-----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, NXsdjqkh8Tii3Bolep4drUpbgqCirhEynGmOk0Z5iVgJyulNHELt7mRgE92MKooN 1H1689fDFaum878rlvbdzA== 0000891020-98-001078.txt : 19980703 0000891020-98-001078.hdr.sgml : 19980703 ACCESSION NUMBER: 0000891020-98-001078 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980702 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INCONTROL INC CENTRAL INDEX KEY: 0000871629 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 911501619 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-24540 FILM NUMBER: 98660167 BUSINESS ADDRESS: STREET 1: 6675 185TH AVE NE SUITE 100 CITY: REDMOND STATE: WA ZIP: 98052 BUSINESS PHONE: 2068619800 MAIL ADDRESS: STREET 1: 6675 185TH AVENUE STREET 2: SUITE 100 CITY: REDMOND STATE: WA ZIP: 98052-6734 10-Q/A 1 AMENDMENT NO. 1 TO FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 --------------------- FORM 10-Q/A AMENDMENT NO. 1 ( X ) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended March 31, 1998 or ( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 0-24540 INCONTROL, INC. (Exact name of registrant as specified in its charter)
DELAWARE 91-1501619 - -------------------------------------------------------------- --------------------------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
6675 - 185TH AVENUE N.E. REDMOND, WA 98052-6734 (425) 861-9800 (Address and telephone number of registrant's principal executive offices) --------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter periods that the registrant has been required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes ( X ) No ( ) --- --- As of June 30, 1998, there were 19,265,381 shares of the registrant's $.01 par value Common Stock outstanding. Page 1 of 12 sequentially numbered pages 2 INCONTROL, INC. QUARTERLY REPORT ON FORM 10-Q/A AMENDMENT NO. 1 TABLE OF CONTENTS PART I
PAGE NO. -------- PART I FINANCIAL INFORMATION Item 1. Financial Statements (unaudited).................................................3 Consolidated Balance Sheets - March 31, 1998 and December 31, 1997........................................3 Consolidated Statements of Operations - three months ended March 31, 1998 and 1997..................................4 Consolidated Statements of Cash Flows - three months ended March 31, 1998 and 1997..................................5 Notes to Consolidated Financial Statements ......................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...............................7 Item 3. Quantitative and Qualitative Disclosures About Market Risk.......................11 PART II PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.................................................11 Signature........................................................................11
Page 2 of 12 sequentially numbered pages 3 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS INCONTROL, INC. CONSOLIDATED BALANCE SHEETS ASSETS
MARCH 31, DECEMBER 31, 1998 1997 ------------- ------------- (UNAUDITED) Current assets: Cash and cash equivalents $ 4,082,577 $ 2,336,703 Securities available-for-sale 2,081,859 13,333,038 Trade accounts receivable, net 1,125,206 915,285 Inventories 2,943,942 2,492,583 Prepaid expenses and other current assets 823,498 964,424 ------------- ------------- Total current assets 11,057,082 20,042,033 Property and equipment, net 7,729,315 7,835,514 Notes receivable from employees 816,042 801,042 Other assets 225,786 239,716 ------------- ------------- Total assets $ 19,828,225 $ 28,918,305 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 719,506 $ 608,908 Accrued expenses 1,941,681 1,972,958 Current portion of long-term obligations 3,287,444 3,674,333 ------------- ------------- Total current liabilities 5,948,631 6,256,199 Long-term obligations, less current portion 696,288 525,076 Commitments -- -- Stockholders' equity: Preferred stock, $.01 par value: Authorized shares--10,000,000; Issued and outstanding shares--none -- -- Common stock, $.01 par value: Authorized shares--40,000,000; Issued and outstanding shares-- 18,837,371 at March 31,1998 and 18,775,864 at December 31, 1997 152,559,090 152,505,419 Accumulated deficit (138,797,868) (129,688,761) Notes receivable from stockholders (581,000) (581,000) Accumulated other comprehensive income/(loss) 3,084 (98,628) ------------- ------------- Total stockholders' equity 13,183,306 22,137,030 ------------- ------------- Total liabilities and stockholders' equity $ 19,828,225 $ 28,918,305 ============= =============
See accompanying notes. Page 3 of 12 sequentially numbered pages 4 INCONTROL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998 1997 ------------ ------------ Revenues $ 895,025 $ 310,748 Cost of sales 605,699 225,889 ------------ ------------ Gross profit 289,326 84,859 Expenses: Research and development 6,567,026 5,501,995 Sales and marketing 1,565,806 1,050,539 General and administrative 1,212,665 1,270,540 ------------ ------------ 9,345,497 7,823,074 Interest income 162,235 511,543 Interest expense (215,171) (104,468) ------------ ------------ Net loss $ (9,109,107) $ (7,331,140) ============ ============ Basic and diluted net loss per share (Note 1) $ (0.48) $ (0.43) ============ ============ Shares used in computation of net loss per share: 18,809,347 16,985,322
See accompanying notes. Page 4 of 12 sequentially numbered pages 5 INCONTROL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998 1997 ------------ ------------ OPERATING ACTIVITIES: Net loss $ (9,109,107) $ (7,331,140) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 760,485 654,595 Changes in operating assets and liabilities: (Increase) decrease in prepaid expenses and other current assets 345,779 (369,559) (Increase) decrease in inventories (451,359) 335,581 Increase (decrease) in accounts payable, accrued expenses, and sales tax payable 95,474 (10,128) ------------ ------------ Net cash used in operating activities (8,358,728) (6,720,651) INVESTING ACTIVITIES: Purchases of property and equipment (635,548) (1,370,220) Loans to employees (15,000) (15,000) Proceeds from collection of employee loans -- -- Proceeds from maturity of securities 7,731,000 7,470,000 Proceeds from sale of securities 3,186,259 -- ------------ ------------ Net cash provided by investing activities 10,266,711 6,084,780 FINANCING ACTIVITIES: Proceeds from third-party lease financing 280,251 793,000 Payments on third-party lease financing (491,813) (243,758) Proceeds from collection of stockholders' loans -- 36,000 Proceeds from exercise of stock options 53,671 44,690 ------------ ------------ Net cash (used in) provided by financing activities (157,891) 629,932 Effect of exchange rate changes on cash (4,218) (28,584) ------------ ------------ Net increase (decrease) in cash and cash equivalents 1,745,874 (34,523) Cash and cash equivalents at beginning of period 2,336,703 4,287,617 ------------ ------------ Cash and cash equivalents at end of period $ 4,082,577 $ 4,253,094 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH PAID: Interest $ 161,823 $ 91,385 ============ ============
See accompanying notes. Page 5 of 12 sequentially numbered pages 6 INCONTROL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) INTERIM FINANCIAL INFORMATION The consolidated financial statements included herein have been prepared by InControl, Inc. ("InControl" or the "Company") without audit, according to the rules and regulations of the Securities and Exchange Commission (the "Commission"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The financial statements reflect, in the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the three-month period ended March 31, 1998 are not necessarily indicative of results to be expected for the entire year ending December 31, 1998 or for any other fiscal period. INVENTORIES Inventories are valued at the lower of cost (first in, first out method) or market. Allowances are made for obsolete, unsalable, or unusable inventories. The components of inventories are as follows:
MARCH 31, DECEMBER 31, 1998 1997 ---------- ---------- Raw materials $1,219,017 $1,498,530 Work in process 1,149,545 865,450 Finished products 1,155,891 967,714 ---------- ---------- $3,524,453 $3,331,694 Reserves (580,511) (839,111) ---------- ---------- $2,943,942 $2,492,583 ========== ==========
The Company purchases components and certain related peripheral equipment for its products from outside vendors, including components from sole source vendors. The establishment of additional or replacement sources of supply would require the Company to certify the new vendors, which, in the case of certain components, would cause a delay in the Company's ability to manufacture the products. COMPREHENSIVE LOSS As of January 1, 1998, the Company adopted Statement No. 130, "Reporting Comprehensive Income" (FAS 130). FAS 130 establishes new rules for reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or stockholders' equity. FAS 130 requires unrealized gains or losses on the Company's available-for-sale securities and foreign currency translation adjustments, which, prior to adoption, were reported separately in stockholders' equity, to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of FAS 130. During the first quarter ended March 31, 1998 and 1997, total comprehensive loss amounted to $9,007,395 and $7,115,740, respectively. Page 6 of 12 sequentially numbered pages 7 Components of comprehensive loss for the three month periods ended March 31, 1998 and 1997 are as follows:
1998 1997 ----------- ----------- Net loss $(9,109,107) $(7,331,140) Unrealized gain/(loss) on securities (25,078) 210,536 Foreign currency translation 126,790 (120,516) ----------- ----------- Comprehensive loss $(9,007,395) $(7,115,740) =========== ===========
Components of accumulated other comprehensive loss at March 31, 1998 and December 31, 1997 are as follows:
1998 1997 --------- --------- Unrealized gain/(loss) on securities $ -- $ 25,078 Foreign currency translation 3,084 (123,706) --------- --------- Comprehensive loss $ 3,084 $ (98,628) ========= =========
The Company will incorporate this information into the Consolidated Statement of Stockholders' Equity for the year ending December 31, 1998. Per share calculations based upon comprehensive loss are not required. BASIC AND DILUTED NET LOSS PER SHARE Basic and diluted net loss per share are computed based upon the weighted average number of shares of common stock outstanding. The effect of outstanding options and warrants have been excluded from the calculation because they are antidilutive. NEW ACCOUNTING PRONOUNCEMENT In 1997, the FASB issued Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information" (FAS 131). FAS 131 replaces FASB Statement No. 14, "Financial Reporting for Segments of a Business Enterprise" and is effective for financial statements with fiscal years beginning after December 15, 1997. The Statement requires a company to report segment information based upon how management internally evaluates operating performance of its business segments. Segment information is not required to be reported in interim financial statements in the first year of application. The Company intends to adopt the disclosure requirements for FAS 131 for the year ending December 31, 1998 and does not expect its provisions to be significant. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe", "expect", "intend", "anticipate", variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect the Company's actual results include, among other things, the availability of adequate funding, the progress and costs of preclinical studies and clinical trials, the recruitment of suitable patients, the timing of regulatory approvals, the rate of market acceptance and the adoption of the METRIX System and related future products, the availability of third-party reimbursement for the Company's products, the ability to obtain and defend patent and intellectual property rights and to market the Company's products and the status of competing products. Reference is made to the Company's Annual Report on Form 10-K filed with the Commission for a more detailed description of such factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. InControl undertakes no obligation to update publicly any forward-looking statements to reflect Page 7 of 12 sequentially numbered pages 8 new information, events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. OVERVIEW InControl is engaged in the design, development and manufacture of implantable atrial defibrillators and related products, including transvenous defibrillation leads, and temporary defibrillation catheters. The majority of the Company's resources have been, and continue to be, devoted to research and development activities related to the METRIX System, a proprietary system designed to treat atrial fibrillation. The METRIX System is comprised of an implantable defibrillator, transvenous leads to connect the defibrillator to the heart, a system analyzer and a system programmer. The Company is also party to agreements under which the Company distributes defibrillation and diagnostic catheters and related products in certain geographic markets. The design and development of an implantable medical device has required the Company to make significant investments in research and development activities and, as a result, the Company has accumulated a deficit of $138.8 million as of March 31, 1998. InControl expects to incur substantial additional losses in the near future. The Company expects that revenues from clinical trials and sales of the Company's products will increase and that these increases will moderate future deficit growth. The amount and timing of the Company's future revenues and, accordingly, the amount and timing of the Company's future losses will be affected by, among other things: the availability of adequate funding, the progress and costs of preclinical studies and clinical trials, including the recruitment of suitable patients, the timing of regulatory approvals, the rate of market acceptance and the adoption of the METRIX System and related future products, the availability of third-party reimbursement for the Company's products, the ability to obtain and defend patent and intellectual property rights and to market the Company's products and the status of competing products. Future expenses are expected to be primarily due to InControl's continuing investment in research and development efforts, increases in clinical trial activities, the maintenance of the European sales organization, the expansion of domestic marketing and sales capabilities and increasing domestic manufacturing activity. The Company believes that it will incur losses at least until the METRIX System has gained market acceptance in the United States. Market acceptance of the METRIX System in the United States is dependent on, among other things, obtaining regulatory approval from the FDA for its commercial release, which is in turn dependent on the success of the METRIX System clinical trials. There can be no assurance that clinical trials will be successful. Further, there can be no assurance that regulatory approval for the METRIX System will be obtained, or, if such approval is obtained, that the METRIX System will achieve market acceptance in the United States. In Europe, the Company has received the needed certifications required in order to affix the CE mark to the METRIX System. While the CE mark allows the Company to distribute and market the METRIX System throughout the European Community (EC), the Company will need to complete studies regarding the cost benefits and quality of life improvements of the therapy in order to be eligible for reimbursement approvals from the medical reimbursing authorities in various EC member countries. There can be no assurance that such approvals from reimbursing authorities will be obtained in a timely manner, if at all. Even with reimbursement approvals, there can be no assurance that the METRIX System will achieve market acceptance in Europe. RESULTS OF OPERATIONS REVENUES Net revenues were $895,000 for the quarter ended March 31, 1998. This represents an increase of $584,000 or 188% over the comparable period in 1997. Of the $895,000, $354,000 relate to revenues earned in the United States and $541,000 relate to revenues earned outside the United States. Revenues result from the sale of METRIX devices, leads and accessories and distribution of catheters and related products in Europe together with sales of METRIX Systems in clinical investigations in the United States. Page 8 of 12 sequentially numbered pages 9 Revenues in future quarters will be dependent on the timing and outcome of certain limited clinical studies required for European reimbursement approvals, the success and timing of the Company's United States clinical trial activities and the subsequent rate of market acceptance in the United States and Europe. There can be no assurance, however, that such studies and trials will be completed successfully or that the METRIX System will achieve market acceptance in the United States or Europe. GROSS PROFITS Gross profits for the quarter ended March 31, 1998 totaled $289,000 or 32% of net revenues. The 1997 comparable period totaled $85,000 or 27% of net revenues. The Company's products are at an early stage in their product life cycles; current cost of sales and gross profits therefore may not be indicative of future cost of sales or gross profits. The Company's cost of sales and gross profits are affected by many factors. Currently, the Company has limited experience in manufacturing and is operating at volumes well below expected facility capacity. The Company's manufacturing overhead is allocated to costs of goods sold based on the expected capacity of the Company's manufacturing facility and not its actual capacity. The manufacturing overhead that is not charged to cost of goods sold represents experience and capacity-related costs that the Company considers part of its ongoing manufacturing development. Accordingly, the Company has charged these expenses to research and development. The Company anticipates that in future years, to the extent its products gain market acceptance, the Company's sales volume and manufacturing experience will increase. As a result, these manufacturing development costs will both decrease and be incorporated into cost of revenues and, to that extent, will be excluded from research and development. In addition, net revenues and, as a result, gross profits will be influenced by sales discounts and allowances that the Company may make during clinical trials or in connection with the initial commercial release of the Company's products in the United States. The Company's gross profits from European sales have been influenced by sales discounts and allowances that the Company has offered on a situational basis in connection with the commercial release of the METRIX System in Europe. RESEARCH AND DEVELOPMENT EXPENSES Research and development expense was $6.6 million and $5.5 million for the quarters ended March 31, 1998 and 1997, respectively. The quarter-to-quarter increase of $1.1 million or 19% over the comparable period last year is due to the increase in personnel engaged in the design, development and primary research associated with the current and next generations of atrial defibrillation systems, the funding of preclinical and clinical trials and expenditures associated with manufacturing development. Research and development expenses in future periods will be primarily dependent on the level of personnel the Company maintains in order to meet its objectives in primary research and development activities associated with future atrial defibrillation products. Research and development expense will also be affected by the level of activity in preclinical studies and clinical trials in the United States and Europe. Manufacturing development expenditures will continue to be a component of research and development, but are expected to moderate in future periods as the Company increases production volume and gains manufacturing experience. SALES AND MARKETING EXPENSES Sales and marketing expenses for the quarters ended March 31, 1998 and 1997 were $1.6 million and $1.1 million, respectively. The increase is primarily related to increased sales and marketing personnel, particularly in the Company's European subsidiaries. These additional personnel have been hired to support the commercial release and ongoing distribution of the Company's products in Europe. Sales and marketing expenses in future periods will be primarily dependant on the number of sales and marketing personnel and related activities in both the United States and Europe that the Company maintains to support the sales and distribution of the Company's products. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses were $1.2 million and $1.3 million for the quarters ended March 31, 1998 and 1997, respectively. This quarter-to-quarter decrease primarily is attributable to a decrease in professional service expenses. The Company expects general and administrative expense will reflect overall Company employment and activity levels which will fluctuate from period to period. Page 9 of 12 sequentially numbered pages 10 INTEREST INCOME AND INTEREST EXPENSE Interest income was $162,000 and $512,000 for the quarters ended March 31, 1998 and 1997, respectively. The quarter-to-quarter decrease primarily is attributable to the decrease in the average balances of cash, cash equivalents, and securities available-for-sale resulting from the use of cash to fund operations. Interest income will fluctuate with the average balances of cash, cash equivalents, and securities available-for-sale, which in turn will fluctuate with the success and timing of the Company's financing activities and the rate resources are used to fund operations. Interest expense was $215,000 and $104,000 for the quarters ended March 31, 1998 and 1997, respectively. The increase is primarily related to the increase in the Company's average balance of equipment lease financing. Interest expense in future periods will depend on the rate of capital expenditures and the success and timing of the Company's efforts to secure additional sources of lease financing for those expenditures. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1998, the Company had cash, cash equivalents, and securities available-for-sale totaling $6.2 million, compared to a balance of $15.7 million at December 31, 1997. The decrease of $9.5 million or 61% was used to fund $8.4 million in operating activities, $636,000 in purchases of property and equipment and $212,000 of payments, net of proceeds, for lease financing. During the comparable period in 1997, the Company funded $6.7 million in operating activities and $1.4 million in purchases of property and equipment, both of which were partially offset by net proceeds from lease financing of $549,000. As a result of the Company's available cash, the Company has failed to comply with certain covenants associated with its capital lease agreements. As a result, $1.6 million of the amounts payable under these capital lease agreements have been classified as a current liability in the accompanying consolidated financial statements. InControl expects its cash needs will continue at similar levels in future periods due to the Company's planned investment in research and development, anticipated increases in spending on clinical studies and trial activities and expansion of marketing, sales and manufacturing capabilities. The Company's future capital requirements will depend on many factors, including the progress and costs of preclinical studies and clinical trials, the recruitment of suitable patients, the timing of regulatory approvals, the rate of market acceptance and adoption of the METRIX System and related future products, the availability of third-party reimbursement for the Company's products, the ability to obtain and defend patent and intellectual property rights and to market the Company's products and the status of competing products. In April, the Company raised $10 million through two private financings. Of the $10 million, $7.5 million was raised through the sale of convertible preferred stock, which is redeemable under certain circumstances. For a description of the rights and preferences of the convertible preferred stock, see "Description of the Series B Stock" in the Company's Current Report on Form 8-K/A dated as of April 20, 1998, incorporated herein by reference. The remaining funds were raised through the private sale of 400,000 shares of common stock. The Company believes that its existing cash, cash equivalents, securities available-for-sale and interest thereon, including the proceeds of the April offerings, will be sufficient to meet its capital requirements into the third quarter of 1998. The Company will seek additional funding during 1998, through either public or private sources, to meet its future operational requirements. There can be no assurance such funds will be available as needed or on terms that are acceptable to the Company. If the Company is unable to obtain sufficient funds to satisfy it cash requirements, the Company will be forced to delay, reduce or eliminate some or all of its research and development activities, clinical studies and trials and manufacturing and administrative programs, or dispose of assets or technology. Page 10 of 12 sequentially numbered pages 11 IMPACT OF YEAR 2000 The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any of the Company's computer programs or products that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions in the Company's operations or potential problems with its products. The Company has begun an assessment of its software, key suppliers and products to determine whether the Company faces any business or financial risk from the Year 2000 issue. Inquiries to the Company's software vendors have revealed no problems and the Company plans to test these vendors' assertions, before the year 2000. The Company is also planning to inquire with key component suppliers to verify that supplies of raw material components will not be at risk from this problem. If tests of the Company's software reveal Year 2000 compliance problems or any of the Company's key components suppliers do not successfully and in a timely manner achieve Year 2000 compliance, the Company's business or operations could be adversely affected. The Company believes its products are not subject to this problem, with certain Programmers needing only minor adjustments in the year 2000. These minor adjustments can be done by the Company's field clinical engineers. Based on these early indications from the Company's assessment, there appears to be no material business or financial risk to the Company. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. PART II: OTHER INFORMATION ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit No. 27.1 Financial Data Schedule* __________ *Previously filed. b) Reports on Form 8-K No reports on form 8-K were filed during the quarter ended March 31, 1998. SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INCONTROL, INC. (Registrant) Dated: July 1, 1998 By:/s/ Philip A. Okeson ------------------------------------- Philip A. Okeson Treasurer and Secretary (Authorized Officer and Principal Financial Officer) Page 11 of 12 sequentially numbered pages 12 EXHIBIT INDEX Exhibits Exhibit No. 27.1 Financial Data Schedule* __________ *Previously filed. Page 12 of 12 sequentially numbered pages -----END PRIVACY-ENHANCED MESSAGE-----