Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
CASM > SEC Filings for CASM > Form 10-Q on 14-May-2013All Recent SEC Filings

Show all filings for CAS MEDICAL SYSTEMS INC | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for CAS MEDICAL SYSTEMS INC


14-May-2013

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements included in this report, including without limitation statements in Management's Discussion and Analysis of Financial Condition and Results of Operations, which are not historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent the Company's current expectations regarding future events. The Company cautions that such statements are qualified by important factors that could cause actual results to differ materially from expected results which may be contained in the forward-looking statements. All forward-looking statements involve risks and uncertainties, including, but not limited to, the following: foreign currency fluctuations, regulations and other economic and political factors which affect the Company's ability to market its products internationally, changes in economic conditions that adversely affect demand for the Company's products, potential liquidity constraints, new product introductions by the Company's competitors, increased price competition, rapid technological changes, dependence upon significant customers, availability and cost of components for the Company's products, the impact of any product liability or other adverse litigation, marketplace acceptance for the Company's new products, FDA and other governmental regulatory and enforcement actions, changes in reimbursement levels from third-party payors, changes to federal research and development grant programs presently utilized by the Company and other factors described in greater detail in the Company's most recent annual report on Form 10-K.

Results of Operations

For the three months ended March 31, 2013, the Company reported a net loss applicable to common stockholders of $1,880,000, or ($0.14) per basic and diluted common share, compared to a net loss applicable to common stockholders of $2,220,000, or ($0.17) per basic and diluted common share, for the three months ended March 31, 2012.

The Company generated revenues of $5,576,000 for the three months ended March 31, 2013, an increase of $167,000, or 3%, compared to revenues of $5,409,000 for the three months ended March 31, 2012. The following table provides information with respect to revenues by major category:

Total Revenues ($000's)

                          Three Months        Three Months
                              Ended               Ended            Increase/
                         March 31, 2013      March 31, 2012        (Decrease)          % Change

Tissue Oximetry
Monitoring               $         2,234     $         1,704     $          530            31%
Traditional Vital
Signs Monitoring                   3,342               3,705               (363 )         (10%)
                         $         5,576     $         5,409     $          167             3%

Domestic Sales           $         4,225     $         4,211     $           14            0%
International Sales                1,351               1,198                153            13%
                         $         5,576     $         5,409     $          167            3%

Tissue oximetry product revenues of $2,234,000 for the three months ended March 31, 2013, were $530,000, or 31%, above the $1,704,000 reported for the same period in the prior year led by increased sensor sales. As of March 31, 2013, the Company's worldwide installed base of oximetry monitors was 773 units, an increase of 31% above the installed base of 592 as of March 31, 2012.

Traditional vital signs monitoring product revenues for the three months ended March 31, 2013, decreased $363,000, or 10%, to $3,342,000 from $3,705,000 reported for the same period in the prior year. Decreases in international sales of vital signs monitors, often influenced by large tenders, were responsible for the reduction and were partially offset by increases in vital signs monitor sales to U.S. customers.

- 14 -

Sales of all products to the U.S. market accounted for $4,225,000, or 76%, of the total revenues reported for the three months ended March 31, 2013, an increase of $14,000 from the $4,211,000 of U.S. sales reported for the three months ended March 31, 2012. International sales of all products accounted for $1,351,000, or 24%, of the total revenues reported for the three months ended March 31, 2013, an increase of $153,000, or 13%, from the $1,198,000 reported for the same period of the prior year.

The following table provides information with respect to tissue oximetry revenues:

Tissue Oximetry Revenues ($000's)

                           Three Months         Three Months
                              Ended                Ended            Increase/
                          March 31, 2013       March 31, 2012      (Decrease)      % Change

Sensor Sales             $          1,858     $          1,445     $       413         29%
Monitors & Accessories                376                  259             117         45%
                         $          2,234     $          1,704     $       530         31%

Domestic Sales           $          1,793     $          1,330     $       463         35%
International Sales                   441                  374              67         18%
                         $          2,234     $          1,704     $       530         31%

Worldwide sales of tissue oximetry products increased 31% for the first quarter of 2013 led by sales of disposable sensors. Worldwide sensor sales increased 29%, to $1,858,000 for the first quarter of 2013 from $1,445,000 for the first quarter of 2012. Domestic tissue oximetry product sales were $1,793,000, an increase of $463,000, or 35%, from the $1,330,000 recorded for the first quarter of 2012 as a result of both improved monitor and sensor sales. International tissue oximetry product sales were $441,000, an increase of $67,000, or 18%, from the first quarter of 2012 as a result of increased sensor sales.

Gross profit was $2,225,000 or 40% of sales for the three months ended March 31, 2013, compared to $2,035,000, or 38% of sales for the same period of the prior year. The improvement resulted primarily from manufacturing productivity gains.

Total operating expenses for the three months ended March 31, 2013, increased $137,000, or 3%, to $4,135,000 from $3,998,000 for the three months ended March 31, 2012.

Research and development expenses increased $163,000, or 18%, to $1,053,000 for the three months ended March 31, 2013, compared to $890,000 for the three months ended March 31, 2012. R&D expenses for the three months ended March 31, 2012, were net of $130,000 of reimbursements from the National Institutes of Health ("NIH"). The Company's NIH grant expired in late 2012, and no further reimbursements are available. Increased engineering project expenditures accounted for the balance of the increased R&D spending.

Selling, general, and administrative ("S,G&A") expenses decreased $26,000, or 1%, to $3,082,000 for the three months ended March 31, 2013, compared to $3,108,000 for the three months ended March 31, 2012. The decrease in S,G&A for the three months ended March 31, 2013, was primarily related to lower costs for trade shows and international selling expenses, largely offset by the recently enacted medical device excise tax and increased legal expenses.

Management expects operating expenses to increase for the duration of the 2013 calendar year over first quarter 2013 spending levels primarily due to increases in R&D and selling expenses.

Interest expense of $66,000 for the three months ended March 31, 2013, primarily reflects the Company's term debt agreement with its bank lender executed July 31, 2012.

- 15 -

Other income was $388,000 for the three months ended March 31, 2013, compared to $17,000 of income for the three months ended March 31, 2012. During January 2013, the Company received $381,000 related to the sale and demutualization of one of its commercial insurance providers.

The Company does not expect to record taxable income during its 2013 fiscal year. Income tax benefits that may be generated during 2013 would be offset by a deferred income tax asset valuation allowance.

Management established the valuation allowance as of December 31, 2009, as a result of cumulative pre-tax losses and its estimates of future taxable income. Management has continued to perform the required analysis regarding the realization of our deferred income tax assets concluding that a full valuation allowance is warranted. As of March 31, 2013, the deferred income tax asset valuation allowance balance was $6,608,000.

Financial Condition, Liquidity and Capital Resources

As of March 31, 2013, the Company's cash and cash equivalents and short-term investments totaled $7,746,000 compared to $10,496,000 as of December 31, 2012. Working capital decreased $577,000 to $12,042,000 as of March 31, 2013, from $12,619,000 as of December 31, 2012.

Cash used in operations for the three months ended March 31, 2013, was $2,946,000 compared to cash used in operations of $1,798,000 for the same period in the prior year. The increase in cash used from operations over the prior year period primarily related to increase in inventory and decreases in accounts payable and accrued expenses.

Cash provided by investing activities was $656,000 for the three months ended March 31, 2013, compared to cash used in investing activities of $415,000 for the same period in the prior year. Short-term investments of $493,000 for the three-months ended March 31, 2013, pertains to the transfer of funds from fully-matured certificates of deposit classified as short-term investments to the Company's principal operating account. Expenditures for property and equipment of $213,000 for the three-months ended March 31, 2013, were primarily comprised of manufacturing equipment and FORE-SIGHT cerebral oximeter customer placements. Cash flows from investing activities for the three months ended March 31, 2013, include $381,000 of income from the sale and demutualization of the Company's insurance provider during January 2013.

On July 31, 2012, the Company entered into a Loan and Security Agreement (the "Loan Agreement") with East West Bank (the "Bank"). Pursuant to the Loan Agreement, the Bank provided the Company with a secured three-year $3,500,000 term loan (the "Term Loan") which bears interest at 5.5% and contained a 12-month interest-only feature. On May 10, 2013, the Company amended the Loan Agreement which increased the principal to $5,000,000 and extended the maturity date of the Term Loan to July 31, 2016, with principal payable in 24 equal installments of approximately $221,000 including interest commencing August 1, 2014. The interest rate was modified to 5.75%.

The Loan Agreement, as amended, also contains a revolving line-of-credit (the "Revolver") facility with maximum borrowings of $2,000,000 and an expiration date of July 31, 2014. Under the amended Loan Agreement, advances under the Revolver bear interest at a floating rate equal to 2.00% above the Bank's prime rate, with a 3.25% floor on the prime rate, representing an effective rate of 5.25%, as of March 31, 2013. Interest on the loan is payable monthly. The Company is permitted to borrow against eligible accounts receivable as defined under the Revolver according to pre-established criteria. The amount available for borrowing under the Revolver as of March 31, 2013, was $1,471,000. There were no borrowings under the Revolver as of March 31, 2013.

Our 2013 business plans call for increased operating expenditures primarily to develop and market our FORE-SIGHTŪ technology and our other product lines. Our ordinary short-term capital needs are expected to be met from our current cash on hand and amounts available under our Loan Agreement with East West Bank. However, we may, from time to time, seek additional funding through a combination of equity and debt financings or from other sources.

- 16 -

Critical Accounting Policies and Estimates

The Company's discussion and analysis of financial condition and results of operations are based on the condensed consolidated financial statements. The preparation of these financial statements requires the Company to make estimates and judgments that affect the amounts reported in them. The Company's critical accounting policies and estimates include those related to revenue recognition, the valuations of inventories and deferred income tax assets, measuring stock compensation and warranty costs, determining useful lives of intangible assets, and making asset impairment valuations. The Company bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional information about the Company's critical accounting policies and estimates, see Item 7 and Note 2 to the financial statements included in the Company's Form 10-K for the year ended December 31, 2012. There were no significant changes in critical accounting policies and estimates during the three months ended March 31, 2013.

  Add CASM to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for CASM - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.