-----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, QoRaASVfwwj4gRTCDx9qqvA6EEL58ViLqNm0FeQbqEbR4A1DY1dIynv5OctPpJLF TqWH35Bw1u4cG/EyWNObTg== 0000912057-97-016712.txt : 19970513 0000912057-97-016712.hdr.sgml : 19970513 ACCESSION NUMBER: 0000912057-97-016712 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHYSIOMETRIX INC CENTRAL INDEX KEY: 0001010397 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 770238187 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27956 FILM NUMBER: 97600227 BUSINESS ADDRESS: STREET 1: FIVE BILLERICA PARK STREET 2: 101 BILLERICA AVE CITY: NORTH BILLERICA STATE: MA ZIP: 01862 BUSINESS PHONE: 5086702422 MAIL ADDRESS: STREET 1: FIVE BILLERICA PARK STREET 2: 101 BILLERICA AVE CITY: NORTH BILLERICA STATE: MA ZIP: 01862 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 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 1010397 ______________________________ PHYSIOMETRIX, INC. ________________________________________________________________________________ (Exact name of registrant as specified in its charter) Delaware 77-0248588 ________________________________________________________________________________ (State or other jurisdiction of (IRS Employer identification incorporation or organization) No.) Five Billerica Park, N. Billerica, MA 01862-1256 ________________________________________________________________________________ (Address of principal executive offices) (Zipcode) (508) 670-2422 ________________________________________________________________________________ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ITEM 1 - Yes X No ---- ---- ITEM 2 - Yes X No ---- ---- The number of shares outstanding of each of the issuer's classes of common stock as of Class Outstanding at March 31, 1997 ----- ----------------------------- Common Stock, $.001 par value 5,601,268 PHYSIOMETRIX, INC. TABLE OF CONTENTS PART I FINANCIAL INFORMATION PAGE NO. ITEM 1 Financial Statements Balance Sheets as of December 31, 1996 and 3 March 31, 1997 Statements of Operations for the Three Months 4 March 31, 1996 and 1997 Statements of Cash Flows for the Three Months 5 ended March 31, 1996 and 1997 Notes to Financial Statements 6 ITEM 2 Management's Discussion and Analysis of 7 Financial Condition and Results of Operations PART II OTHER INFORMATION 10 SIGNATURES 11 2 PHYSIOMETRIX, INC. BALANCE SHEETS (Unaudited) DECEMBER 31 MARCH 31 1996 1997 ---------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 328,331 $ 211,521 Short-term investments 17,817,917 15,786,906 Accounts receivable, net 38,196 122,581 Inventories, net 279,789 306,104 Prepaid expenses 102,393 140,274 ---------------- ------------ Total current assets 18,566,626 16,567,386 Property, plant and equipment 777,578 885,485 Less allowances for depreciation (284,740) (330,256) ---------------- ------------ 492,838 555,229 Due from officer 84,000 84,000 Other assets 8,518 8,518 ---------------- ------------ Total assets $ 19,151,982 $ 17,215,133 ---------------- ------------ ---------------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 691,690 $ 388,039 Accrued expenses 261,107 341,469 Demand note payable 541,334 - Current portion of notes payable to stockholder 82,236 49,061 ---------------- ------------ Total current liabilities 1,576,367 778,569 Stockholders' equity: Preferred stock: $.001 par value; 10,000,000 shares authorized: - - Common stock: $.001 par value, 50,000,000 shares authorized; 5,580,324 shares in 1996 and 5,601,268 shares in 1997 issued and outstanding 5,580 5,601 Additional paid-in-capital 30,571,122 30,571,903 Accumulated deficit (13,001,087) (14,140,940) ---------------- ------------ Total stockholders' equity 17,575,615 16,436,564 ---------------- ------------ Total liabilities and stockholders' equity $ 19,151,982 $ 17,215,133 ---------------- ------------ ---------------- ------------ SEE ACCOMPANYING NOTES. 3 PHYSIOMETRIX, INC. STATEMENTS OF OPERATIONS (Unaudited) THREE MONTHS ENDED MARCH 31 ---------------------- 1996 1997 ---------- ---------- Revenues $ 136,226 $ 203,727 Costs and expenses: Cost of goods sold 295,181 394,298 Research and development 179,115 570,780 Selling, general, and administrative 331,221 574,896 ---------- ----------- 805,517 1,539,974 ---------- ----------- Operating loss (669,291) (1,336,247) Interest income 4,007 215,314 Interest expense (7,869) (18,919) ---------- ----------- Net loss $ (673,153) $(1,139,852) ---------- ----------- ---------- ----------- Net loss per share $ (0.18) $ (0.20) ---------- ----------- ---------- ----------- Shares used in computing net loss per share 3,650,934 5,587,775 ---------- ----------- ---------- ----------- 4 PHYSIOMETRIX, INC. STATEMENTS OF CASH FLOWS (Unaudited) THREE MONTHS ENDED MARCH 31 ------------------------- 1996 1997 ---------- ------------- OPERATING ACTIVITIES: Net loss $ (673,153) $ (1,139,852) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 22,048 45,516 Changes in operating assets and liabilities: Accounts receivable (65,617) (84,385) Inventories 16,569 (26,315) Prepaid expenses and other assets (136,998) (37,881) Accounts payable and accrued expenses 78,710 (223,289) ---------- ------------- Net cash used in operating activities (758,441) (1,466,206) INVESTING ACTIVITIES: Purchase of equipment (12,430) (107,908) Purchase of available-for-sale securities - (41,813,005) Proceeds from maturity of available-for-sale securities - 43,844,016 ---------- ------------- Net cash provided by (used in) investing activities (12,430) 1,923,103 FINANCING ACTIVITIES: Proceeds from notes payable to stockholders 380,460 - Proceeds from debt financing 250,534 - Principal payments on notes payable to stockholders (37,471) (33,175) Principal payments on short-term debt - (541,334) Proceeds from issuance of common stock, net 7,604 802 ---------- ------------- Net cash provided by (used in) financing activities 601,127 (573,707) ---------- ------------- Net increase (decrease) in cash and cash equivalents (169,744) (116,810) Cash and cash equivalents at beginning of period 432,126 328,331 ---------- ------------- Cash and cash equivalents at end of period $ 262,382 $ 211,521 ---------- ------------- ---------- ------------- SEE ACCOMPANYING NOTES. 5 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ended December 31, 1997 or any other interim period. The accompanying financial statements should be read in conjunction with the audited financial statements for the period ending December 31, 1996. NOTE B - INVENTORIES Inventories consist of the following: December 31 March 31 1996 1997 ----------- --------- Raw materials $ 149,032 $ 115,308 Work-in-process 78,726 106,291 Finished goods 52,031 84,505 ----------- --------- $ 279,789 $ 306,104 ----------- --------- ----------- --------- NOTE C - NET LOSS PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Standard No. 128, "Earnings Per Share" (FAS 128) which simplifies the calculation of earnings or net loss per share and creates a standard of comparability to the recently issued International Accounting Standard No. 33, "Earnings Per Share." Since early application is not permitted, the Company will adopt this standard in the fourth quarter of 1997. The pro forma net loss per share calculation required under FAS 128 is not materially different from the primary and fully diluted net loss per share calculations presented herein. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following discussion of the financial condition and results of operations of Physiometrix, Inc. should be read in conjunction with the Financial Statements and related Notes thereto included elsewhere in this Form 10-Q. This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual events or results may differ materially from those projected in the forward-looking statements as a result of the factors described herein and other risks detailed from time to time in the Company's SEC reports, including its annual report on Form 10-K for the year ended December 31, 1996. Such forward-looking statements include, but are not limited to, statements concerning (i) business strategy; (ii) products under development; (iii) marketing and distribution; (iv) research and development; (v) manufacturing; (vi) competition; (vii) government regulation especially as it relates to FDA approvals; (viii) third-party reimbursement and (ix) operating and capital requirements. OVERVIEW Since its inception in January 1990, Physiometrix has been engaged primarily in the design and development and more recently the manufacture and sale of noninvasive, advanced medical products. The Company's products which incorporate proprietary materials and electronics technology are used in neurological monitoring applications. The Company's initial products are its e-Net headpiece and disposable HydroDot biosensors and custom electronics, which are packaged as the HydroDot NeuroMonitoring System. The Company also has two additional neurological monitoring products, the Equinox EEG System which was commercially introduced in February 1997 and the Patient State Analyzer, which was tested in its first phase of clinical trials and was submitted to the FDA for 510(k) clearance notification. The Company believes that the Patient State Analyzer, currently in its second phase of clinical trials, will be subject to FDA 510(k) clearance notification. However, the FDA may require the Company to submit a premarket approval application ("PMA") for this product. There can be no assurance that the Company will be able to obtain necessary 510(k) clearance or PMA application approval to market the Patient State Analyzer or any other products on a timely basis, if at all. Physiometrix has a limited history of operations and has experienced significant operating losses since its inception. As of March 31, 1997, the Company had an accumulated deficit of approximately $14.1 million. The HydroDot NeuroMonitoring System and Equinox are currently the Company's principal commercial products and are expected to account for most of the Company's revenue through 1997. The Company anticipates that its results of operations will fluctuate on a quarterly basis for the foreseeable future due to several factors, including actions relating to regulatory and reimbursement matters, the extent to which the Company's products gain market acceptance, introduction of alternative means for neurophysiological monitoring and competition. Results of operations will also be affected by the progress of clinical trials and inhouse development activities, and the extent to which the Company establishes distribution channels for its products domestically and internationally. There can be no assurance the Company will achieve significant commercial revenues or profitability. 7 THREE MONTHS ENDED MARCH 31, 1996 AND 1997 REVENUES Revenues increased 50% to $203,727 for the three months ended March 31, 1997 from $136,226 for the three months ended March 31, 1996. This increase is primarily the result of sales of the Company's Equinox EEG System which was commercially introduced in February 1997. COST OF GOODS SOLD Cost of goods sold increased 34% to $394,298 for the three months ended March 31, 1997 from $295,181 for the three months ended March 31, 1996. This increase was primarily due to a higher sales volume. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased 74% to $574,896 for the three months ended March 31, 1997 from $331,221 for the three months ended March 31, 1996. This increase is primarily due to additional costs for marketing personnel and advertising costs associated with the Equinox EEG System introduction this quarter. RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses consisting principally of salaries, consulting fees and clinical trial expenses increased 219% to $570,780 for the three months ended March 31, 1997 from $179,115 for the three months ended March 31, 1996. This increase is primarily the result of ongoing development and clinical evaluation for the Patient State Analyzer, development and enhancements to the Equinox low cost EEG System and continued enhancements to and support for the Company's existing products. INTEREST INCOME Interest income increased $211,307 to $215,314 for the three months ended March 31, 1997 from $4,007 for the three months ended March 31, 1996. This was the result of a higher cash balance from the Company's initial public offering which occurred on April 30, 1996. Interest expense increased $11,050 to $18,919 for the three months ended March 31, 1997 from $7,869 for the three months ended March 31, 1996. This increase was the result of borrowings in 1997 under a revolving line of credit. 8 LIQUIDITY AND CAPITAL RESOURCES At March 31, 1997, the Company's cash, cash equivalents and short-term investments were $15,998,427 as compared to $18,146,248 at December 31, 1996. The Company's operating activities used cash of $1,466,206 in the three months ended March 31, 1997 as compared to $758,441 in the three months ended March 31, 1996. The increase in cash used was the result of an increase in the net loss combined with a decrease in accounts payable and accrued expenses. The Company's investing activities provided cash of $1,923,103 for the three months ended March 31, 1997 as compared to cash used of $12,430 for the three months ended March 31, 1996. This increase was the result of maturing securities which were purchased with proceeds from the Company's initial public offering. The Company's financing activities used cash of $573,707 for the three months ended March 31, 1997 as compared to $601,127 of cash provided in the three months ended March 31, 1996. This decrease was due to the repayment of a $541,334 line of credit during the three months ended March 31, 1997 and receiving $630,994 in debt financing during the three months ended March 31, 1996. Although the Company believes that its capital resources together with cash generated from the future sale of its products will be sufficient to meet the Company's operating and capital requirements at least through 1997, there can be no assurance that the Company will not require additional financing within this time frame. There can be no assurance that additional financing, if required, will be available on satisfactory terms if at all. In addition, the Company may in the future seek to raise additional funds through bank facilities, debt or equity offerings or other sources of capital. The Company's future liquidity and capital requirements will depend on numerous factors, including progress of clinical trials involving the Patient State Analyzer, actions relating to regulatory and reimbursement matters, the costs and timing of expansion of marketing, sales, manufacturing and product development activities, the extent to which the Company's products gain market acceptance, and competitive developments. 9 PHYSIOMETRIX, INC. MARCH 31, 1997 PART II Other Information ITEM 1 Legal Proceedings: Not applicable. ITEM 2 Changes in Securities: Not applicable. ITEM 3 Defaults upon Senior Securities: Not applicable. ITEM 4 Submission of matters to a vote of security holders: Not applicable. ITEM 5 Other information: None. ITEM 6 Exhibits and reports on Form 8-K: (a) Exhibits - None 27.1 Financial Data Schedule (b) Reports on Form 8-K - None 10 PHYSIOMETRIX, INC. MARCH 31, 1997 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PHYSIOMETRIX, INC. DATE: May 12, 1997 BY: /s/ John A. Williams -------------------------------- John A. Williams President and Chief Executive Officer BY: /s/ Michael J. Tubridy -------------------------------- Michael J. Tubridy Duly Authorized Officer and Chief Financial Officer 11 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 MAR-31-1997 211,521 15,786,906 122,581 27,511 306,104 16,567,386 885,485 330,256 17,215,133 778,569 0 0 0 5,601 16,430,963 17,215,133 203,727 203,727 394,298 1,539,974 0 (1,336,247) 18,919 (1,139,852) 0 (1,139,852) 0 0 0 (1,139,852) (0.20) (0.20)
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