UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
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Exchange Act of 1934.
For the quarterly period ended June 30, 2001
Transition period pursuant to Section 13 or 15(d) of the Securities
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Exchange Act of 1934.
For the transition period from to .
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0-20727
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(Commission File Number)
Novoste Corporation
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(Exact Name of Registrant as Specified in Its Charter)
Florida 59-2787476
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3890 Steve Reynolds Blvd., Norcross, GA 30093
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone, including area code: (770) 717-0904
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
requirements for the past 90 days.
(Item 1) Yes X No
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(Item 2) Yes X No
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As of August 1, 2001 there were 16,203,807 shares of the Registrant's Common
Stock outstanding.
NOVOSTE CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2001 (unaudited)
and December 31, 2000............................................ 3
Consolidated Statements of Operations (unaudited) for the six
months ended June 30, 2001 and 2000.............................. 4
Consolidated Statements of Cash Flows (unaudited) for the six
months ended June 30, 2001 and 2000.............................. 5
Notes to Unaudited Consolidated Financial Statements............... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk......... 14
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.......................... 14
Item 4. Submission of Matters to a Vote of Security Holders................ 14
Item 5. Other Information.................................................. 15
Item 6. Reports on Form 8-K................................................ 15
SIGNATURES...................................................................... 16
2
NOVOSTE CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, 2001 December 31, 2000
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(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,792,055 $ 26,512,398
Short-term investments 28,845,851 30,655,436
Accounts receivable, net of allowance of $599,244 at June 30,
2001 and $311,310 at December 31, 2000 13,270,313 4,469,781
Inventories 2,391,803 1,251,687
Prepaid expenses and other current assets 802,243 482,383
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Total current assets 53,102,265 63,371,685
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Property and equipment, net 8,895,904 7,277,734
Radiation and transfer devices, net 8,805,691 5,480,948
Other assets 1,309,708 942,427
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Total assets $ 72,113,568 $ 77,072,794
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,910,741 $ 3,425,250
Accrued expenses 7,895,137 5,415,277
Unearned revenue 3,069,427 580,817
Capital lease obligations 123,807 208,805
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Total current liabilities 13,999,112 9,630,149
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Long-term liabilities
Capital lease obligations 475,152 400,526
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Shareholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock, $.01 par value, 25,000,000 shares authorized;
16,184,184 and 16,094,635 shares issued, respectively 161,842 160,946
Additional paid-in-capital 186,517,178 184,511,610
Other accumulated comprehensive loss (1,336,726) (93,690)
Accumulated deficit (126,199,861) (116,274,687)
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59,142,433 68,304,179
Less treasury stock, 5,780 shares of common stock at cost (23,840) (23,840)
Unearned compensation (1,479,289) (1,238,220)
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Total shareholders' equity 57,639,304 67,042,119
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Total liabilities and shareholders' equity $ 72,113,568 $ 77,072,794
============= =============
See accompanying notes.
3
NOVOSTE CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended June 30, Six months ended June 30,
------------------------------- --------------------------------
2001 2000 2001 2000
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Net Sales $17,290,707 $ 1,197,647 $ 26,581,336 $ 2,043,693
Cost of Sales 5,725,840 770,013 9,470,344 1,523,393
----------- ----------- ------------ ------------
Gross Margin 11,564,867 427,634 17,110,992 520,300
----------- ----------- ------------ ------------
Operating expenses
Research and Development 3,724,430 4,250,381 7,320,567 8,725,921
Sales and Marketing 9,149,095 2,987,702 16,435,329 5,357,206
General and Administrative 2,576,296 1,367,654 4,486,996 2,415,155
----------- ----------- ------------ ------------
Total operating expenses 15,449,820 8,605,737 28,242,892 16,498,282
----------- ----------- ------------ ------------
Loss from operations (3,884,953) (8,178,103) (11,131,900) (15,977,982)
----------- ----------- ------------ ------------
Interest income 606,169 1,053,899 1,247,854 1,661,575
Interest expense (17,822) (4,929) (41,128) (11,668)
----------- ----------- ------------ ------------
588,347 1,048,970 1,206,726 1,649,907
----------- ----------- ------------ ------------
Net loss $(3,296,606) $(7,129,133) $ (9,925,174) $(14,328,075)
=========== =========== ============ ============
Net loss per share Basic & Diluted $ (0.20) $ (0.45) $ (0.62) $ (0.95)
=========== =========== ============ ============
Weighted average shares outstanding 16,131,974 15,865,441 16,104,834 15,067,015
=========== =========== ============ ============
See accompanying notes.
4
NOVOSTE CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30,
2001 2000
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Cash flows from operating activities:
Net loss $ (9,925,174) $(14,328,075)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 1,145,248 626,219
Issuance of stock for services or compensation 1,076,614 212,351
Amortization of deferred compensation (241,069) 295,132
Amortization of radiation & transfer devices 1,440,662 --
Provision for doubtful accounts 287,934 --
Changes in assets and liabilities:
Accounts receivable (9,088,466) (857,413)
Inventory (1,140,116) 1,717,211
Prepaid expenses (319,860) (144,526)
Accounts payable (514,509) 545,071
Accrued expenses 2,479,860 (427,918)
Unearned revenue 2,488,610 46,481
Other assets (1,610,317) (4,734)
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Net cash used by operations (13,920,582) (12,320,201)
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Cash flow from investing activities:
Maturity of short-term investments 1,809,585 10,223,458
Purchase of property and equipment (2,658,484) (1,742,848)
Purchase of radiation and transfer devices (4,765,405) (2,451,128)
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Net cash (used) provided by investing activities (5,614,304) 6,029,452
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Cash flows from financing activities:
Proceeds from issuance of common stock 929,850 54,264,162
Repayment of capital lease obligations (115,307) --
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Net cash provided by financing activities 814,543 54,264,162
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Net (decrease) increase in cash and cash equivalents (18,720,343) 47,973,413
Cash and equivalents at beginning of period 26,512,398 7,091,025
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Cash and cash equivalents at end of period $ 7,792,055 $ 55,064,438
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
Information:
Cash paid for interest on capital lease obligation $ (31,027) $ --
Non-cash investing and financing activities:
Assets acquired under capital lease $ 105,000 $ --
See accompanying notes.
5
NOVOSTE CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and in accordance with instructions to Article 10 of
Regulation S-X. Accordingly, such consolidated financial statements do not
include all of the information and disclosures 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.
The operating results of the interim periods presented are not necessarily
indicative of the results to be achieved for the year ending December 31, 2001.
The accompanying consolidated financial statements should be read in conjunction
with the audited financial statements and notes thereto for the year ended
December 31, 2000 included in the Company's 2000 Annual Report on Form 10-K
filed with the Securities and Exchange Commission ("SEC").
The consolidated financial statements include the accounts of Novoste
Corporation and its wholly owned subsidiaries incorporated in August 1998 in The
Netherlands, in December 1998 in Belgium, in February 1999 in Germany and in
January 2000 in France. Significant intercompany transactions and accounts have
been eliminated.
NOTE 2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents are comprised of certain highly liquid investments with
maturities of less than three months at the time of their acquisition. In
addition to cash equivalents, the Company has investments in commercial paper
that are classified as short-term (mature in more than 90 days but less than one
year from the date of acquisition). Management determines the appropriate
classification of debt securities at the time of purchase and reevaluates such
designation as of each balance sheet date. Debt securities are classified as
held-to-maturity when the Company has the positive intent and ability to hold
the securities to maturity. Investments held-to-maturity are carried at
amortized cost, adjusted for the amortization or accretion of premiums or
discounts without recognition of gains or losses that are deemed to be
temporary. Premiums and discounts are amortized or accreted over the life of
the related instrument as an adjustment to yield using the straight-line method,
which approximates the effective interest method. Interest income is recognized
when earned.
Marketable equity securities and debt securities not classified as held-to-
maturity are classified as available-for-sale. Available-for-sale securities
are carried at fair value, with the unrealized gains and losses reported in a
separate component of shareholders' equity, if significant. The amortized cost
of debt securities in this category is adjusted for amortization included in
investment income. Realized gains and losses and declines in value judged to be
other-than-temporary on available-for-sale securities are included in investment
income. The cost of securities sold is based on the specific identification
method. Interest and dividends on securities classified as available-for-sale
are included in investment income. At June 30, 2001 fair value approximated net
book value for all short-term investments and all were considered available for
sale and have been accounted for as such.
The effect of exchange rates on cash and cash equivalents was insignificant for
the three and six month period ended June 30, 2001 and 2000.
NOTE 3. ACCOUNTS RECEIVABLE
Accounts receivable at June 30, 2001 and December 31, 2000 includes receivables
due from product sales and amounts due under lease arrangements relating to
radiation and transfer devices (see Note 5. Radiation and Transfer Devices).
The carrying amounts reported in the consolidated balance sheets for accounts
receivable approximate their fair value. The Company performs periodic credit
evaluations of its customers' financial condition and generally does not require
collateral. Management records estimates of expected credit losses and returns
of product sold. Bad debt expense for the six month period ended June 30, 2001
amounted to approximately $12,000. There was no bad debt expense recorded for
the six month period ended June 30, 2000.
6
NOTE 4. INVENTORIES
Inventories are stated at the lower of cost or market on a first-in, first-out
(FIFO) basis and are comprised of the following:
June 30, 2001 December 31, 2000
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Raw Materials $ 995,403 $ 777,819
Work in Process 483,487 218,958
Finished Goods 912,913 254,910
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Total $2,391,803 $1,251,687
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NOTE 5. RADIATION AND TRANSFER DEVICES
The Company retains ownership of the radiation source trains (RSTs) and transfer
devices (TDs). During 1999, the Company was the lessor of RSTs and TDs under
annual sales-type lease agreements expiring through December 2000.
During the second quarter of 2000, the Company determined that based upon
experience, testing and discussions with the FDA the estimated useful life of
RSTs and TDs would exceed one year. Accordingly, the Company has reclassified
these assets from inventory to a long-term asset named, radiation and transfer
devices. Depreciation of the costs of these assets, which is included in cost of
sales, will be over their estimated useful lives (currently estimated at 18
months) using the straight-line method and will begin once the Beta-Cath(TM)
System is placed into service. Concurrent with the change in estimated life, the
RST and TD annual agreements to license the use of the radiation and transfer
devices are classified by the Company as operating leases. At June 30, 2001,
equipment with a cost of approximately $6,568,000 before accumulated
depreciation of approximately $1,441,000 was under operating leases.
Approximately $3,678,000 of radiation and transfer devices were available for
lease at June 30, 2001. At June 30, 2001, amounts receivable under these
operating leases approximated $1,555,000 and are recorded in accounts
receivable. Radiation and transfer devices are stated at cost and are comprised
of the following:
June 30, 2001 December 31, 2000
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Radiation and Transfer Devices $10,246,353 $5,612,763
Less: Accumulated Depreciation 1,440,662 131,815
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Total $ 8,805,691 $5,480,948
=========== ==========
NOTE 6. BASIC AND DILUTED LOSS PER SHARE
The basic and diluted loss per share is computed based on the weighted average
number of common shares outstanding. Common equivalent shares are not included
in the per share calculations where the effect of their inclusion would be
antidilutive. Options to purchase shares of common stock are not included in
the computation of diluted loss per share since the effect would be
antidilutive.
NOTE 7. SEGMENT INFORMATION
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information ("SFAS 131") requires the reporting of segment information based on
the information provided to the company's chief operating decision maker for
purposes of making decisions about allocating resources and accessing
performance. The Company's business activities are represented by a single
industry segment, the manufacture and distribution of medical devices. For
management purposes, the Company is segmented into three geographic areas:
North America, Europe and the Rest of World (Asia and South America)
7
The Company's net sales by geographic area are as follows:
Six Months Ended June 30,
-------------------------
Rest of
United States Europe World Consolidated
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2001 $24,028,800 $2,124,193 $428,343 $26,581,336
2000 125,000 1,674,770 243,923 2,043,693
At June 30, 2001 and 2000, the Company's net assets outside of the United
States, consisting principally of cash and cash equivalents, accounts
receivable, inventory and office equipment, were approximately $5,696,000 and
$2,819,000, respectively.
NOTE 8. SHAREHOLDERS' EQUITY
For the three and six month period ended June 30, 2001, changes in shareholders'
equity consisted of the following:
Three Months Six Months
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Shareholders' Equity at beginning of period $60,688,999 $67,042,119
Proceeds from exercise of 24,112 and 70,676
stock options ranging from $3.20 to $27.00
per share 274,703 885,366
Proceeds from issuance of stock under
employee stock purchase plan, 18,873
shares on 4/2/01 at $14.93 per share 281,738 281,738
Deferred compensation relating to
issuance of certain stock options 839,360 839,360
Amortization of unearned compensation (419,076) (241,069)
Comprehensive loss:
Translation adjustment (729,813) (1,243,036)
Net loss (3,296,607) (9,925,174)
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Total comprehensive loss (4,026,420) (11,168,210)
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Shareholders' Equity at June 30, 2001 $57,639,304 $ 57,639,304
=========== ============
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
FORWARD LOOKING INFORMATION
The statements contained in this Form 10-Q that are not historical are 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, including
statements regarding the expectations, beliefs, intentions or strategies
regarding the future. The Company intends that all forward-looking statements be
subject to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements reflect the Company's views
as of the date they are made with respect to future events and financial
performance, but are subject to many uncertainties and risks which could cause
the actual results of the Company to differ materially from any future results
expressed or implied by such forward-looking statements. Some of these risks are
discussed below and in the section "Certain Factors That May Impact Future
Operations." Additional risk factors are discussed in other reports filed by the
Company from time to time on Forms 10-K, 10-Q and 8-K including the Company's
annual report on Form 10-K for the year ended December 31, 2000. The Company
does not undertake any obligations to update or revised any forward-looking
statement, made by it or on its behalf, whether as a result of new information,
future events, or otherwise.
OVERVIEW
Novoste commenced operations as a medical device company in May 1992. Since
1994, we have devoted substantially all of our efforts to developing the Beta-
Cath(TM) System. On November 3, 2000, Novoste received U.S. marketing approval
for the 30-millimeter Beta-Cath(TM) System from the FDA for use in patients
suffering from "in-stent restenosis", a condition in which coronary stents
become clogged with new tissue growth. On June 18, 2001, Novoste received US
marketing approval for the 40-millimeter Beta-Cath(TM) System from the FDA.
Since our inception, through June 30, 2001, we experienced significant losses in
each period. The Company commenced the active marketing of the Beta-Cath(TM)
System in Europe in January 1999. Although revenues are growing since the
introduction of the Beta-Cath(TM) System in the U.S. market, we do not have
significant experience in manufacturing, marketing or selling our products in
quantities necessary for achieving profitability. At June 30, 2001, we had an
accumulated deficit of approximately $126.2 million. We expect to continue to
incur operating losses through at least 2001 as we continue to allocate
resources to increasing our manufacturing operations, both internally and with
outside vendors, continue to invest in expanding our sales and marketing efforts
in support of United States market development and continue to increase our
administrative activities to support our growth. At the same time we will
continue to conduct clinical trials and research and development projects in
order to expand the opportunities for our technology.
While the Beta-Cath(TM) System has been approved by the FDA for use in patients
suffering from in-stent restenosis, future clinical trials may not demonstrate
the safety and effectiveness of other or different applications or utilizations
of the product. Additionally, the hospitals and catheterization labs that will
be our customers may not obtain necessary approvals for the Beta-Cath(TM) System
from the state, federal or foreign governmental agencies that regulate the
medical use of radiation. Our research and development efforts may not be
successfully completed. Manufacturing of our products may be delayed by
production problems or our vendors may be unable to produce sufficient
quantities to meet our needs. The Company also faces intense competition in the
field of vascular brachytherapy with companies that have significantly greater
capital resources than Novoste. New technologies under development, including
coated stents, pose additional competitive threats in treating restenosis. We
may not successfully sustain an acceptable level of market demand for Beta-
Cath(TM) System or any other product we develop. We may never achieve
significant revenues from sales of our Beta-Cath(TM) System and we may never
achieve or sustain profitability.
8
RESULTS OF OPERATIONS
Net loss for the three months ended June 30, 2001 was $3,296,606 or ($.20) per
share, as compared to $7,129,133 or ($.45) per share, for the three months ended
June 30, 2000. Net loss for the six months ended June 30, 2001 was $9,925,174,
or ($.62) per share, as compared to $14,328,075 or ($.95) per share, for the six
months ended June 30, 2000. The decrease in net loss for the three and six
months ended June 30, 2001 compared to the year earlier period was primarily due
to an increase in revenue from sales in the U.S. market from its commercial
launch of the Beta-Cath(TM) System.
Net Sales. Net sales of $17,290,707 and $26,581,336 were recognized in the
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three and six months ended June 30, 2001 as compared to net sales of $1,197,647
and $2,043,693 for the three and six months ended June 30, 2000. Net sales
increased in both the three and six month periods due to sales of the Beta-
Cath(TM) System in the U.S., following FDA pre-market approval of the system in
November 2000. Net sales in the U.S. comprised approximately 90% of all net
sales for the first six months of 2001. The significant growth in net sales in
second quarter 2000 was primarily due to the rapid growth in the number of new
hospitals leasing the Beta-Cath(TM) System in the U.S. as well as continued
utilization in the existing sites. The Company added over 100 sites for the
three months ended June 30, 2001 for a total of over 200 new sites for the year.
The Company expects net sales to increase in the future as direct distribution
is expanded in the U.S. The Company expects utilization to increase in the
future with the recent FDA approval of the 40mm radiation source train and the
radiation license guidance changes and anticipated reimbursement by third
parties.
Cost of Sales. Cost of sales for the three months ended June 30, 2001 were
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$5,725,840 resulting in a gross margin of 66.9%, compared to cost of sales of
$770,013 and gross margin of 35.7% for the same period of 2000. Cost of sales
were $9,470,344 for the six months ended June 30, 2001 resulting in a gross
margin of 64.4% as compared to cost of sales of $1,523,393 and a gross margin of
25.5% for the six months ended June 30, 2000. Cost of Sales includes raw
material, labor and overhead to manufacture catheters as well as the amortized
costs of transfer devices and radiation source trains used in the Beta-Cath(TM)
System. The Company expects cost of sales to increase as sales activities in the
U.S. continue to grow. However, cost of sales are expected to continue to grow
at a slower pace than sales as the manufacturing facility continues to utilize
capacity of the current plant and therefore increase gross margin.
Research and Development Expenses. Research and Development expenses decreased
----------------------------------
12% to $3,724,430 for the three months ended June 30, 2001 from $4,250,381 for
the three months ended June 30, 2000. For the six months ended June 30, 2001
research and development expenses decreased 16% to $7,320,567 from $8,725,921
for the same period a year earlier. These decreases were primarily the result
of decreased clinical trial activity related to the completion of pivotal trials
and the elimination of costs associated with enrollments such as the costs of
supplying product to clinical sites. However, the Company expects research and
development expenses to increase as a result of anticipated new clinical trial
activity.
Sales and Marketing Expenses. Sales and marketing expenses increased 206% to
-----------------------------
$9,149,095 for the three months ended June 30, 2001 from $2,987,702 for the
three months ended June 30, 2000. For the six months ended June 30, 2001 sales
and marketing expenses were $16,435,329 as compared to $5,357,206 for the six
months ended June 30, 2000, an increase of 207%. These increases were primarily
the result of additional sales and customer support personnel, training, trade
show, consulting and promotional literature costs associated with marketing the
Company's product on a direct basis in the U.S. as we launched the new Beta-
Cath(TM) System in the U.S. The Company has built up a solid base of sales and
marketing infrastructure to penetrate the market rapidly and expects sales and
marketing expenses to increase in the future as direct distribution is expanded
in the U.S., but expects a slower rate of increase as a percent of net sales.
The Company expects that its recently modified sales commission program, which
recognizes the completion of the initial product launch in the US and generally
reduces the commission percentage on net sales beyond certain thresholds, will
reduce commission expense as a percentage of net sales in the future.
General and Administrative Expenses. General and administrative expenses for
------------------------------------
the three and six months ended June 30, 2001 were $2,576,296 and $4,486,996 as
compared to the three and six months ended June 30, 2000 of $1,367,654 and
$2,415,155, and increase of 88% and 86%, respectively. The increase for the
three and six month period was primarily the result of additional management
personnel at higher salaries and information systems costs. Given the continued
revenue growth, the Company expects general and administrative expenses to
increase in the future in support of a higher level of operations, but at a
slower rate as a percentage of net sales.
Interest Income. Net interest income decreased 44% to $588,347 for the three
----------------
months ended June 30, 2001 from $1,048,970 for the three months ended June 30,
2000. Net interest income decreased 27% to $1,206,726 for the six months ended
June 30, 2001 from $1,649,907 for the six months ended June 30, 2000. The
decrease in interest income for the three and six months was primarily due to
the decrease in average cash equivalent and short-term investment balances
combined with falling interest rates.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 2001 and 2000, the Company used cash to
fund operations of $13.9 million and $12.3 million, respectively. The increase
in cash used by operating activities of $1.6 million for 2001 over 2000 was
primarily attributable to (i) $8.2 million funding of accounts receivable due to
the growth in sales of the Beta-Cath(TM) System related to the initial market
launch in the US, (ii) $2.8 million used to fund the purchase of increased
levels of inventory, (iii) $.2 million used for prepaid expenses, (iv) $1.1
million used to pay accounts payable, and (v) $1.6 million increase in other
assets, offset by (i) $4.4 million decrease in net loss, (ii) $2.6 million
increase in earnings related to non-cash items, (iii) $2.9 million provided by
accrued expenses, and (iv) $2.4 million increase in unearned revenue related to
revenue recognized on radiation and transfer devices.
Net cash used by investing activities for the six months ended June 30, 2001 was
$5.6 million and net cash provided by investing activities for the six months
ended June 30, 2000 was $6.0 million. The $11.6 million increase in cash used in
2001 compared to 2000 was due to $8.4 million in short-term investments that
matured, $.9 million to purchase additional property and equipment and $2.3
million used to buy radiation and transfer devices related to the increase in
demand for our Beta-Cath(TM) System.
Our financing activities include equity offerings and borrowings and repayments
of capital leases. Financing activities for the six months ended June 30, 2001
and 2000 provided net cash of $.8 million and $54.3 million, respectively. The
change of $53.5 million resulted primarily from receiving net proceeds of $49.0
million in april 2000 for a private placement offering plus $5.3 million from
the exercise of stock options during the six months ended June 30, 2000 and $.9
million from the exercise of stock options during the same period in 2001. In
addition, the Company repaid $.1 million for capital leases of computer
equipment.
On April 7, 2000 we completed a private placement offering, in which we sold
1,463,500 shares of our common stock at $35.00 per share. The placement raised
net proceeds of approximately $49 million, of which $5 million was received
during the second quarter. After the offering, we had 15.85 million shares of
common stock outstanding. The Company also received approximately $2 million for
the quarter and $5.3 million for the six months ended June 30, 2000 from the
exercise of stock options. In 2001, the Company received $.9 million from the
exercise of stock options, all received during the second quarter of 2001.
At June 30, 2001, the Company had commitments to purchase $7.1 million in
inventory components of the Beta-Cath(TM) System over the next year. In
addition, on October 14, 1999, the Company signed a development and
manufacturing supply agreement with AEA Technologies QSA GmbH for a second
source of radioisotope supply and for the development of a smaller diameter
source. This agreement provides for the construction of a production line over
the period October 1, 1999 to January 2002. The cost of this production line is
estimated at $4.0 million and is being paid by the Company
9
as construction progresses. Through June 30, 2001, the Company has paid $3.1
million towards this commitment.
Significant proportions of key components and processes relating to the
Company's products are purchased from single sources due to technology,
availability, price, quality, and other considerations. Key components and
processes currently obtained from single sources include isotopes, protective
tubing for catheters, proprietary connectors, and certain plastics used in the
design and manufacture of the transfer device. In the event a supply of a key
single-sourced material or component was delayed or curtailed, the Company's
ability to produce the related product in a timely manner could be adversely
affected. The Company attempts to mitigate these risks by working closely with
key suppliers regarding the Company's product needs and the maintenance of
strategic inventory levels.
The Company has entered into a license agreement with a physician pursuant to
which he is entitled to receive a royalty on the net sales of the Beta-Cath(TM)
System (excluding consideration paid for the radioactive isotope), subject to a
maximum payment of $5,000,000. Royalty fees to the physician aggregated $273,944
and $17,024 for the six months ended June 30, 2001 and 2000, respectively, and
have been expensed in Cost of Sales.
On January 30, 1996, the Company entered into a license agreement whereby Emory
University assigned its claim to certain technology to the Company for royalties
based on net sales (as defined in the agreement) of products derived from such
technology, subject to certain minimum royalties. The royalty agreement term is
consistent with the life of the related patent and applies to assignments of the
patent technology to a third party. Royalty fees to Emory University aggregated
$573,500 and $41,647 for the six months ended June 30, 2001 and 2000,
respectively, and have been expensed in Cost of Sales.
The Company's principal source of liquidity at June 30, 2001 consisted of cash,
cash equivalents and short-term investments of $36.6 million. The Company did
not have any credit lines available or outstanding borrowings at June 30, 2001.
The Company anticipates that its operating losses will continue through at least
the third quarter of 2001 as it continues to expend additional resources to
expand sales and marketing activities. We believe that our existing capital
resources will be sufficient to fund the Company until it reaches a positive
operating cash flow. The Company expects that given its current rate of revenue
growth, it will continue to have sufficient cash flow to support growth of the
business in the US and the Company also feels it will have sufficient cash
reserves until it is able to sustain a positive cash flow by early in 2002. The
Company's future liquidity and capital requirements will depend upon numerous
factors, including, among others: market acceptance and demand for its products;
the resources required to maintain a direct sales force in the United States and
in the larger markets of Europe, develop distributors internationally, and to
continue to expand manufacturing capacity; the resources the Company devotes to
the development, manufacture and marketing of its products; the receipt of and
the time required to obtain additional regulatory clearances and approvals; the
resources required to gain such approvals; and the progress of the Company's
clinical research and product development programs. Novoste may in the future
seek to raise additional funds through bank facilities, debt or equity offerings
or other sources of capital. Additional financing, if required, may not be
available on satisfactory terms, or at all.
CERTAIN FACTORS THAT MAY IMPACT FUTURE OPERATIONS
We depend on the successful development and commercialization of the Beta-Cath
(TM) System.
We began to commercialize the Beta-Cath(TM) System in the United States in
November 2000 and our distribution system in Europe and certain Asian countries
are still being developed. Substantially all of our revenue in the first half of
2001 has been from sales in the United States. We anticipate that for the
foreseeable future we will be solely dependent on the continued successful
development and commercialization of the Beta-Cath(TM) System. Our failure to
continue commercialization of the Beta-Cath(TM) System would have a material
adverse effect on our business, financial condition and results of operations.
The Beta-Cath(TM) System received FDA approval for the 30-millimeter system on
November 3, 2000 and on June 18, 2001, the Company received FDA approval for the
40-millimeter system; however, we may be unable to:
. manufacture the Beta-Cath(TM) System in commercial quantities at
acceptable costs;
. gain any significant degree of market acceptance of the Beta-Cath(TM)
System among physicians, patients and/or health care payors;
. broaden the Beta-Cath(TM) system marketability by obtaining approval for
additional applications of our product; or
10
. demonstrate that the Beta-Cath(TM) System is an attractive and cost-
effective alternative or complement to other procedures, including
coronary stents, competing vascular brachytherapy devices, or other
competitive technologies.
Commercialization of the Beta-Cath(TM) System in Europe is subject to certain
additional risks. Physicians in Europe are generally less receptive to and
slower to adopt new medical devices and technologies than physicians in the
United States due to various factors, including the influence of national health
care policies and reimbursement strategies of health care payers. We may never
achieve significant revenue from sales in Europe or ever achieve or sustain
profitability in our European operations. Our sales in selected European
countries and several other countries aggregated approximately $1.8 million in
1999, approximately $4.2 million in 2000 and approximately $2.1 million for the
first six months of 2001.
WE HAVE LIMITED OPERATING HISTORY; WE HAVE A HISTORY OF LOSSES AND EXPECT FUTURE
LOSSES THROUGH AT LEAST THE THIRD QUARTER OF 2001.
We have a limited history of operations. Since our inception in May 1992, we
have been primarily engaged in developing and testing our Beta-Cath(TM) System.
We have generated only limited revenue and do not have significant experience in
manufacturing, marketing or selling our products in quantities necessary for
achieving or sustaining profitability.
At June 30, 2001, we had accumulated a deficit of approximately $126.2 million
since our inception in 1992. The commercialization of the Beta-Cath(TM) System
and other new products, if any, will require substantial additional development,
clinical, regulatory, manufacturing, sales and marketing and other expenditures.
We expect our operating losses to continue through at least the third quarter of
2001 as we continue to expand our product development, clinical trials and
marketing efforts. We may never:
. achieve commercial success in the sale of the Beta-Cath(TM) System or any
other product in any countries in which we have received the necessary
governmental approvals to market these products; or
. achieve or sustain profitability.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL REGULATORY APPROVALS TO EXPAND
BETA-CATH(TM) SYSTEM PRODUCT OFFERINGS OR TO BE ABLE TO MARKET THE
BETA-CATH(TM) SYSTEM TO TREAT A BROADER RANGE OF INDICATIONS FOR THE
UNITED STATES
On November 3, 2000, we received marketing approval from the FDA for the 30mm
Beta-Cath(TM) System. On June 18, 2001, we received marketing approval from the
FDA for the 40mm Beta-Cath(TM) System. These approvals limit our ability to
promote the Beta-Cath(TM) System for use with patients who are being treated for
"in-stent" restenosis in a single coronary artery with a 30-millimeter radiation
source train or a 40-millimeter radiation source train. In order to market the
Beth-Cath(TM) System with radiation source trains longer than 40-millimerters,
we will likely be required to demonstrate to the FDA that a longer source train
is safe and effective. In order to market the Beta-Cath(TM) System for a broader
range of patients, we may seek to expand the indications for which the Beta-
Cath(TM) System can be marketed to, for example, patients undergoing balloon
angioplasty of previously untreated (de novo) lesions.
In order to market the Beta-Cath(TM) System for use with (1) further product
design enhancements, such as a 60-millimeter radiation source train or
modifications to the catheter or (2) a broader range of indications, including
stand alone balloon angioplasty or previously untreated (de novo) lesions, we
will likely be required to demonstrate to the FDA through additional clinical
trials that the Beta-Cath(TM) System is safe and effective with such product
design enhancement(s) or in treating a broader range of indications and the FDA
must approve a pre-market approval application or application supplement
covering the product design enhancement(s) or the broader range of indications
for the device.
The process of obtaining a pre-market approval and other required regulatory
approvals can be expensive, uncertain and lengthy, and we may be unsuccessful in
obtaining additional approvals to market the Beta-Cath(TM) System. We may
encounter significant difficulties and costs in our efforts to obtain additional
FDA approvals that could delay or preclude us from selling new products in the
United States. Furthermore, the FDA may request additional data or require that
we conduct further clinical studies, causing us to incur substantial cost and
delay. In addition, the FDA may impose strict labeling requirements, onerous
operator training requirements or other requirements as a condition of our pre-
market approval, any of which could limit our ability to market our systems.
Labeling and marketing activities are subject to scrutiny by the FDA and, in
certain circumstances, by the Federal Trade Commission. FDA enforcement policy
strictly prohibits the marketing of FDA cleared or approved medical devices for
unapproved uses. Further, if a company wishes to modify a product after FDA
approval of a pre-market approval, including any changes that could affect
safety or effectiveness, additional approvals will be required by the FDA. Such
changes include, but are not limited to: new indications for use, the use of a
different facility to manufacture, changes to process or package the device,
changes in vendors to supply components, changes in manufacturing methods,
changes in design specifications and certain labeling changes. Failure to
receive or delays in receipt of FDA approvals, including the need for additional
clinical trials or data as a prerequisite to approval, or any FDA conditions
that limit our ability to market our systems, could have a material adverse
effect on our business, financial condition and results of operations.
Sales of the Beta-Cath(TM) System outside the United States are subject to
regulatory requirements that vary widely from country to country but generally
include pre-marketing governmental approval. The time required to obtain
approval for sale in foreign countries may be longer or shorter than required
for FDA approval, and the requirements for the conduct of clinical trials,
marketing authorization, pricing and reimbursement differ from those in the
United States. Moreover, the export of medical devices from the United States
must be in compliance with FDA regulations. In August 1998 we qualified to apply
CE marking to the Beta-Cath(TM) System, a requirement necessary to sell our
device in most of Western Europe. In August of 2001 we qualified to apply CE
marking to the Beta-Cath(TM) 3.5F System. We are subject to continuing audit
and reporting requirements related to this marking. We may be delayed or
precluded from marketing the Beta-Cath(TM) System in other foreign countries.
Foreign pre- market and other regulatory approvals of the Beta-Cath(TM) System,
if granted, may include significant limitations on the indicated uses for which
the device may be marketed.
Our business involves the import, export, manufacture, distribution, use and
storage of Strontium-90 (Strontium/Yttrium), the beta-emitting radioisotope
utilized in the Beta-Cath(TM) System 's radiation source train. Accordingly,
manufacture,
11
distribution, use and disposal of the radioactive material used in the Beta-
Cath(TM) System in the United States will be subject to federal, state and/or
local rules relating to radioactive material. On August 4, 2000, the State of
Georgia Department of Natural Resources (DNR) issued a sealed source and device
registration certificate for the Company's Beta-Cath(TM) System, allowing it to
be listed on the Nuclear Regulatory Commission's Sealed Source and Device
Registry. The Company, in addition, must comply with NRC, Georgia and United
States Department of Transportation regulations on the labeling and packaging
requirements for shipment of radiation sources to hospitals or other users of
the Beta-Cath(TM) System. Further, hospitals and/or physicians in the United
States may be required to amend their radiation licenses to hold, handle and use
Strontium-90 prior to receiving and using our Beta-Cath(TM) System.
Hospitals in the United States are required to have radiation licenses to hold,
handle and use radiation. Many of the hospitals and/or physicians in the United
States will be required to amend their radiation licenses to include Strontium-
90 prior to receiving and using our Beta-Cath(TM) System. Depending on the state
that the hospital is located in, its license amendment will be processed by the
State's nuclear regulatory agency in agreement states, or by the NRC. Obtaining
any of the foregoing radiation-related approvals and licenses can be complicated
and time consuming and may take longer in the NRC States (sixteen states). If a
significant number of hospitals are delayed in obtaining any of the foregoing
approvals or any of those approvals are not obtained, our business, financial
condition and results of operations could be materially adversely affected.
THE INDUSTRY IN WHICH WE PARTICIPATE IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE
AND INTENSE COMPETITION.
Competition in the medical device industry, and specifically the markets for
cardiovascular devices, is intense and characterized by extensive research and
development efforts and rapidly advancing technology. New developments in
technology could render vascular brachytherapy generally or the Beta-Cath(TM)
System in particular noncompetitive or obsolete.
Vascular brachytherapy may compete with other treatment methods designed to
improve outcomes from coronary artery procedures that are well established in
the medical community, such as coronary stents. Stents are the predominant
treatment currently utilized to reduce the incidence of coronary restenosis
following PTCA and were used in approximately 75% of all PTCA procedures
performed worldwide in 2000. Manufacturers of stents include Johnson & Johnson,
Medtronic, Inc., Guidant Corporation and Boston Scientific Corporation. Stent
manufacturers often sell many products used in the cardiac catheterization labs,
commonly referred to as cath labs, and as discussed below, certain of these
companies are developing vascular brachytherapy devices.
Also on November 3, 2000, the FDA approved Johnson & Johnson's CHECKMATE(TM)
System, a gamma radiation vascular brachytherapy device. Guidant has publicly
disclosed that it anticipates FDA pre-marketing approval of its beta radiation
device in the third quarter of 2001. Johnson & Johnson, and if it receives FDA
approval, Guidant, compete directly with Novoste for market acceptance of
vascular brachytherapy and has substantially greater capital resources and
greater resources and experience at introducing new products than does Novoste.
We may not be able to compete effectively against Johnson & Johnson or Guidant.
Many of these same companies and others are researching coatings and treatments
to coronary stents that could reduce restenosis and possibly be more acceptable
to a medical community already experienced at using stents. Recently, results
from early non-randomized trials were reported as eliminating restenosis.
Extensive clinical trials will need to be completed in order to confirm these
results, however, positive information from these trials could have a negative
impact on the ultimate acceptability of vascular brachytherapy and the Company's
stock price.
Many of our competitors and potential competitors have substantially greater
capital resources than we do and also have greater resources and expertise in
the area of research and development, obtaining regulatory approvals,
manufacturing and marketing. Our competitors and potential competitors may
succeed in developing, marketing and distributing technologies and products that
are more effective than those we will develop and market or that would render
our technology and products obsolete or noncompetitive. Additionally, many of
the competitors have the capability to bundle a wide variety of products in
sales to cath labs. We may be unable to compete effectively against such
competitors and other potential competitors in terms of manufacturing,
marketing, distribution, sales and servicing.
WE HAVE LIMITED MANUFACTURING EXPERIENCE AND MAY ENCOUNTER DIFFICULTIES IN
SCALING-UP PRODUCTION.
To date, we have not yet successfully commercialized the Beta-Cath(TM) System in
order to sustain profitability. To achieve profitability, the Beta-Cath(TM)
System must be manufactured in commercial quantities in compliance with
regulatory requirements and at acceptable costs. Production in commercial
quantities has required us to expand our manufacturing capabilities and to hire
and train additional personnel. We do not have significant experience in
manufacturing our products in commercial quantities. We may encounter
difficulties in scaling up production, including problems involving production
yields, quality control and assurance, component supply and shortages of
qualified personnel. Difficulties encountered in manufacturing scale up could
have a material adverse effect on our business, financial condition and results
of operations. We cannot assure that future-manufacturing difficulties, which
could have a material adverse effect on our business, financial condition and
results of operations, will not occur.
THE PRICE OF OUR STOCK IS SUBJECT TO VOLATILITY AND FLUCTUATIONS AND WILL
DEPEND ON OPERATING RESULTS.
The market price of our common stock could decline below the public offering
price. Specific factors relating to our business or broad market fluctuations
may materially adversely affect the market price of our common stock. The
trading price of our common stock could be subject to wide fluctuations in
response to quarter-to-quarter variations in operating results, announcements of
technological innovations, new products or clinical data announced by us or our
competitors, governmental regulatory action, developments with respect to
patents or proprietary rights, general conditions in the medical device or
cardiovascular device industries, changes in earnings estimates by securities
analysts, or other events or factors, many of which are beyond our control. In
addition, the stock market has experienced extreme price and volume
fluctuations, which have particularly affected the market prices of many medical
device companies and which have often been unrelated to the operating
performance of such companies. Our revenue or operating results in future
quarters may be below the expectations of securities analysts and investors. In
such an event, the price of our common stock would likely decline, perhaps
substantially. During the six month period ended June 30, 2001, the closing
price of our common stock ranged from a high of $39.50 per share to a low of
$13.00 per share and ended that period at $25.50 per share.
WE DEPEND ON THE PROTECTION PROVIDED BY OUR ISSUED PATENT AND PENDING PATENT
APPLICATIONS, WHICH MAY BE CHALLENGED.
Our policy is to protect our proprietary position by, among other methods,
filing United States and foreign patent applications. On November 4, 1997 we
were issued United States Patent No. 5,683,345, on May 4, 1999 we received
United States Patent No. 5,899,882 (which is jointly owned by us and Emory
University) and on January 11, 2000 we received United States Patent No.
6,013,020, all related to the Beta Cath(TM) System. We also have several
additional United States applications pending covering aspects of our Beta-
Cath(TM) System. The United States Patent and Trademark Office has indicated
that certain claims pending in another United States application are allowable.
With respect to the above identified United States Patents and our other pending
United States patent applications, we have filed, or will file in due course,
counterpart applications in the European Patent Office and certain other
countries.
Like other firms that engage in the development of medical devices, we must
address issues and risks relating to patents and trade secrets. United States
Patent No. 5,683,345 may not offer any protection to us because competitors may
be able to design functionally equivalent devices that do not infringe this
patent. It may also be reexamined, invalidated or circumvented. In addition,
claims under our other pending applications may not be allowed, or if allowed,
may not offer any protection or may be reexamined, invalidated or circumvented.
In addition, competitors may have or may obtain patents that will prevent, limit
or
12
interfere with our ability to make, use or sell our products in either the
United States or international markets.
We received a letter from NeoCardia, L.L.C., dated July 7, 1995, in which
NeoCardia notified us that it was the exclusive licensee of United States Patent
No. 5,199,939, or the Dake patent, and requested that we confirm that our
products did not infringe the claims of the Dake patent. On August 22, 1995 our
patent counsel responded on our behalf that we did not infringe the Dake patent.
The United States Patent and Trademark Office later reexamined the Dake patent.
In the reexamination proceeding some of the patent claims were amended and new
claims were added. We have concluded, based upon advice of patent counsel, that
our Beta-Cath(TM) System does not infringe any claim of the Dake patent as
reexamined.
In May 1997 Guidant acquired NeoCardia together with the rights under the Dake
patent. Guidant is attempting to develop and commercialize products that may
compete with the Beta-Cath(TM) System and has significantly greater capital
resources than the Company. Guidant may sue for patent infringement in an
attempt to obtain damages from us and/or injunctive relief restraining us from
commercializing the Beta-Cath(TM) System in the United States. While the Company
does not believe such an action would have merit, if Guidant were successful in
any such litigation, we might be required to obtain a license from Guidant under
the Dake patent to market the Beta-Cath(TM) System in the United States, if such
license were available, or be prohibited from selling the Beta-Cath(TM) System
in the United States. Any of these actions could have a material adverse effect
on our business, financial condition and results of operations, or could result
in cessation of our business.
We have two versions of our delivery catheter: a "rapid exchange" catheter and
an "over the wire" catheter. As a result of certain United States patents held
by other device manufacturers covering "rapid exchange" catheters, we currently
intend to sell the "over the wire" version of our delivery catheter in the
United States. If further investigation reveals that we may sell a "rapid
exchange" version in the United States without infringing the valid patent
rights of others, we might decide to do so in the future. However, we cannot
assure that we will be able to sell a "rapid exchange" version in the United
States without a license of third party patent rights or that such a license
would be available to us on favorable terms or at all.
13
Item 3. Quantitative And Qualitative Disclosures About Market Risk
Interest Rate Risk
The Company's cash equivalents and short-term investments are subject to market
risk, primarily interest-rate and credit risk. The Company's investments are
managed by outside professional managers within investment guidelines set by the
Company. Such guidelines include security type, credit quality and maturity and
are intended to limit market risk by restricting the Company's investments to
high credit quality securities with relatively short-term maturities.
At June 30, 2001, the Company had $7.8 million in cash equivalents with a
weighted average interest rate of 3.80% and $28.8 million in available for sale
investments with a weighted average interest rate of 4.13%. At June 30, 2000
the Company had $51.0 million in cash equivalents with a weighted average
interest rate of 6.31% and $26.6 million in available for sale investments with
a weighted average interest rate of 6.70%. All investments mature, by policy,
in one year or less.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(c) On June 14, 2001, the Company issued Dr. Charles Wilmer, a consultant,
1,000 restricted shares under its 2001 Stock Plan. The shares contain
restrictions on transfer, which lapse over time or upon a change of control.
The restrictions lapse on June 14, 2002, with respect to all of the shares.
The shares were issued pursuant to an exemption from registration under the
Securities Act of 1933 under Section 4(2) thereof. The shares were purchased
for investment and the shares have been duly legended to reflect that they
have not been registered under the Securities Act.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its annual meeting of stockholders on June 14, 2001 and
solicited votes by proxy in connection with such meeting.
(c) The following matters were approved by the shareholders:
(i) The approval of management's nominees to the Board of Directors with
the nominees receiving the following votes:
FOR AGAINST WITHHELD
William A. Hawkins 13,639,441 1,422,335 --
Donald Harrison, MD. 14,928,969 132,807 --
14
(ii) The shareholders approved the Company's 2001 Stock Plan with
6,803,434 votes in favor, 4,649,855 against and 36,195 abstained. There were
3,572,292 broker non-votes. Immediately following approval of the 2001 Stock
Plan, the Board, at its meeting on June 14, 2001 approved amendments to the Plan
to clarify that options must be granted at 100% of fair market value on the date
of grant and to limit the number of shares that may be granted thereunder
pursuant to awards that are not stock options to 10% of the shares reserved
thereunder.
(iii) The shareholders approved an increase in the number of shares
reserved for issuance under Novoste's Employee Stock Purchase Plan from 100,000
to 250,000 shares. Shareholders approved the plan amendment as follows:
11,267,686 in favor, 188,556 against and 33,242 abstained. There were 3,572,292
broker non-votes.
(iv) The ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company for the year ending December 31, 2001. The
proposal received 14,863,798 votes in favor, 193,875 against and 4,103
abstained.
Item 5. Other Information
On June 14, 2001, Cheryl Johnson, the Company's Vice President of Business
Development and Investor Relations resigned. Rob Walsh was elected by the Board
as Vice President, Investor Relations to fill the vacancy created by Ms.
Johnson's resignation, effective July 2, 2001.
On June 20, 2001, the Company entered into a new agreement with its primary
supplier of radiation source trains, Bebig Gmbh. The new agreement, with a term
of four years, supersedes all prior agreements and establishes minimum supply
obligations for Bebig, prices of the product for the full term of the agreement
and the costs of disposal for the radiation source trains.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Copy of Novoste Corporation 2001 Stock Plan, as amended. Filed as
Exhibit A to the Registrant's Proxy Statement for its 2000 Annual
Meeting of Stockholders filed on April 30, 2001.
#10.29 Amendment to the Framework Agreement and Security Agreement (NOV 34)
between Registrant and Bebig Isotopentechnik und Umweltdiagnostik GmbH
--------
#Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.
(b) Reports on Form 8-K
The Company filed a Form 8-K on April 4, 2001,indicating that as stated in
its Annual Report on Form 10-K for the year ended December 31, 2000, the Company
had evaluated the impact of Staff Accounting Bulletin (SAB) 101,Revenue
Recognition in Financial Statements, on its revenue recognition policies and
concluded, based on its understanding of the SEC's ongoing interpretation of SAB
101, that the adoption of SAB 101 in 2000 did not require the Company to change
its revenue recognition policies in its audited financial statements for the
year ended December 31, 2000. The Registrant had previously disclosed and
reported in its Form 10-Q for the quarter ended September 30, 2000, that the
adoption of SAB 101 would require a change in its revenue recognition policies.
The Company stated in the Form 8-K that it believed its adoption of SAB 101
would not have any material effect on the recognition of revenues during the
year ending December 31, 2001.
15
SIGNATURES
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 hereunto duly authorized.
NOVOSTE CORPORATION
August 14, 2001 /s/ Edwin B. Cordell, Jr.
--------------- -------------------------
Date Edwin B. Cordell, Jr.
Vice President - Finance,
Chief Financial Officer
(Principal Financial & Accounting Officer)
16