SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
XX Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934.
For the period ended December 31, 2004.
___ 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: 0-16128
TUTOGEN MEDICAL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-3100165
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1130 MCBRIDE AVENUE, WEST PATERSON, NEW JERSEY 07424
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 785-0004
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.01
(Title of Class) (Name of Each Exchange on Which Registered)
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 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_.
As of January 31, 2005 there were outstanding 15,915,960 shares of Tutogen
Medical, Inc. Common Stock, par value $0.01.
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
INDEX
PART I. Financial Information. Page No.
ITEM 1. Financial Statements.
Consolidated Balance Sheets - December 31, 2004 1
(unaudited) and September 30, 2004.
Consolidated Statements of Operations for the 2
three months ended December 31, 2004 and
2003(unaudited).
Consolidated Statements of Cash Flows for the 3
three months ended December 31, 2004 and
2003(unaudited).
Consolidated Statements of Stockholders' Equity 4
for the year ended September 30, 2004 and the
three months ended December 31, 2004 (unaudited).
Notes to Consolidated Financial Statements 5
(unaudited).
ITEM 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations.
ITEM 3. Quantitative Statements and Supplementary 13
Data
ITEM 4. Controls and Procedures 13
PART II. ITEM 6. Reports on Form 8-K 14
SIGNATURES 15
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
DECEMBER 31, SEPTEMBER 30,
2004 2004
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,199 $ 5,063
Marketable security 491 -
Accounts receivable - net of allowance for doubtful
accounts of $203 in December 2004 and $192 in
September 2004 4,711 4,922
Inventories - net 15,167 15,072
Deferred income taxes 603 425
Other current assets 856 1,409
------------ ------------
25,027 26,891
PROPERTY, PLANT AND EQUIPMENT, NET 6,337 6,138
DEFERRED INCOME TAXES 1,288 1,318
------------ ------------
TOTAL ASSETS $ 32,652 $ 34,347
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other accrued expenses $ 5,690 $ 6,521
Accrued commissions 1,629 1,521
Current portion of deferred distribution fees 704 642
Current portion of long-term debt 183 173
------------ ------------
8,206 8,857
OTHER LIABILITIES
Deferred distribution fees 2,617 2,580
Long-term debt 842 827
SHAREHOLDERS' EQUITY 20,987 22,083
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 32,652 $ 34,347
============ ============
See accompanying Notes to Consolidated Financial Statements.
1
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
2004 2003
---- ----
REVENUE $ 7,073 $ 7,485
COST OF REVENUE 3,760 2,989
------------ ------------
Gross margin 3,313 4,496
OPERATING EXPENSES
General and administrative 1,142 1,229
Distribution and marketing 2,711 2,070
Research and development 390 339
------------ ------------
4,243 3,638
OPERATING (LOSS) INCOME (930) 858
FOREIGN EXCHANGE LOSS (579) (40)
OTHER (EXPENSE) INCOME (4) 21
INTEREST EXPENSE (17) (14)
------------ ------------
(600) (33)
(L0SS) INCOME BEFORE INCOME TAX EXPENSE (1,530) 825
Income (benefit) tax expense (148) 243
------------ ------------
NET (LOSS) INCOME $ (1,382) $ 582
============ =============
Comprehensive Income:
Foreign currency translation adjustments 286 190
------------ ------------
COMPREHENSIVE (LOSS) INCOME $ (1,096) $ 772
============ =============
AVERAGE SHARES OUTSTANDING FOR BASIC
(LOSS) EARNINGS PER SHARE 15,915,960 15,667,195
============ =============
BASIC (LOSS) EARNINGS PER SHARE $ (0.09) $ 0.04
============ =============
AVERAGE SHARES OUTSTANDING FOR DILUTED
(LOSS) EARNINGS PER SHARE 15,915,960 16,682,431
============ =============
DILUTED (LOSS) EARNINGS PER SHARE $ (0.09) $ 0.04
============ =============
See accompanying Notes to Consolidated Financial Statements
2
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
2004 2003
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $ (1,382) $ 582
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization 190 189
Deferred distribution fees revenue (172) (157)
Deferred income taxes (148) 41
Reserve for obsolesence (62) -
Changes in assets and liabilities:
Accounts receivable 469 1,009
Inventories 359 (909)
Other current assets 633 500
Accounts payable and other accrued expenses (1,737) (558)
Accrued commissions 107 28
------------- -------------
Net cash (used in) provided by operating
activities (1,743) 725
CASH FLOWS USED IN INVESTING ACTIVITIES
Investment in a marketable security (491) -
Purchase of property and equipment (389) (194)
------------- -------------
Net cash used in investing activities (880) (194)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock - 2
Repayment of long-term debt (34) (15)
------------- -------------
Net cash provided by financing activities (34) (13)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 793 64
------------- -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,864) 582
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,063 5,049
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,199 $ 5,631
============= =============
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 17 $ 14
============= =============
Income taxes paid $ 61 $ -
============= =============
See accompanying Notes to Consolidated Financial Statements
3
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEAR ENDED SEPTEMBER 30, 2004 AND THREE MONTHS ENDED DECEMBER 31, 2004
(Unaudited)
(In Thousands, Except for Share Data)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED COMMON
COMMON ADDITIONAL OTHER SHARES
STOCK PAID-IN COMPREHENSIVE ACCUMULATED ISSUED AND
($.01 PAR) CAPITAL INCOME (1) DEFICIT TOTAL OUTSTANDING
BALANCE, OCTOBER 1, 2003 $ 157 $ 35,980 $ 81 $ (18,172) $ 18,046 15,667,110
Stock issued on exercise of options 2 365 - - 367 248,850
Net income - - - 1,503 1,503 -
Foreign currency translation adjustment - - 2,167 - 2,167 -
--------- --------- ---------- ---------- --------- -----------
BALANCE, SEPTEMBER 30, 2004 159 36,345 2,248 (16,669) 22,083 15,915,960
Net (loss) income - - - (1,382) (1,382) -
Foreign currency translation adjustment - - 286 - 286 -
--------- --------- ---------- ---------- --------- -----------
BALANCE, June 30, 2004 $ 159 $ 36,345 $ 2,534 $ (18,051) $ 20,987 15,915,960
========= ========= ========== ========== ========= ===========
(1) Represents foreign currency translation adjustments.
See accompanying Notes to Consolidated Financial Statements.
4
TUTOGEN MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 2004
(IN THOUSANDS, EXCEPT SHARE DATA)
(1) OPERATIONS AND ORGANIZATION
Tutogen Medical, Inc. with its consolidated subsidiaries (the "Company")
processes, manufactures and distributes worldwide, specialty surgical
products and performs tissue processing services for neuro, orthopedic,
reconstructive and general surgical applications. The Company's core
business is processing human donor tissue, utilizing its patented
Tutoplast(R) process, for distribution to hospitals and surgeons. The
Company processes at its two manufacturing facilities in Germany and the
United States and distributes its products and services to over 30
countries worldwide.
(2) BASIS OF PRESENTATION
The accompanying unaudited consolidated balance sheet of the of the
Company as of December 31, 2004 and the unaudited results of operations
for the three months ended December 31, 2004 and 2003 and the unaudited
cash flows for the three months ended December 31, 2004 and 2003 have
been prepared in conformity with accounting principles generally
accepted in the United States of America for interim financial
reporting. Accordingly, they do not include all of the information and
notes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments necessary in order to make the financial
statements not misleading have been made. Operating results for the
three months ended December 31, 2004 are not necessarily indicative of
the results, which may be expected for the fiscal year ending September
30, 2005. The interim financial statements should be read in conjunction
with the audited consolidated financial statements of the Company for
the year ended September 30, 2004.
(3) NEW ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Standards Board ("FASB")
issued Statement 123 (Revised), SHARE-BASED PAYMENT,that will require
compensation costs related to share-based payment transactions to be
recognized in the financial statements. This statement is effective as
of the beginning of the first interim or annual reporting period that
begins after June 15, 2005. The adoption of FASB No. 123 (Revised) is
not expected to have a material impact on the results of operations or
financial position of the Company.
In November 2004, the FASB issued Statement 151, INVENTORY COSTS, AN
AMENDMENT OF ARB NO. 43, CHAPTER 4 to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling costs, and
wasted material (spoilage). This statement is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. The
adoption of FASB No. 151 is not expected to have a material impact on
the results of operations or financial position of the Company.
In January 2003, the FASB issued FIN No. 46, as restated by FIN No. 46R,
CONSOLIDATION OF VARIABLE INTEREST ENTITIES, AND AN INTERPRETATION OF
ARB 51. FIN No. 46 defines when a business enterprise
5
must consolidate a variable interest entity. This interpretation applies
immediately to variable interest entities created after January 31,
2003. It applies in the first fiscal year or interim period beginning
after December 15, 2003, to entities in which an enterprise holds a
variable interest that it acquired before February 1, 2003. The Company
does not have variable interest entities as of December 31, 2004.
(4) STOCK-BASED AWARDS
The FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, which amends SFAS No. 123,
Accounting for Stock-Based Compensation. SFAS 148 provides alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. (Under the
fair value based method, compensation cost for stock options is measured
when options are issued). In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require more prominent and
more frequent disclosures in financial statements of the effects of
stock-based compensation. The Company adopted SFAS No. 148 beginning in
the second fiscal quarter of fiscal 2003 and such disclosures are
included as herein.
The following table reconciles net (loss) income and basic and diluted
(loss) earnings per share ("EPS"), as reported, to pro-forma net (loss)
income and basic and diluted EPS, as if the Company had expensed the
fair value of stock options as permitted by SFAS No. 123, as amended by
SFAS No. 148, since it permits alternative methods of adoption.
Three Months Ended
December 31,
2004 2003
---- ----
Net (loss) income, as reported: ($1,382) $582
Pro-forma expense as if stock options were
charged against net (loss) income 10 16
-------- --------
Pro-forma net (loss) income using the fair value method ($1,392) $566
======== ========
Basic EPS:
As reported ($0.09) $0.04
Pro forma using the fair value method ($0.09) $0.04
Diluted EPS:
As reported ($0.09) $0.04
Pro forma using the fair value method ($0.09) $0.03
6
(5) MARKETABLE SECURITY
The marketable security represents one U.S. Treasury Note with a face
value of $490 and a coupon rate of 1.875% maturing on December 31, 2005.
(6) INVENTORIES
Major classes of inventory at December 31, 2004 and September 30, 2004
were as follows:
December 31, September 30,
2004 2004
---- ----
Raw materials $ 2,462 $ 2,171
Work in process 6,692 6,560
Finished goods 8,540 8,791
--------- ---------
17,694 17,522
Less reserves for obsolescence 2,527 2,450
--------- ---------
$ 15,167 $ 15,072
========= =========
(7) INCOME TAXES
The Company has incurred cumulative net operating losses ("NOL's")
through December 31, 2004 of approximately $12 million, generated from
its U.S. and German operations of $9 million and $3 million,
respectively. These net operating losses are the primary component of
the Company's net deferred tax asset of $1.9 million as of December 31,
2004, generated from its U.S. and German operations. A full valuation
allowance had been provided on all but $135 thousand of the U.S.
deferred tax asset and no valuation allowance has been provided on its
German operations in the Company's consolidated financial statements.
The Company establishes valuation allowances in accordance with the
provisions of FASB Statement No. 109, ACCOUNTING FOR INCOME TAXES. The
Company continually reviews the adequacy and necessity of the valuation
allowance and recognizes these benefits only as reassessment, based on
recent developments including income from new contracts, indicates that
it is more likely than not that the benefits will be realized. As of
December 31, 2004 the Company continues to record the existing valuation
allowance on its U.S. operations and has not provided a valuation
allowance on its German operations based upon future taxable income
projections and the NOL's in the German operation have no expiration
date.
(8) SEGMENT DATA
The Company operates principally in one industry providing specialty
surgical products and tissue processing services. These operations
include two geographically determined segments: the United States and
Europe ("International"). The accounting policies of these segments are
the same as those described in the summary of significant accounting
policies. The Company evaluates performance based on net profit or loss
from operations, not including non-recurring and foreign exchange gains
or losses. The Company accounts for intersegment sales and transfers at
contractually agreed-upon prices.
7
The Company's reportable segments are strategic business units that
offer products and services to different geographic markets. They are
managed separately because of the differences in these markets as well
as their physical location.
A summary of the operations and assets by segment as of and for the
three months ended December 31, 2004 and 2003, respectively areas
follows:
2004 INTERNATIONAL UNITED STATES CONSOLIDATED
Gross revenue $ 3,964 $ 4,916 $ 8,880
Less - intercompany (1,807) - (1,807)
---------- ----------- ----------
Total revenue - third party $ 2,157 $ 4,916 $ 7,073
========== =========== ==========
Depreciation and amortization $ 126 $ 64 $ 190
========== =========== ==========
Operating (loss) $ (405) $ (525) $ (930)
========== =========== ==========
Interest expense $ 12 $ 5 $ 17
========== =========== ==========
Net (loss) $ (438) $ (944) $ (1,382)
========== =========== ==========
Capital expenditures $ 355 $ 34 $ 389
========== =========== ==========
Identifiable assets $ 11,062 $ 21,590 $ 32,652
========== =========== ==========
8
2003 INTERNATIONAL UNITED STATES CONSOLIDATED
Gross revenue $ 5,695 $ 5,063 $ 10,758
Less - intercompany (3,273) - (3,273)
---------- ----------- ----------
Total revenue - third party $ 2,422 $ 5,063 $ 7,485
========== =========== ==========
Operating income $ 765 $ 93 $ 858
========== =========== ==========
Depreciation and amortization $ 134 $ 55 $ 189
========== =========== ==========
Interest expense $ 12 $ 2 $ 14
========== =========== ==========
Net income $ 446 $ 136 $ 582
========== =========== ==========
Capital expenditures $ 164 $ 30 $ 194
========== =========== ==========
Identifiable assets $ 8,316 $ 22,909 $ 31,225
========== =========== ==========
(9) SUBSEQUENT EVENT
In January 2005, the Company has entered into a foreign exchange hedging
transaction of $700 per month for a three-month period totaling $2.1
million to purchase euros at a predetermined exchange rate. These
amounts represent payments for intercompany purchase transactions with
its German subsidiary.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(IN THOUSANDS)
RESULTS OF OPERATIONS
REVENUE AND GROSS MARGIN
Revenues for the three months ended December 31, 2004, decreased 5% to $7,073
from $7,485 in 2003. Foreign currency translations had the effect of increasing
total revenues by $320. The U.S. operation had a slight decrease in revenue of
$147 from $5,063 to $4,916 for this quarter or 3%. The spine revenues decreased
$1.0 million from $2.1 to $1.1 million this quarter due solely to the
fulfillment of approximately $1.0 million of backorders in 2003. The decrease in
Spine business was offset by an increase in the demand for the Company's
Tutoplast(R) bone products for dental applications sold by Zimmer Dental
("Dental"), the Company's marketing partner. This product line contributed an
increase of $1.2 million or 85% from the comparable quarter. The urology
business decreased $194 as the demand has decreased due to competition from
synthetic users. The International operation had an decrease in revenue of $265
from $2,422 to $2,157. The decrease in International revenue was due to a
temporary delay in the renewal of the CE marks ("European Conformity") on
certain products, which have now been resolved.
Gross margin, for the three months ended December 31, 2004 was 47%, as compared
to 60% for the comparable period last year. The lower gross margin was due to an
unfavorable product mix of lower margin products from the dental product
revenues versus the higher margin spine revenues and higher production costs due
to the strengthening of the euro against the U.S. dollar. The spine revenues
decreased to 15% of total revenues versus 27% a year ago.
GENERAL AND ADMINISTRATIVE
General and administrative expenses decreased 7% as the result cost control
measures, despite an increase of $48 due to the translation of the euro-based
expenses as the result of the weakening of the U.S. dollar, for the three months
ended December 31, 2004, from the comparable period last year. As a percentage
of revenues, for the three months ended December 31, 2004, General and
Administrative expenses remained at 16% for 2004 and 2003.
DISTRIBUTION AND MARKETING
Distribution and marketing expenses increased from $2,106 to $2,711 or 29% for
the three months ended December 31, 2004 from the comparable period last year.
The increase was primarily due to higher marketing fees paid to Dental of $1,252
versus $649 a year ago as a result of an 85% increase in Dental sales. In
addition, the translation of the euro-based expenses as the result of the
weakening of the U.S. dollar had an unfavorable impact of $103. For the three
months ended December 31, 2004, as a percentage of revenues, Distribution and
Marketing expenses increased from 28% in 2003 to 38% in 2004.
10
RESEARCH AND DEVELOPMENT
Research and development expenses increased 15% for the three months ended
December 31, 2004, from the comparable period last year. The increase was
primarily due to the translation of the euro-based expenses as the result of the
weakening of the U.S. dollar. For the three months ended December 31, 2004, as a
percentage of revenues, Research and Development expenses increased from 5% in
2003 to 6% in 2004.
FOREIGN EXCHANGE LOSSES
Foreign exchange losses increased to $579 from $40 for the three months ended
December 31, 2004 and 2003, respectively. This was primarily the result of
higher foreign exchange losses due to the weakness of the dollar versus the euro
and higher inter-company balances at quarter-end.
OTHER EXPENSE (INCOME)
Other expenses increased were $4 compared to other income of $21 a year ago due
primarily to higher interest income in 2003.
INTEREST EXPENSE
Interest expense was essentially flat from period to period.
NET (LOSS) INCOME
As a result of the above, net loss for the three months ended December 31, 2004
totaled $1,382 or $0.09 basic and diluted loss per share, as compared to a net
income of $582 or $0.04 basic and diluted earnings per share for the comparable
period in 2003.
INVENTORY
Inventory was essentially flat, from $15.1 million at last fiscal year-end to
$15.2 million at December 31, 2004. The 9% weakening of the dollar against the
Euro had the effect of increasing the inventory by $419. Raw materials are up
13%, which reflects the receipt of higher than anticipated shipments of human
tissue towards the end of the quarter, while work-in-process ("WIP") is up 2%.
The increase in WIP is due solely to the increase in inventory to support the
Dental product lines. Finished goods are down 2% reflecting the sell-through of
the slow-moving inventory.
CRITICAL ACCOUNTING POLICIES
The Company's significant accounting policies are more fully described in Note 2
to the consolidated financial statements in the annual report. However, certain
of the accounting policies are particularly important to the portrayal of the
financial position and results of operations and require the application of
significant judgment by management; as a result, they are subject to an inherent
degree of uncertainty. In applying those policies, management uses its judgment
to determine the appropriate assumptions to be
11
used in the determination of certain estimates. Those estimates are based on
historical experience, terms of existing contracts, observance of trends in the
industry, information provided by customers and information available from other
outside sources, as appropriate. The Company's significant accounting policies
include:
INVENTORIES. Inventories are valued at the lower of cost (weighted average
basis) or market. Work in process and finished goods include costs attributable
to direct labor and overhead. Reserves for slow moving and obsolete inventories
are provided based on historical experience and current product demand. The
adequacy of these reserves is evaluated quarterly.
REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE. Revenue on product sales is
recognized when persuasive evidence of an arrangement exists, the price is
fixed, final delivery has occurred and there is a reasonable assurance of
collection of the sales proceeds. Oral or written purchase authorizations are
generally obtained from customers for a specified amount of product at a
specified price. Delivery is to have occurred at the time of shipment. Customers
are provided with a limited right of return. Revenue is recognized at shipment.
Reasonable and reliable estimates of product returns are made in accordance with
SFAS No. 48 and of allowances for doubtful accounts based on significant
historical experience. Revenue from service sales is recognized when the service
procedures have been completed or applicable milestones have been achieved.
Revenue from distribution fees includes nonrefundable payments received as a
result of exclusive distribution agreements between the Company and independent
distributors. Distribution fees under these arrangements are recognized as
revenue as products are delivered.
FOREIGN CURRENCY TRANSLATION. The functional currency of the Company's German
subsidiary is the Euro for the years 2004 and 2003. Assets and liabilities of
foreign subsidiaries are translated at the period end exchange rate while
revenues and expenses are translated at the average exchange rate for the year.
The resulting translation adjustments, representing unrealized, non-cash losses
are made directly to comprehensive income. Gains and losses resulting from
transactions of the Company and its subsidiaries, which are made in currencies
different from their own, are included in income as they occur. The Company
recognized currency losses of $579 in 2004 and $40 in 2003. The exchange rates
at December 31, 2004 and December 31, 2003 were euro 0.77/U.S. dollar and euro
0.84/U.S. Dollar, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2004, the Company has working capital of $16.8 million as
compared to September 30, 2004 of $18.0 million. The Company maintains current
working capital credit lines totaling 1.5 million euros (approximately $2.0
million) with several German banks and a $1.0 million credit line with a U.S.
bank. At December 31, 2004, the Company had no borrowings against these lines.
The Company has experienced a negative cash flow of $1.4 million for the three
months ended December 31, 2004 as compared to a positive cash flow of $582 for
the same period in 2003. The primary reason for the negative cash flow in 2004
was due to the net loss this quarter and the payments for capital expenditures
associated with the completion of a new clean room at the German manufacturing
facility. The Company's ability to generate positive operational cash flow is
dependent upon increasing processing revenues through increased recoveries by
tissue banks in the U.S. and Europe, and the development of additional markets
and surgical applications worldwide. While the Company believes
12
that it continues to make progress in both these areas, there can be no
assurances that changing governmental regulations will not have a material
adverse effect on the results of operations and cash flow.
Future minimum rental payments required under Company's leases that have initial
or remaining non-cancelable lease terms in excess of one year as of December 31,
2004 are as follows:
2005 $ 1,045
2006 492
2007 274
2008 164
2009 65
------------
$ 2,040
============
Long-term debt consists of senior debt, 5.75% interest until March 30, 2008 when
terms are renegotiable, due 2008. Future minimum payments as of December 31,
2004 are as follows:
2005 $ 183
2006 193
2007 178
2008 471
------------
$ 1,025
============
ITEM 3. QUANTITATIVE STATEMENTS AND SUPPLEMENTARY DATA
For information regarding the Company's exposure to certain market risks, see
Item 7A, Quantitative Statements and Supplementary Data, in the Annual Report on
Form 10K for the year ended September 30, 2004. There have been no significant
changes in our market risk exposures form the fiscal 2004 year-end, except that
in January 2005, the Company has now engaged in a hedging program as explained
in Note 9, Subsequent Event, of the Notes to the Consolidated Financial
Statements.
ITEM 4. CONTROLS AND PROCEDURES
Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13 a-14. Based
upon that evaluation, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) that is required to be
included in the Company's periodic filings with the Securities and Exchange
Commission. There have been no significant changes in the Company's internal
controls or, to the Company's knowledge, in other factors that could
significantly affect those internal controls subsequent to the date the Company
carried out its evaluation.
13
PART II. OTHER INFORMATION
ITEM 6. REPORTS ON FORM 8-K
The Company filed no Reports on Form 8-K during the quarter
ended December 31, 2004.
14
SIGNATURES
Registrant has duly caused this report to be signed on its behalf by the
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
undersigned, thereunto duly authorized.
TUTOGEN MEDICAL, INC.
Date: February 11, 2005 /s/ Guy L. Mayer
----------------
Chief Executive Officer
Date: February 11, 2005 /s/ George Lombardi
-----------------------
Chief Financial Officer
(Principal Financial and Accounting
Officer)
15
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10QSB of Tutogen Medical, Inc.
(the "Company") for the three months ended December 31, 2004 as filed with the
Securities and Exchange commission on the date hereof (the "Report"), I George
Lombardi, as the Chief Financial Officer of the Company, hereby certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13
(a) or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date: February 11, 2005
TUTOGEN MEDICAL, INC.
/s/ George Lombardi
-------------------
George Lombardi
Chief Financial Officer, Treasurer
and Secretary
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10QSB of Tutogen Medical, Inc.
(the "Company") for the three months ended December 31, 2004 as filed with the
Securities and Exchange commission on the date hereof (the "Report"), I Guy L.
Mayer, as the Chief Executive Officer of the Company, hereby certify, pursuant
to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act
of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13
(a) or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date: February 11, 2005
TUTOGEN MEDICAL, INC.
/s/ Guy L. Mayer
----------------
Chief Executive Officer
CERTIFICATION
I GEORGE LOMBARDI CERTIFY THAT:
1. I HAVE REVIEWED THIS QUARTERLY REPORT ON FORM 10-Q OF TUTOGEN MEDICAL,
INC.
2. BASED ON MY KNOWLEDGE, THIS QUARTERLY REPORT DOES NOT CONTAIN ANY UNTRUE
STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY
TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
SUCH STATEMENTS WERE MADE, NOT MISLEADING WITH RESPECT TO THE PERIOD
COVERED BY THIS QUARTERLY REPORT;
3. BASED ON MY KNOWLEDGE, THE FINANCIAL STATEMENTS AND OTHER FINANCIAL
INFORMATION INCLUDED IN THE QUARTERLY REPORT FAIRLY PRESENT IN ALL
MATERIAL RESPECTS, THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
CASH FLOWS OF THE REGISTRANT AS OF, AND FOR, THE PERIODS PRESENTED IN
THIS QUARTERLY REPORT;
4. THE REGISTRANT'S OTHER CERTIFYING OFFICER AND I AM RESPONSIBLE FOR
ESTABLISHING AND MAINTAINING DISCLOSURE CONTROLS AND PROCEDURES (AS
DEFINED IN EXCHANGE ACT RULES 13A-14 AND 15D-14) FOR THE REGISTRANT AND
HAVE:
A) DESIGNED SUCH DISCLOSURE CONTROLS AND PROCEDURES TO
ENSURE THAT MATERIAL INFORMATION RELATING TO THE REGISTRANT,
INCLUDING ITS CONSOLIDATED SUBSIDIARIES, IS MADE KNOWN TO US BY
OTHERS WITHIN THOSE ENTITIES, PARTICULARLY DURING THE PERIOD IN
WHICH THIS QUARTERLY REPORT IS BEING PREPARED;
B) EVALUATED THE EFFECTIVENESS OF THE REGISTRANT'S
DISCLOSURE CONTROLS AND PROCEDURES AS OF A DATE WITHIN 90 DAYS
PRIOR TO THE FILING DATE OF THIS QUARTERLY REPORT (THE
"EVALUATION DATE"); AND
C) PRESENTED IN THIS QUARTERLY REPORT OUR CONCLUSIONS ABOUT
THE EFFECTIVENESS OF THE DISCLOSURE CONTROLS AND PROCEDURES
BASED ON OUR EVALUATION AS OF THE EVALUATION DATE.
5. THE REGISTRANT'S OTHER CERTIFYING OFFICER AND I HAVE DISCLOSED, BASED ON
OUR MOST RECENT EVALUATION, TO THE REGISTRANT'S AUDITORS AND THE AUDIT
COMMITTEE OF REGISTRANT'S BOARD OF DIRECTORS (OR PERSONS PERFORMING THE
EQUIVALENT FUNCTIONS):
A) ALL SIGNIFICANT DEFICIENCIES IN THE DESIGN OR OPERATION
OF INTERNAL CONTROLS WHICH COULD ADVERSELY AFFECT THE
REGISTRANT'S ABILITY TO RECORD, PROCESS, SUMMARIZE AND REPORT
FINANCIAL DATA AND HAVE IDENTIFIED FOR THE REGISTRANT'S AUDITORS
ANY MATERIAL WEAKNESSES IN INTERNAL CONTROLS; AND
B) ANY FRAUD, WHETHER OR NOT MATERIAL, THAT INVOLVES
MANAGEMENT OR OTHER EMPLOYEES WHO HAVE A SIGNIFICANT ROLE IN THE
REGISTRANT'S INTERNAL CONTROLS.
CERTIFICATION
6. THE REGISTRANT'S OTHER CERTIFYING OFFICERS AND I HAVE INDICATED IN THIS
QUARTERLY REPORT WHETHER THERE WERE SIGNIFICANT CHANGES IN INTERNAL
CONTROLS OR IN OTHER FACTORS THAT COULD SIGNIFICANTLY AFFECT INTERNAL
CONTROLS SUBSEQUENT TO THE DATE OF OUR MOST RECENT EVALUATION, INCLUDING
ANY CORRECTIVE ACTIONS WITH REGARD TO SIGNIFICANT DEFICIENCIES AND
MATERIAL WEAKNESSES.
DATE: FEBRUARY 11, 2005
BY:
NAME: /S/ GEORGE LOMBARDI
TITLE: CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
PAGE 2
CERTIFICATION
I GUY L. MAYER CERTIFY THAT:
1. I HAVE REVIEWED THIS QUARTERLY REPORT ON FORM 10-QSB OF TUTOGEN MEDICAL,
INC.
2. BASED ON MY KNOWLEDGE, THIS QUARTERLY REPORT DOES NOT CONTAIN ANY UNTRUE
STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY
TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH
SUCH STATEMENTS WERE MADE, NOT MISLEADING WITH RESPECT TO THE PERIOD
COVERED BY THIS QUARTERLY REPORT;
3. BASED ON MY KNOWLEDGE, THE FINANCIAL STATEMENTS AND OTHER FINANCIAL
INFORMATION INCLUDED IN THE QUARTERLY REPORT FAIRLY PRESENT IN ALL
MATERIAL RESPECTS, THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
CASH FLOWS OF THE REGISTRANT AS OF, AND FOR, THE PERIODS PRESENTED IN
THIS QUARTERLY REPORT;
4. THE REGISTRANT'S OTHER CERTIFYING OFFICER AND I AM RESPONSIBLE FOR
ESTABLISHING AND MAINTAINING DISCLOSURE CONTROLS AND PROCEDURES (AS
DEFINED IN EXCHANGE ACT RULES 13A-15 (E) AND 15D-15(E)) FOR THE
REGISTRANT AND HAVE:
A) DESIGNED SUCH DISCLOSURE CONTROLS AND PROCEDURES TO
ENSURE THAT MATERIAL INFORMATION RELATING TO THE REGISTRANT,
INCLUDING ITS CONSOLIDATED SUBSIDIARIES, IS MADE KNOWN TO US BY
OTHERS WITHIN THOSE ENTITIES, PARTICULARLY DURING THE PERIOD IN
WHICH THIS QUARTERLY REPORT IS BEING PREPARED;
B) EVALUATED THE EFFECTIVENESS OF THE REGISTRANT'S
DISCLOSURE CONTROLS AND PROCEDURES AS OF A DATE WITHIN 90 DAYS
PRIOR TO THE FILING DATE OF THIS QUARTERLY REPORT (THE
"EVALUATION DATE"); AND
C) PRESENTED IN THIS QUARTERLY REPORT OUR CONCLUSIONS ABOUT
THE EFFECTIVENESS OF THE DISCLOSURE CONTROLS AND PROCEDURES
BASED ON OUR EVALUATION AS OF THE EVALUATION DATE.
5. THE REGISTRANT'S OTHER CERTIFYING OFFICER AND I HAVE DISCLOSED, BASED ON
OUR MOST RECENT EVALUATION, TO THE REGISTRANT'S AUDITORS AND THE AUDIT
COMMITTEE OF REGISTRANT'S BOARD OF DIRECTORS (OR PERSONS PERFORMING THE
EQUIVALENT FUNCTIONS):
A) ALL SIGNIFICANT DEFICIENCIES IN THE DESIGN OR OPERATION
OF INTERNAL CONTROLS WHICH COULD ADVERSELY AFFECT THE
REGISTRANT'S ABILITY TO RECORD, PROCESS, SUMMARIZE AND REPORT
FINANCIAL DATA AND HAVE IDENTIFIED FOR THE REGISTRANT'S AUDITORS
ANY MATERIAL WEAKNESSES IN INTERNAL CONTROLS; AND
B) ANY FRAUD, WHETHER OR NOT MATERIAL, THAT INVOLVES
MANAGEMENT OR OTHER EMPLOYEES WHO HAVE A SIGNIFICANT ROLE IN THE
REGISTRANT'S INTERNAL CONTROLS.
CERTIFICATION
6. THE REGISTRANT'S OTHER CERTIFYING OFFICERS AND I HAVE INDICATED IN THIS
QUARTERLY REPORT WHETHER THERE WERE SIGNIFICANT CHANGES IN INTERNAL
CONTROLS OR IN OTHER FACTORS THAT COULD SIGNIFICANTLY AFFECT INTERNAL
CONTROLS SUBSEQUENT TO THE DATE OF OUR MOST RECENT EVALUATION, INCLUDING
ANY CORRECTIVE ACTIONS WITH REGARD TO SIGNIFICANT DEFICIENCIES AND
MATERIAL WEAKNESSES.
DATE: FEBRUARY 11, 2005
BY:
NAME: /S/ GUY L. MAYER
TITLE: CHIEF EXECUTIVE OFFICER
PAGE 2