contract manufacturing customer placed some large orders with the Company during the first quarter of 1997 and then informed the Company that they had excess inventory and would not be placing any additional orders for product for most of 1997. The Company does not expect this customer to increase their orders until the first quarter of 1998. The Company also does some contract research and development work periodically for Medtronic and realized sales of $14,467 for the nine months ended September 30, 1997 compared to $127,888 for the nine months ended September 30, 1996. This contract research and development work is not expected to be a continuous revenue item for the Company. Sales of the Company's fiber optic pressure sensing catheter and monitor transducer products ("LuMax(TM) System") were $1,898,553 for the nine months ended September 30, 1997, compared to $994,595 for the nine months ended September 30, 1996, representing a 90.9% increase. Monitor sales increased 65.5% or $529,620 and catheter and accessory sales increased 201.4% or $374,338 over the comparable period. The Company has continued to actively market the upgraded version of its LuMax System into the gynecology and urology office markets by adding sales management, attending major trade shows and conducting various direct mail and telemarketing campaigns. Total gross profit increased from $1,295,322 for the nine months ended September 30, 1996, to $2,333,955 for the nine months ended September 30, 1997, an increase of 80.2%. Total gross profit as a percent of sales increased from 34.0% to 44.2% in such periods. The gross profit percentage on vessel introducers and contract manufacturing totaled 53.1% for the nine months ended September 30, 1997, compared to 42.5% in the nine months ended September 30, 1996. The increase in the gross profit percentage on vessel introducers and contract manufacturing was primarily due to increased sales to Medtronic, which resulted in the existing overhead being allocated over more units. The Company lowered prices to Medtronic in May 1997 on many of the kit sizes that they purchase and will be lowering prices on the remaining kit sizes in September 1997. The Company expects to see lower gross margin percentages in the fourth quarter as the price reductions take effect. For fiber optic products, the gross profit percent totaled 28.3% or $537,294 for the nine month period ended September 30, 1997 compared to 9.9% or $98,547 for the nine month period ended September 30, 1996. This increase was primarily due to increased sales which resulted in the existing overhead being allocated over more units. While the Company was pleased with the increased gross profit percentage, the Company continues to look at optimizing its catheter manufacturing processes to increase yields and lower costs. As the Company's revenues increase, the gross profit percent related to fiber optic products should improve as a result of greater efficiencies and more effective utilization of manufacturing capabilities. Total research and development expenditures were $361,410 or 6.8% of sales for the nine months ended September 30, 1997, compared to $632,212 or 16.6% of sales for the nine months ended September 30, 1996. This decrease is due to lower spending on the development of the LuMax system during the first nine months of 1997 compared to the first nine months of 1996. The Company plans to increase spending on research and development in the fourth quarter as it continues working on improving catheter yields. Selling, general and administrative expenses increased from $1,709,881 for the nine months ended September 30, 1996 to $2,057,098 for the nine months ended September 30, 1997. Sales and marketing expenses increased $367,846 for the nine months ended September 30, 1997 over the comparable period in 1996 primarily because of increased salary, travel, depreciation and commission expense. The Company hired two regional sales managers in 1997 which were not in place during 1996. As a result of these hires, the Company has also seen an increase in its travel expenses. Depreciation expense has increased during the comparable periods because the Company has placed a greater number of the new LuMax machines with our expanded independent sales force to support the increased sales effort. Commission expense increased during the comparable periods due to increased sales activity. General and administrative expenses decreased $20,629 for the first nine months of 1997 over the comparable period in 1996. This decrease is primarily due to decreased spending on insurance and investor relations expenses during the comparable periods. Interest expense decreased from $66,071 for the nine months ended September 30, 1996 to $63,147 for the nine months ended September 30, 1997. This decrease can be attributed to the prepayment of the $500,000 notes payable to private investors in the first quarter of 1996 which resulted in the recognition, as interest expense, of the remaining unamortized discount related to the notes. As a result, the Company incurred a net loss of $127,936 or $.03 per share for the nine months ended September 30, 1997, compared to a net loss of $1,076,272 or $.29 per share for the nine months ended September 30, 1996. THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996 Total revenues were $1,711,548 for the three months ended September 30, 1997 compared to $1,255,670 for the three months ended September 30, 1996, representing a 36.3% increase. Sales of vessel introducers, primarily to Medtronic under an exclusive distribution arrangement, were $937,717 for the three months ended September 30, 1997, compared to $733,636 for the three months ended September 30, 1996. This increase was primarily due to the factors discussed above. The Company expects fourth quarter sales to be consistent with the third quarter. Contract manufacturing sales were $39,142 for the three months ended September 30, 1997, compared to $141,133 for the three months ended September 30, 1996. This decrease was primarily due to the factors discussed above. The Company expects fourth quarter sales to be consistent with the third quarter. Sales of the Company's LuMax System were $734,689 for the three months ended September 30, 1997, compared to $380,901 for the three months ended September 30, 1996. Monitor sales increased 65.2% or $196,533 and catheter and accessory sales increased 198.0% or $157,255 in the three months ended September 30, 1997 over the comparable period in 1996, primarily due to the factors discussed above. Total gross profit increased from $397,523 for the three months ended September 30, 1996, to $737,115 for the three months ended September 30, 1997, an increase of 85.4%. Total gross profit as a percent of sales increased from 31.7% in the three months ended September 30, 1996 to 43.1% in the comparable period in 1997. The gross profit percentage on vessel introducers and contract manufacturing totaled 49.6% in the third quarter of 1997, compared to 44.2% in the third quarter of 1996, primarily due to the factors discussed above. For fiber optic products, the gross profit percent totaled 34.4% or $252,451 in the third quarter of 1997 compared to 3.0% or $11,223 in the third quarter of 1996, primarily due to the factors discussed above. Total research and development expenditures were $125,952 or 7.4% of sales for the three months ended September 30, 1997, compared to $164,894 or 13.1% of sales for the three months ended September 30, 1996, primarily due to the factors discussed above. The Company does expect to increase research and development expenditures in the fourth quarter as it continues to work on improving catheter yields. Selling, general and administrative expenses increased from $556,592 for the three months ended September 30, 1996 to $672,473 for the three months ended September 30, 1997. Sales and marketing expenses increased $154,374 and general and administrative expenses decreased $38,493 in the third quarter of 1997 compared to the third quarter of 1996 primarily for the reasons discussed above. Interest expense increased from $13,841 for the three months ended September 30, 1996 to $15,744 for the three months ended September 30, 1997 primarily due to increased borrowing levels on the line of credit during the comparable periods. As a result, the Company incurred a net loss of $69,275 or $.02 per share for the three months ended September 30, 1997, compared to a net loss of $318,779 or $.08 per share for the three months ended September 30, 1996. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the nine months ended September 30, 1997 was $309,488, consisting of a net loss of $127,936, less adjustments for depreciation and amortization of $368,124, and interest accretion of $1,193. The Company also issued 1,425 shares of the Company's common stock to its independent sales representatives as part of a sales incentive program. The market price on the date of issue was $2.125 per share, totaling $3,028. In addition, cash was provided by net changes in operating assets and liabilities of $67,465. The Company saw a decrease in accounts receivable during the first nine months of 1997 primarily due to increased collections from its LuMax customers and increased sales to Medtronic which resulted in faster payments. The Company used the cash from accounts receivable collections to pay down its note payable to the bank during the period. The Company anticipates inventory and receivables to increase during the fourth quarter if sales of the fiber optic products materialize as expected. Net cash used in investing activities for the nine months ended September 30, 1997 was $157,085. The Company purchased $164,290 of equipment during the period and had additions to patent rights of $3,784. Additionally, the $30,000 treasury bill which was pledged as collateral to the equipment lease matured and a new treasury bill was purchased for $19,011 to replace it. Net cash used in financing activities for the nine months ended September 30, 1997 was $366,598. The Company paid down the credit line by $363,939 during the period and had a balance due on the line of $418,844 as of September 30, 1997. Additionally, a medical consultant exercised a warrant for 40,000 shares of the Company's common stock at an exercise price of $1.25 per share, totaling $50,000. The Company also made principal debt payments totaling $52,659. As a result, the Company's cash and cash equivalents were $991,588 as of September 30, 1997 compared to $1,205,783 at December 31, 1996. Working capital increased from $1,685,731 as of December 31, 1996 to $1,760,953 as of September 30, 1997. On June 24, 1997, the Company signed a one year extension through June 30, 1998 on its $1,200,000 revolving line of credit with a financial institution. The availability under the line is subject to borrowing base requirements, and advances are at the discretion of the lender. The agreement calls for interest at the rate of 2.25% over the financial institution's base rate with minimum interest due over the term of the agreement of $70,000. The line is secured by substantially all of the Company's assets. If sales estimates and working capital needs meet the Company's projections, the Company believes its available cash and investments, along with borrowing availability under its $1,200,000 line of credit will be sufficient to meet the Company's anticipated operating expenses and cash requirements for the foreseeable future. If the sales estimates are not realized or working capital requirements exceed those projected, the Company may need to secure additional capital or, if capital is not available, to curtail its marketing efforts. Forward-looking statements herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. Certain important factors could cause results to differ materially from those anticipated by some statements made herein. You are cautioned that all forward-looking statements involve risks and uncertainties. Among the factors that could cause results to differ materially are the following: delays in new product launches; lack of market acceptance of the Company's products; introduction of competitive products; patent and government regulation matters and the Risk Factors included in Form 8-K filed with the Securities and Exchange Commission on November 13, 1996. PART II - OTHER INFORMATION ITEM 6(b) - REPORTS ON FORM 8-K None SIGNATURE Pursuant to the requirements of Section 13 or 15(d) 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: MEDAMICUS, INC. Date: October 28, 1997 By: /s/ James D. Hartman President, Chief Executive Officer and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 9-Mos Dec-31-1997 Sep-30-1997 991,588 0 949,097 7,372 1,169,768 3,195,187 2,784,003 1,829,492 4,190,609 1,404,234 61,354 0 0 41,082 2,683,939 4,190,609 5,280,446 5,280,446 2,946,491 2,946,491 361,410 0 63,147 (127,936) 0 (127,936) 0 0 0 (127,936) (0.03) (0.03)
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