U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON , D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: December 31, 2002
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File No.: 0-10728
GISH BIOMEDICAL, INC.
------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 95-3046028
- -------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
22942 Arroyo Vista, Rancho Santa Margarita, California 92688
-------------------------------------------------------
(Address of principal executive offices)
(949) 635-6200
----------------------------------
(Issuer's telephone number)
N/A
--------------------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity: As of February 7, 2003, the issuer had 3,592,145 shares of its
common stock, no par value, outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
PART I - FINANCIAL INFORMATION
- ------ ---------------------
ITEM 1. - Financial Statements
- ------- --------------------
GISH BIOMEDICAL, INC.
CONDENSED BALANCE SHEET
As of December 31, 2002
(Unaudited)
(In thousands, except share data)
ASSETS
Current assets:
Cash $ 257
Accounts receivable, net 2,405
Relocation receivable 156
Inventories 3,650
Other current assets 127
--------
Total current assets 6,595
Property and equipment, at cost 9,631
Less accumulated depreciation ( 7,041)
--------
Net property and equipment 2,590
Other assets 615
--------
Total assets $ 9,800
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving line of credit $ 663
Accounts payable and other accrued liabilities 1,164
Accrued compensation and related items 326
Accrued relocation liabilities 306
--------
Total current liabilities 2,459
Deferred rent 114
--------
Total liabilities 2,573
--------
Shareholders' equity:
Preferred stock, 1,500,000 shares authorized; no shares outstanding
Common stock, no par value, 7,500,000 shares authorized,
3,592,145 shares issued and outstanding 10,532
Accumulated deficit ( 3,305)
--------
Total shareholders' equity 7,227
--------
Total liabilities and shareholders' equity $ 9,800
========
See accompanying notes to condensed financial statements.
2
GISH BIOMEDICAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
Three and six months ended December 31, 2002 and 2001
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2002 2001 2002 2001
---- ---- ---- ----
(In thousands, except share and
per share data)
Net sales $ 4,260 $ 4,038 $ 8,436 $ 7,886
Cost of sales 3,258 3,188 6,333 6,264
--------- -------- --------- ----------
Gross profit 1,002 850 2,103 1,622
Operating expenses:
Selling and marketing 548 964 1,112 1,953
Research and development 215 257 434 510
General and administrative 479 362 947 764
--------- --------- --------- ----------
Total operating expenses 1,242 1,583 2,493 3,227
--------- --------- --------- ----------
Operating loss ( 240) ( 733) ( 390) ( 1,605)
Interest expense, net ( 18) ( 22) ( 38) ( 37)
--------- --------- --------- ----------
Net loss ($ 258) ($ 755) ($ 428) ($ 1,642)
========= ========= ========= ==========
Net loss per share - basic and diluted ($ .07) ($ .21) ($ .12) ($ .46)
========= ========= ========= ==========
Basic and diluted weighted average
common shares 3,592,145 3,592,145 3,592,145 3,592,145
========= ========= ========= =========
See accompanying notes to condensed financial statements.
3
GISH BIOMEDICAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Six months ended December 31, 2002 and 2001
(Unaudited)
(In thousands) 2002 2001
---- ----
OPERATING ACTIVITIES:
Net loss ($ 428) ($ 1,642)
Adjustments:
Depreciation 342 342
Amortization 3 3
Gain on disposal of assets ( 3) -
Deferred rent 22 28
Changes in operating assets and liabilities 1,173 1,354
-------- ---------
Net cash provided by operating activities 1,109 85
-------- ---------
INVESTING ACTIVITIES
Purchases of property and equipment, net ( 74) ( 273)
Increase of other long-term assets ( 143) ( 68)
-------- ---------
Net cash used in investing activities ( 217) ( 341)
-------- ---------
FINANCING ACTIVITIES
Net borrowings (repayments) on line of credit ( 793) 656
-------- ---------
Net cash provided by (used in) financing activities ( 793) 656
-------- ---------
Net increase in cash and cash equivalents 99 400
Cash and cash equivalents at beginning of period 158 110
-------- ---------
Cash at end of period $ 257 $ 510
======== =========
See accompanying notes to condensed financial statements.
4
GISH BIOMEDICAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 2002 (Unaudited)
1. General
-------
The condensed financial statements included herein have been prepared by the
Company, without audit, and include all adjustments which, in the opinion of
management, are necessary for a fair presentation of the results of operations
and cash flows for the six month periods ended December 31, 2002 and 2001, and
financial position at December 31, 2002, pursuant to the rules and regulations
of the Securities and Exchange Commission ("SEC"). Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations.
Although the Company believes that the disclosures in such condensed financial
statements are adequate to make the information presented not misleading, these
condensed financial statements should be read in conjunction with the Company's
financial statements and the notes thereto included in the Company's Annual
Report filed with the SEC on Form 10-KSB for the year ended June 30, 2002.
The accompanying financial statements have been prepared assuming the Company
will remain a going concern. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
The Company incurred net losses of $428,000 and $2,730,000 and used $64,000 and
$1,992,000 of cash in financing such losses during the six months ended December
31, 2002 and the year ended June 30, 2002. As a result, the Company had a
deficit in retained earnings of $3,305,000 at December 31, 2002. Under its
current operating plan, the Company believes its existing cash, together with
cash forecasted to be generated by operations and from borrowings under the
existing revolving line of credit may be sufficient to meet the Company's cash
requirements through December 31, 2003. However, if the Company is unable to
achieve the financial performance embodied in the Company's current operating
plan, including maintaining or reducing its current level of operating losses, a
cash shortage could occur earlier and it would require either additional sources
of funding or raising additional cash through the sale of assets. There can be
no assurances that additional sources of funding will be available when needed
or will be available at rates and terms favorable to the Company or that any
potential assets sale will occur.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. The accompanying condensed balance sheet does not include
any adjustments to reflect the possible future effects on recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.
5
GISH BIOMEDICAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (continued)
December 31, 2002 (Unaudited)
Statement of Cash Flows
-----------------------
Changes in operating assets and liabilities as shown in the condensed statements
of cash flows comprise (in thousands):
Six Months Ended December 31,
2002 2001
-------- --------
Decrease(increase) in:
Accounts receivable $ 268 $ 404
Relocation receivable - -
Inventories 663 648
Other current assets ( 20) ( 53)
Increase (decrease) in:
Accounts payable and other accrued liabilities 244 528
Accrued compensation and related items 34 ( 115)
Accrued relocation liabilities ( 16) ( 58)
------- -------
Net change in operating assets and liabilities $ 1,173 $ 1,354
======= =======
The Company did not pay any federal income taxes during the six month periods
ended December 31, 2002 and 2001. The Company paid interest costs of $42,000 and
$44,000 during the six month periods ended December 31, 2002 and 2001,
respectively.
2. Inventories
-----------
Inventories are stated at the lower of cost (first-in, first-out) or net
realizable value and are summarized as follows (in thousands):
December 31, 2002
-----------------
Raw materials $ 1,594
Work in progress 846
Finished goods 1,210
--------
$ 3,650
========
3. Revolving line of credit agreement
----------------------------------
In December 2000, the Company entered into a $2,000,000 three-year revolving
line of credit agreement. In February 2002, the revolving line of credit
agreement was amended to extend the agreement for an additional year and
increase the line to $4,000,000. Advances, based on eligible receivables, are
secured by the operating assets of the Company and bear interest at prime (4.25%
at December 31, 2002) plus 2%. The agreement also includes various restrictive
loan covenants, including a requirement for the Company to maintain a minimum
6
net worth of $7,000,000, and to achieve net income on a rolling three-month
basis, effective March 2003.
At December 31, 2002 the Company had borrowed $663,000 under the revolving line
of credit and, would have been entitled to borrow an additional $1,500,000.
4. Commitments and Contingencies
-----------------------------
During the three months ended March 31, 2001, the Company relocated to a new
operating facility in Rancho Santa Margarita, California.
Costs for the construction of improvements to the new facility totaled
approximately $1,800,000 of which $148,000 is included in accrued relocation
liabilities at December 31, 2002. The Company has excluded from the improvement
construction costs at December 31, 2002, approximately $300,000 billed to the
Company by the improvement construction contractor. The accuracy and validity of
these billings are currently being disputed by the Company. Binding arbitration
of this dispute was completed on February 10, 2003, and the Company expects to
receive the arbitrator's decision by February 28, 2003. Upon resolution of this
issue the current landlord will reimburse this Company $156,000 for leasehold
improvements, which is included in relocation receivable at December 31, 2002.
5. Loss per share
--------------
The Company calculates loss per share pursuant to SFAS 128 "Earnings Per Share".
Due to the incurrence of losses in each reporting period, there is no difference
between basic and diluted per share amounts.
6. Merger Agreement
----------------
Effective October 25, 2002, the Company entered into an Agreement to convert all
of its outstanding shares of common stock into shares of common stock of
CardioTech International, Inc. (CTE). The Agreement provides for the issuance of
shares of common stock of CTE equal to the adjusted tangible net book value of
the Company at September 30, 2002 ($7,292,000) and for the market value of CTE
common shares to be set at the average daily closing price for the twenty-five
trading days preceding October 25, 2002 ($1.51). As a result, each share of
common stock of the Company will be converted into 1.34 shares of common stock
of CTE. The Agreement is subject to Shareholder approval and various pre-closing
conditions and, accordingly, no assurance can be given that this transaction
will be completed or be consummated in the form currently proposed. The Company
has scheduled a special shareholders' meeting on March 5, 2003 for shareholders
to vote on the merger.
At December 31, 2002 the Company had incurred costs of $153,000 related to the
merger transaction. The costs are included in other assets at December 31, 2002
and costs totaling $148,000 were unpaid and included in accounts payable and
accrued expenses at December 31, 2002.
7
7. Related Party Transaction
-------------------------
On July 15, 2002 the Company entered into a one-year Agreement with T. R.
Winston & Company, Inc. (TRW) which granted TRW the non-exclusive right to
arrange financial transactions for the Company, at a price and on terms
satisfactory to the Company. On transactions initiated by TRW, TRW will be due a
cash commission based on all consideration paid to or received by the Company.
TRW will receive a cash commission of 5% of the first $1,000,000, 4% of the next
$1,000,000, 3% of the next $1,000,000, 2% of the next $1,000,000, and 1% of the
amounts in excess of $4,000,000.
TRW initiated the proposed merger transaction between the Company and CTE
previously described and according to the terms of the Agreement, would have
been due a cash commission of $174,000, if the merger is completed as currently
proposed. However, on October 23, 2002 the Company and TRW entered into a
Termination Agreement whereby both parties agreed to terminate the previously
mentioned one-year Agreement in return for a payment by the Company to TRW of
$100,000.
John W. Galuchie, Jr. is the president of TRW and the Chairman of the Board of
Directors of Gish Biomedical, Inc. TRW is affiliated with Asset Value Fund
Limited Partnership, who beneficially owns 590,400 shares (16%) of the
outstanding common shares of the Gish Biomedical, Inc. John W. Galuchie, Jr. is
also Treasurer and Secretary of Asset Value Management, Inc., the sole general
partner of Asset Value Fund Limited Partnership.
8
ITEM 2. - Management's Discussion and Analysis of Financial Condition and
- ------- --------------------------------------------------------------------
Results of Operations
- ---------------------
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 and the Company intends that such
forward-looking statements be subject to the safe harbors created thereby. Words
such as "anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates", variations of such words and similar expressions are intended to
identify such forward-looking statements.
In light of the important factors that can materially affect results, including
those set forth below and elsewhere in this Quarterly Report on Form 10-QSB, the
inclusion of forward-looking information herein should not be regarded as a
representation by Gish or any other person that our objectives or plans will be
achieved. We may encounter competitive, technological, financial and business
challenges making it more difficult than expected to continue to develop and
market our products; the market may not accept our existing and future products;
we may be unable to retain key management personnel; and there may be other
material adverse changes in our operations or business. Certain important
factors affecting the forward-looking statements made herein include, but are
not limited to (i) continued downward pricing pressures in our targeted markets,
(ii) the continued acquisition of our customers by certain of our competitors
and (iii) continued periods of net losses, which could require the Company to
find additional sources of financing to fund operations, implement its financial
and business strategies, meet anticipated capital expenditures and fund research
and development costs. Assumptions relating to budgeting, marketing, product
development and other management decisions are subjective in many respects and
thus susceptible to interpretations and periodic revisions based on actual
experience and business developments, the impact of which may cause us to alter
our marketing, capital expenditure or other budgets, which may in turn affect
our financial position and results of operations. The reader is therefore
cautioned not to place undue reliance on forward-looking statements contained
herein, which speak as of the date of this report. The Company assumes no
responsibility to update any forward-looking statements as a result of new
information, future events, or otherwise.
The following is management's discussion and analysis of certain significant
factors which have affected the earnings and financial position of the Company
during the period included in the accompanying financial statements. This
discussion compares the three and six month periods ending December 31, 2002
with the three and six month periods ended December 31, 2001. This discussion
should be read in conjunction with the financial statements and associated
notes.
Results of Operations:
- ----------------------
The Company incurred a net loss of $258,000, or $.07 basic and diluted net loss
per share, for the three months ended December 31, 2002 compared to a net loss
of $755,000, or $.21 basic and diluted net loss per share, for the comparable
period in the prior fiscal year.
For the six months ended December 31, 2002, the Company incurred a net loss of
$428,000, or $.12 basic and diluted net loss per share, compared to a net loss
of $1,642,000 or $.46 basic and diluted net loss per share, for the six months
ended December 31, 2001.
The Company had sales of $4,260,000 for the three months ended December 31, 2002
compared to sales of $4,038,000 for the comparable period in the prior fiscal
year. For the six months ended December 31, 2002, the Company had sales of
$8,436,000 compared to sales of $7,886,000 for the six months ended December 31,
2001.
9
The $222,000 net sales increase for the quarter ended December 31, 2002 compared
to the quarter ended December 31, 2001 included an increase of sales volume
across all product lines, except for cardioplegia delivery system sales, which
sales decreased 25% ($116,000) and HEMED sales which decreased 18% ($44,000).
The decrease in Cardioplegia delivery system sales was primarily due to the
termination of a foreign distributor and the transition to a new distributor.
The decrease in HEMED sales was primarily due to expiration of a Taiwan
distributor's license to import.
A majority of the Company's sales are derived from products used in the
open-heart bypass circuit which is employed when a patient's heart is stopped
during cardiac surgery. In response to the events which occurred on September
11, 2001, most healthcare facilities immediately ceased non-emergency surgeries
in an effort to conserve the nations blood supply and reserve their care
capacity for potential future emergency needs. The Company experienced a
significant reduction in orders in September 2001, which in turn had the effect
of September revenue being approximately $500,000 lower than the prior months
revenue and budgeted revenue.
The Company believes that sales have also been negatively affected by the
growing trend to perform cardiac surgery without stopping the heart ("Beating
Heart"), the growing demand for products to have a biocompatible coating
("Coated Products") and by doubt of its ability to continue as a going concern.
Beating Heart cardiac surgery may be involved in 10% to 20% of the cardiac
surgeries currently performed in the United States of America. The Company has a
biocompatible coating under development, but does not currently offer Coated
Products. The Company believes its lack of Coated Products may have contributed
to its inability to retain certain customers and prevented the opportunity to
acquire certain new customers. While the current effect on the Company's sales
of the demand for Coated Products cannot be determined, if the Company is unable
to develop Coated Products and the demand for Coated Products continues to
increase, the lack of Coated Products could have a significant negative impact
on future Company sales.
After taking into account the loss of revenue in September 2001 discussed
previously, sales by product group for the three and six month periods ended
December 31, 2002, except for cardioplegia delivery systems and HEMED, were
comparable to the average quarterly sales for the year ended June 30, 2002.
Effective April 2002 the Company restructured its sales organization to return
to greater representation by distributors and manufacturer's representatives
instead of by a direct sales force. This change resulted in the elimination of
eight direct sales positions. During the same period, the Company also
restructured its non-production work force, resulting in the elimination of 17
positions.
Gross profit increased to $1,002,000 for the three months ended December 31,
2002 compared to $850,000 for the three months ended December 31, 2001. For the
six months ended December 31, 2002, gross profit was $2,103,000 compared to
$1,622,000 for the six months ended December 31, 2001. The primary cause of the
gross profit increase was the increase in sales compared to the prior year
periods.
Selling and marketing expenses for the three months ended December 31, 2002 were
$548,000 compared to $964,000 for the three months ended December 31, 2001.
Selling and marketing expenses for the six months ended December 31, 2002 were
$1,112,000 compared to $1,953,000 for the six months ended December 31, 2001.
The decline in selling and marketing expenses results primarily from the April
2002 restructure.
10
Research and development expenses for the three months ended December 31, 2002
were $215,000 compared to $257,000 for the three months ended December 31, 2001.
Research and development expenses for the six months ended December 31, 2002
were $434,000 compared to $510,000 for the comparable period in the prior year.
The decrease in research and development expenses results from the completion of
a new cardioplegia device in April 2002 and the April 2002 restructure.
For the three months ended December 31, 2002, general and administrative
expenses were $479,000 compared to $362,000 for the three months ended December
31, 2001. For the six months ended December 31, 2002, general and administrative
expenses were $947,000 compared to $764,000 for the six month period ended
December 31, 2001. The increase from the prior year periods is primarily due to
legal expenses related to the dispute with the Company's improvement
construction contractor as described in Note 4.
Liquidity and Capital Resources:
- --------------------------------
At December 31, 2002, the Company had cash of $257,000.
For the six months ended December 31, 2002 net cash provided by operating
activities was $1,109,000 compared to net cash provided by operating activities
of $85,000 for the six months ended December 31, 2001. The increase in cash
provided by operating activities, results primarily from the Company's ability
to reduce its operating losses. Liquidity and cash flow of the Company were
materially affected by its ability to reduce its inventory and accounts
receivable levels. The reductions were the result of management efforts and a
movement to a more "just in time" purchasing and production plan. The Company
believes it will continue to reduce inventory levels, but achieve a
substantially smaller quarterly inventory level reduction than achieved in the
six months ended December 31, 2002.
Net cash used in investing activities for the six months ended December 31, 2002
was $217,000 compared to net cash used in investing activities of $341,000 for
the six months ended December 31, 2001.
For the six months ended December 31, 2002 net cash used in financing activities
was $793,000 compared to net cash provided by financing activities of $656,000
for the six months ended December 31, 2001. The increase in net cash used in
financing activities is due to repayments on the revolving line of credit.
In December 2000 the Company entered into a $2,000,000 three-year revolving line
of credit agreement. In February 2002, the revolving line of credit agreement
was amended to extend the agreement for an additional year and increase the line
to $4,000,000. Advances, based on eligible receivables, are secured by the
operating assets of the Company and bear interest at prime (4.25% at December
31, 2002) plus 2%. The agreement also includes various restrictive loan
covenants, including a requirement for the Company to maintain a minimum net
worth of $7,000,000, and to achieve net income on a rolling three-month basis,
effective March 2003.
At December 31, 2002 the Company had borrowed $663,000 under the revolving line
of credit and, would have been entitled to borrow an additional $1,500,000.
The Company completed its relocation to a new operating facility in the April
2001. At December 31, 2002 unpaid improvement and relocation costs of $306,000
are included in accrued relocation liabilities.
11
Additionally, the Company has excluded from the costs recorded for the
construction improvements at December 31, 2002 approximately $300,000 billed to
the Company by the improvement construction contractor. The accuracy and
validity of these billings are currently being disputed by the Company. Binding
arbitration of this dispute was completed on February 10, 2003, and the Company
expects to receive the arbitrator's decision by February 28, 2003. Upon
resolution of this issue the current Landlord will reimburse the Company
$156,000 for leasehold improvements, which is included in relocation receivable
at December 31, 2002.
Under its current operating plan, the Company believes its existing cash,
together with cash forecasted to be generated by operations, and from borrowings
under the existing revolving line of credit may be sufficient to meet the
Company's cash requirements through December 31, 2003. However, if the Company
is unable to achieve the financial performance embodied in the Company's current
operating plan, including maintaining or reducing its current level of operating
losses, a cash shortage could occur earlier and would require either additional
sources of funding or raising additional cash through the sale of assets. There
can be no assurances that additional sources of funding will be available when
needed or will be available at rates and terms favorable to the Company or that
any potential assets sale will occur.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. The Company's balance sheet at December 31, 2002 presented
elsewhere in this Form 10-QSB, does not include any adjustments to reflect the
possible future effects on recoverability and classification of assets or the
amounts and classification of liabilities that may result from the outcome of
this uncertainty.
Merger
- ------
Effective October 25, 2002, the Company entered into an Agreement to convert all
of its outstanding shares of common stock into shares of common stock of
CardioTech International, Inc. (CTE). The Agreement provides for the issuance of
shares of common stock of CTE equal to the tangible net book value of the
Company at September 30, 2002 ($7,292,000) and for the market value of CTE
common shares to be set at the average daily closing price for the twenty-five
trading days preceding October 25, 2002 ($1.51). As a result, each share of
common stock of the Company will be converted into 1.34 shares of common stock
of CTE. The Agreement is subject to Shareholder approval and various pre-closing
conditions and, accordingly, no assurance can be given that this transaction
will be completed or be consummated in the form currently proposed. The Company
has scheduled a special shareholders' meeting on March 5, 2003 to vote on the
merger.
At December 31, 2002 the Company had incurred costs of $153,000 related to the
merger transaction. The costs are included in other assets at December 31, 2002
and costs totaling $148,000 were unpaid and included in accounts payable and
accrued expenses at December 31, 2002.
On July 15, 2002 the Company entered into a one-year Agreement with T. R.
Winston & Company, Inc. (TRW) which granted TRW the non-exclusive right to
arrange financial transactions for the Company, at a price and on terms
satisfactory to the Company. On transactions initiated by TRW, TRW will be due a
cash commission based on all consideration paid to or received by the Company.
TRW will receive a cash commission of 5% of the first $1,000,000, 4% of the next
$1,000,000, 3% of the next $1,000,000, 2% of the next $1,000,000, and 1% of the
amounts in excess of $4,000,000.
12
TRW initiated the proposed merger transaction between the Company and CTE
previously described and according to the terms of the Agreement would, have
been due a cash commission of $174,000 if the merger is completed as currently
proposed. However, on October 23, 2002 the Company and TRW entered into a
Termination Agreement whereby both parties agreed to terminate the previously
mentioned one-year Agreement in return for a payment by the Company to TRW of
$100,000.
John W. Galuchie, Jr. is the president of TRW and the Chairman of the Board of
Directors of Gish Biomedical, Inc. TRW is affiliated with Asset Value Fund
Limited Partnership, who beneficially owns 590,400 shares (16%) of the
outstanding common shares of the Gish Biomedical, Inc. John W. Galuchie, Jr. is
also Treasurer and Secretary of Asset Value Management, Inc., the sole general
partner of Asset Value Fund Limited Partnership.
Disclosure controls and procedures
- ----------------------------------
Within the 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 President 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 13a-14. Based upon that
evaluation, the President 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 required to be included in
the Company's periodic SEC filings. There were no significant changes in
internal controls, or other factors, that could significantly affect these
controls, subsequent to the date of the evaluation.
13
PART II - OTHER INFORMATION
- ------- -----------------
ITEM 6. - Exhibits and Reports on Form 8-K
- ------- --------------------------------
(A) Exhibits
--------
The following Exhibits are filed as part of this Report:
99.1 - Certifications pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(B) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Company during the quarterly
period ended December 31, 2002.
14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GISH BIOMEDICAL, INC.
Date: February 12, 2003 /s/ Leslie M. Taeger
-----------------------------------
Leslie M. Taeger
Vice President/CFO
15
CERTIFICATIONS
I, Kelly D. Scott, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Gish Biomedical,
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 this quarterly report, fairly represent 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 are 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, 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; and
6. The registrant's other certifying officer 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.
February 12, 2003 /s/ KELLY D. SCOTT
------------------------------
Kelly D. Scott
President/Chief Executive
Officer
CERTIFICATIONS
I, Leslie M. Taeger, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Gish Biomedical,
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 this quarterly report, fairly represent 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 are 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, 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; and
6. The registrant's other certifying officer 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.
February 12, 2003 /s/ LESLIE M. TAEGER
---------------------------
Leslie M. Taeger
Chief Financial Officer
Exhibit 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Public Company Accounting Reform and Investor
Protection Act of 2002 (18 U.S.C. 1350, as adopted), Kelly D. Scott, the
President and Chief Executive Officer of Gish Biomedical, Inc., (the "Company"),
and Leslie M. Taeger, the Chief Financial Officer of the Company each hereby
certifies that, to the best of their knowledge:
1. The Company's Quarterly Report on Form 10-QSB for the period ended
December 31, 2002, to which this Certification is attached as Exhibit
99.1 (the "Periodic Report"), fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934,
as amended;
and
2. The information contained in the Periodic Report fairly presents, in
all material respects, the financial condition of the Company at the
end of the period covered by the Periodic Report and results of
operations of the Company for the period covered by the Periodic
Report.
Dated: February 12, 2003
/s/ Kelly D. Scott
- ------------------------------------------
Kelly D. Scott
President and Chief Executive Officer
/s/ Leslie M. Taeger
- ------------------------------------------
Leslie M. Taeger
Chief Financial Officer