SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 6-K
REPORT of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of: November 6, 2001
Given Imaging Ltd.
(Exact name of registrant as specified in charter)
2 Ha'Carmel Street, Yoqneam 20692, Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
--- ---
Given Imaging Ltd.
The following exhibits are filed as part of this Form 6-K:
Exhibit Description
------- -----------
A. Press release dated November 6, 2001 entitled "Given Imaging Announces
Third Quarter Results."
B. Unaudited interim consolidated financial statements of Given Imaging
Ltd. as of September 30, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GIVEN IMAGING LTD.
Date: November 6, 2001 By: /s/ Gavriel Meron
----------------------------------
Name: Gavriel Meron
Title: President and
Chief Executive Officer
EXHIBIT A
GIVEN IMAGING ANNOUNCES THIRD QUARTER RESULTS
---------------------------------------------
Reporting its First Quarter of Revenues
Yoqneam, Israel, November 6, 2001 -- Given Imaging (NASDAQ:GIVN) announced today
third quarter results for the period ending September 30, 2001 and its first
quarter of publicly reported results. The company registered net revenue of $1.3
million in the third quarter of 2001, the quarter in which it received clearance
from the U.S. Food and Drug Administration to market the Given(R) Diagnostic
Imaging System and its M2ATM imaging capsule in the United States.
"We are pleased by the market's strong acceptance of the M2A capsule and believe
this substantiates its positioning as a patient-friendly, effective diagnostic
procedure for a broad range of gastrointestinal disorders," said Dr. Gavriel
Meron, president and chief executive officer of Given Imaging. "We have
established a worldwide sales and marketing network that covers nineteen
countries, and our first customers are already making repeat orders for M2A
capsules."
Key highlights of the third quarter included:
- Initiation of commercial sales.
- Receiving FDA clearance of the Given(R)Diagnostic Imaging System
- Building a worldwide sales and marketing network that now covers 19
countries. Given's direct sales organization covers five countries
(U.S., Germany, France, Australia and Israel) and distribution
agreements have been signed to address Given's other markets: In the
Americas: Brazil, Canada, Mexico, Puerto Rico and Venezuela; in
Europe: Austria Belgium, Finland, Italy, Portugal, Spain, The
Netherlands, and Sweden; and in the Pacific: New Zealand.
- Signing an agreement with Pemstar (Nasdaq: PMTS) to build and operate
production lines for the M2A capsule, both in Israel and in the U.S.
Third Quarter Financials
------------------------
Revenues totaled $1.3 million during the quarter ending September 30, 2001, and
gross profit was 39.6% of revenues.
Net loss in the third quarter of 2001 was $4.8 million and for the nine months
ended September 30, 2001, the net loss was $12.2 million. On an adjusted,
post-offering basis, the loss per share was $0.19 per share for the third
quarter and $0.49 per share for the nine months. The number of outstanding
shares following the IPO is 25,104,913 shares.
Outlook
-------
Given Imaging will focus on continuing to penetrate the global markets, gain
reimbursement, and scale up production to meet growing demand.
2
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
U.S. $ in thousands except per share data
September 30, December 31,
2001 2000
----------- ---------
(Unaudited) (Audited)
Assets
Cash and cash equivalents $6,558 $21,360
Current assets 4,901 1,362
----- -----
Total current assets 11,459 22,722
Fixed assets, net 3,808 2,248
Other assets, net 2,883 560
----- -------
Total Assets $18,150 $25,530
======= =======
Liabilities and shareholders' equity
Current liabilities 3,703 2,138
Deferred revenue 36
----- ------
Total current liabilities 3,739 2,138
Long-term liabilities 482 317
Shareholders' equity 13,929 23,075
------ ------
Total liabilities and shareholders' equity $ 18,150 $ 25,530
======== ========
3
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Statements Of Operations
U.S. $ in thousands except per share data
Nine month period ended Three month period ended
September 30, September 30,
----------------------- -----------------------
2001 2000 2001 2000
---------- --------- --------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $1,256 - $1,256
-
Cost of goods sold (759) - (759) -
------ ------- ----- -------
Gross profit 497 - 497 -
Research and development costs (4,032) (2,344) (1,464) (970)
Marketing expenses (7,565) (1,546) (3,272) (694)
General and administrative expenses (1,599) (825) (693) (405)
------ ---- ---- ----
Operating Expenses (13,196) (4,715) (5,429) (2,069)
Net Income (loss) $ (12,193) $ (4,592) $ (4,799) $ (2,018)
========= ======== ======== ========
Basic and diluted income (loss) per
Ordinary Share $(1.6) $(0.74) $(0.62) $(0.43)
===== ====== ====== ======
Ordinary Shares outstanding used in basic and
diluted income (loss) per Ordinary Share calculation (1) 8,807,490 8,804,190 8,814,090 8,804,190
== ========= ========= ========= =========
Additional per share information:
--------------------------------
Pro forma income (loss) per ordinary shares $(0.72) $(0.28)
====== ======
Ordinary shares outstanding used in pro forma
income (loss) per ordinary share calculation (2) 19,604,913 19,604,913
========== ==========
Diluted income (loss) per ordinary share on an as
adjusted basis post public offering. $(0.49) $(0.19)
====== ======
Ordinary shares outstanding post public offering (3) 25,104,913 25,104,913
========== ==========
(1) Reflects a three-for-five share consolidation of ordinary shares subsequent
to balance sheet date.
(2) Reflects the following events which occurred subsequent to balance sheet
date: (i) exercise of all options held by certain shareholders (ii)
conversion of all outstanding preferred shares into ordinary shares and
(iii) a three-for-five share consolidation of ordinary shares.
(3) Excluding stock based compensation.
# # #
This press release contains forward-looking statements, including projections
about our business, within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. For example,
statements in the future tense, words such as "anticipates," "estimates,"
"expects," "intends," "plans," "believes," "intends" and words and terms of
similar substance used in connection with any discussion of future operating or
financial performance identify such forward-looking statements. Those
forward-looking statements are not guarantees of future performance and actual
results could differ materially from our current expectations as a result of
numerous factors, including but not limited to the following: changes in
regulatory environment, our success in implementing our sales, marketing and
manufacturing plan, protection and validity of patents and other intellectual
property rights, the impact of currency exchange rates, the effect of
competition by other companies, the outcome of pending and future litigation,
the reimbursement policies for our product from healthcare payors, and other
risks disclosed in our filings with the U.S. Securities Exchange Commission.
4
EXHIBIT B
Given Imaging Ltd.
And Its Consolidated Subsidiary
(A Development Stage Company)
Interim Consolidated Financial Statements
as of September 30, 2001
(Unaudited)
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Index to Consolidated Financial Statements
Page
Independent Auditors' Review Report 2
Consolidated Balance Sheets 3
Consolidated Statements of Operations 5
Consolidated Statements of Changes in Shareholders' Equity 6
Consolidated Statements of Cash Flows 8
Notes to the Consolidated Financial Statements 10
The Board of Directors
Given Imaging Ltd.
Dear Sirs,
Review of the unaudited interim consolidated financial statements for the three
and nine month periods ended September 30, 2001
At your request, we have reviewed the interim consolidated balance sheets of
Given Imaging Ltd. ("the Company") (a development stage company) as at September
30, 2001, and the related consolidated statements of operations, statements of
changes in shareholders' equity and consolidated statements of cash flows for
the three and nine month periods then ended.
Our review was carried out in accordance with procedures prescribed by the
Institute of Certified Public Accountants in Israel and included, inter alia,
reading the said financial statements, reading the minutes of Shareholders'
Meetings and of the Board of Directors and its committees, as well as making
inquiries, of those responsible for financial and accounting matters.
Since such a review is limited in scope and does not constitute an audit in
accordance with generally accepted auditing standards, we do not express an
opinion on the said interim financial statements.
In the course of our review, nothing came to our attention which would indicate
the necessity of making any material modifications to the interim financial
statements referred to above in order for them to be in conformity with
generally accepted accounting principles in the United States
Sincerely yours,
Somekh Chaikin
Certified Public Accountants (Isr.)
November 6, 2001
2
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
U.S. $ in thousands except per share data
September 30, December 31,
----------------------- --------------
2001 2000 2000
---------- --------- --------------
(Unaudited) (Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents $ 6,558 $15,481 $21,360
Accounts receivable:
Trade 809 - -
Other 793 205 319
Inventories 2,640 381 619
Prepaid expenses 184 155 165
Advances to suppliers 475 - 259
------ ------ ------
Total current assets 11,459 16,222 22,722
------ ------ ------
Deposits 72 34 47
Assets held for severance benefits 280 87 115
Fixed assets, less accumulated depreciation 3,808 1,605 2,248
Other assets, at cost, less accumulated amortization 2,531 194 398
------ ------ ------
Total Assets $18,150 $18,142 $25,530
======= ======= =======
1
The accompanying notes are an integral part of these consolidated financial
statements.
3
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
U.S. $ in thousands except per share data
September 30, December 31,
--------------------------- -------------
2001 2000 2000
--------- ---------- -------------
(Unaudited) (Unaudited) (Audited)
Liabilities and shareholders' equity
Current liabilities
Current installments of obligation under capital lease $ 64 $ 56 $ 57
Accounts payable:
Trade 2,120 804 1,442
Other 1,519 435 638
Related parties - - 1
Deferred revenue 36 - -
-------- ------- -------
Total current liabilities 3,739 1,295 2,138
-------- ------- -------
Long-term liabilities
Obligation under capital lease, net 136 178 163
Liability for employee severance benefits 346 127 154
-------- ------- -------
Total long-term liabilities 482 305 317
-------- ------- -------
Total liabilities 4,221 1,600 2,455
Shareholders' equity
Share capital:
Series A Preferred Shares (liquidation preference, $ 33 million),
NIS 0.01 par value each (27,000,000 shares authorized;
7,053,020, 15,193,086 and 15,193,086 shares issued and fully paid
at September 30, 2000, 2001 and December 31, 2000 respectively) 38 19 38
Ordinary A shares NIS 0.01 par value each (8,000,000 authorized;
0, 0 and 0 shares issued and fully paid at September 30, 2000, 2001 and
December 31, 2000 respectively) - - -
Ordinary Shares, NIS 0.5 par value each (40,000,000 shares
authorized; 8,804,190, 8,823,990 and 8,804,190 shares issued and fully
paid at September 30, 2000, 2001 and December 31, 2000, respectively) 37 37 37
Additional paid-in capital 35,849 20,138 35,519
Receipts on account of shares 2,745 5,829 -
Unearned compensation (488) (369) (460)
Deficit accumulated during the development stage (24,252) (9,112) (12,059)
------ ------ -------
Total shareholders' equity 13,929 16,542 23,075
------ ------ -------
Total liabilities and shareholders' equity $ 18,150 $ 18,142 $ 25,530
======== ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
4
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Statements Of Operations
U.S. $ in thousands except per share data
Amounts
Nine month period ended Three month period ended Year ended Accumulated
September 30, September 30, December 31, During the
----------------------- ------------------------ ----------- Development
2001 2000 2001 2000 2000 Stage
---------- ----------- ---------- ----------- ----------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited)
Revenues $1,256 $ - $ 1,256 $ - $ - $ 1,256
Cost of goods sold (759) - (759) - - (759)
---------- -------- --------- --------- -------- ----------
Gross profit 497 - 497 - - 497
Research and development costs
Research and development, gross (4,076) (2,656) (1,464) (1,009) (4,137) (11,266)
Royalty bearing participation 44 312 - 39 312 1,184
---------- -------- --------- --------- -------- ----------
(4,032) (2,344) (1,464) (970) (3,825) (10,082)
Marketing expenses (7,565) (1,546) (3,272) (694) (2,923) (10,552)
General and administrative expenses (1,599) (825) (693) (405) (1,224) (3,473)
---------- -------- --------- --------- -------- ----------
Operating Income (loss) (12,699) (4,715) (4,932) (2,069) (7,972) (23,610)
Financing income, net 506 123 133 51 433 1,022
---------- -------- --------- --------- -------- ----------
Income (loss) before taxes on income (12,193) (4,592) (4,799) (2,018) (7,539) (22,588)
Taxes on income - - - - - -
---------- -------- --------- --------- -------- ----------
Net Income (loss) $ (12,193) $ (4,592) $ (4,799) $ (2,018) $ (7,539) $ (22,588)
========== ========== ========= ========= ======== ==========
Basic and diluted income (loss) per
Ordinary Share $(1.6) $(0.74) $(0.62) $(0.43) $(1.13)
========== ========== ========= ========= ========
Ordinary Shares outstanding used in basic
and diluted income (loss) per Ordinary Share
calculation (1) 8,807,490 8,804,190 8,814,090 8,804,190 8,804,190
========== ========== ========= ========= =========
Pro forma income (loss) per ordinary shares $(0.72) $(0.28)
========== =========
Ordinary shares outstanding used in pro
forma income (loss) per ordinary share
calculation (2) 19,604,913 19,604,913
========== ==========
(1) Reflects a three-for-five share consolidation of ordinary shares subsequent
to balance sheet date (see Note 4).
(2) Reflects the following events which occurred subsequent to balance sheet
date (see Note 4): (i) exercise of all options held by certain shareholders
(ii) conversion of all outstanding preferred shares into ordinary shares
and (iii) a three-for-five share consolidation of ordinary shares.
The accompanying notes are an integral part of these consolidated financial
statements.
5
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Statements Of Changes In Shareholders' Equity
U.S. $ in thousands except per share data
Deficit
Receipts Accumulated
on During
Additional Account the
Series A Paid-In of Unearned Development
Preferred Shares Ordinary Shares(1) Capital(2) Shares Compensation Stage Total
---------------- ----------------- --------- ------- ----------- ----------- -----
Shares Amount Shares Amount
------ ----- ------ ------
Nine month period ended September 30, 2001
Changes during the period:
Balance as of December 31, 2000 (Audited) 15,193,086 38 8,804,190 37 35,519 - (460) (12,059) 23,075
Employees' stock options - - - - 298 - (298) - -
Amortization of unearned compensation - - - - - - 270 - 270
Ordinary Shares issued in August - - 19,800 - 32 - - - 32
Receipts on account of Shares - - - - - 2,745 - 2,745
Net loss - - - - - - - (12,193) (12,193)
---------- -- --------- -- ------ ----- ----- -------- --------
Balance as of September 30, 2001
(Unaudited) 15,193,086 38 8,823,990 37 35,849 2,745 (488) (24,252) 13,929
---------- -- --------- -- ------ ----- ----- -------- --------
Nine month period ended September 30, 2000
Changes during the period:
Balance as of December 31, 1999 (Audited) - - 8,804,190 37 4,563 - (293) (2,856) 1,451
Receipts on account of Preferred Shares - - - - - 5,829 - - 5,829
Preferred Shares ($2.10) issued in 7,053,020 19 - - 13,636 - - - 13,655
September
Dividend related to Preferred Shares in - - - - 1,664 - - (1,664) -
September
Employees' stock options - - - - 275 - (275) - -
Amortization of unearned compensation - - - - - - 199 - 199
Net loss (4,592) (4,592)
---------- -- --------- -- ------ ----- ----- -------- --------
Balance as of September 30, 2000
(Unaudited) 7,053,020 19 8,804,190 37 20,138 5,829 (369) (9,112) 16,542
---------- -- --------- -- ------ ----- ----- -------- --------
Three month period ended September 30,
2001 (Unaudited)
Changes during the period:
Balance as of June 30, 2001 15,193,086 38 8,804,190 37 35,817 - (579) (19,453) 15,860
Amortization of unearned compensation - - - - - - 91 - 91
Ordinary Shares issued in August - - 19,800 - 32 - - - 32
Receipts on account of Shares - - - - - 2,745 - - 2,745
Net loss - - - - - - - (4,799) (4,799)
---------- -- --------- -- ------ ----- ----- -------- --------
Balance as of September 30, 2001
(Unaudited) 15,193,086 38 8,823,990 37 35,849 2,745 (488) (24,252) 13,929
---------- -- --------- -- ------ ----- ----- -------- --------
Three months ended September 30, 2000
(Unaudited)
Changes during the period:
Balance as of June 30, 2000 - - 8,804,190 37 4,570 4,944 (170) (5,430) 3,951
Receipts on account of Preferred Shares in - - - - - 885 - - 885
September
Preferred Shares ($2.10) issued in 7,053,020 19 - - 13,636 - - - 13,655
September
Dividend related to Preferred Shares in - - - - 1,664 - - (1,664) -
September
Employees' stock options - - - - 268 - (268) - -
Amortization of unearned compensation - - - - - - 69 - 69
Net loss (2,018) (2,018)
---------- -- --------- -- ------ ----- ----- -------- --------
Balance as of September 30, 2000
(Unaudited) 7,053,020 19 8,804,190 37 20,138 5,829 (369) (9,112) 16,542
---------- -- --------- -- ------ ----- ----- -------- --------
(1) After bonus shares effect and a three-for-five share consolidation of
ordinary shares subsequent to balance sheet date (see Note 4).
(2) Net of issuing costs.
The accompanying notes are an integral part of these consolidated financial
statements.
6
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Statements Of Changes in Shareholders' Equity (cont'd)
U.S. $ in thousands except per share data
Deficit
Receipts Accumulated
on During
Additional Account the
Series A Paid-In of Unearned Development
Preferred Shares Ordinary Shares(1)Capital(2) Shares Compensation Stage Total
---------------- ----------------- ---------- ----- ------------ ------------ -----
Shares Amount Shares Amount
------- -------- ------- -------
Year ended December 31, 2000 (Audited)
Changes during the year:
Balance as of December 31, 1999 - - 8,804,190 37 4,563 - (293) (2,856) 1,451
Receipts on account of Preferred Shares in
February - - - - 4,944 - - - 4,944
Preferred Shares ($2.10) issued in 15,050,433 38 - - 23,366 - - - 23,404
September
Non cash issuance of Preferred Shares
($2.10) in September 142,653 - - - 300 - - - 300
Dividend related to Preferred Shares in
September - - - - 1,664 - - (1,664) -
Employees' stock options - - - - 434 - (434) - -
Non-employees' stock options - - - - 248 - - - 248
Amortization of unearned compensation - - - - - - 267 - 267
Net loss - - - - - - - (7,539) (7,539)
---------- --- --------- ---- ------ ---- ---- ------ ------
Balance as of December 31, 2000 (Audited) 15,193,086 38 8,804,190 37 35,519 - (460) (12,059) 23,075
---------- --- --------- ---- ------ ---- ---- ------ ------
Amounts accumulated during the
development stage
Ordinary Shares issued - - 8,804,190 37 3,944 - - - 3,981
Preferred shares issued 15,193,086 38 - - 28,610 - - - 28,648
Dividend related to Preferred Shares - - - - 1,664 - - (1,664) -
Employees' stock options - - - - 1,383 - (1,383) - -
Non-employees' stock options - - - - 248 - - - 248
Amortization of unearned compensation - - - - - - 895 - 895
Receipts on account of preferred shares - - - - - 2,745 - - 2,745
Net loss - - - - - - - (22,588) (22,588)
---------- --- --------- ---- ------ ---- ---- ------ ------
Balance as of September 30, 2001
(Unaudited) 15,193,086 38 8,823,990 37 35,849 2,745 (488) (24,252) 13,929
---------- --- --------- ---- ------ ---- ---- ------ ------
(1) After bonus shares effect and a three-for-five share consolidation of
ordinary shares subsequent to balance sheet date (see Note 4).
(2) Net of issuing costs.
The accompanying notes are an integral part of these consolidated financial
statements.
7
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Statements Of Cash Flows
U.S. $ in thousands except per share data
Amounts
Nine month period ended Three month period ended Year ended Accumulated
September 30, September 30, December 31, During the
----------------------- ----------------------- ------------ Development
2001 2000 2001 2000 2000 Stage
----------- ----------- ----------- ---------- ------------ --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited)
Cash flows from operating activities:
Net income (loss) ($12,193) ($ 4,592) ($ 4,799) ($ 2,018) ($ 7,539) ($22,588)
Adjustments required to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 717 169 312 78 289 1,081
Financing expenses on capital lease obligation (5) - (4) - 6 2
Employees' stock options compensation 270 199 91 69 267 895
Non employees' stock options compensation - - - 248 248
Severance benefits, net 27 34 10 23 33 66
Loss from sales of fixed assets 10 - - - 1 11
Decrease in accounts receivable - trade (809) - (809) - - (809)
(Increase) in accounts receivable (474) (238) (320) (43) (224) (793)
Increase in prepaid expenses (19) - (59) - (138) (184)
(Increase) in advances to suppliers (216) - (463) - (259) (475)
Increase in inventory (2,021) (381) (236) (371) (619) (2,640)
Increase in accounts payable 1,572 795 923 316 1,631 3,644
Increase (decrease)in deferred revenue 36 - (80) - 36
Decrease in payable to related parties (1) (14) (1) (5) (13) -
--------- -------- --------- --------- --------- ---------
Net cash used in operating activities ($13,106) ($ 4,028) ($ 5,435) ($ 1,951) ($ 6,317) ($21,506)
--------- -------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchase of fixed assets and other assets ($ 2,930) ($ 1,431) ($ 771) ($ 541) ($ 2,402) ($ 5,651)
Proceeds from sales of fixed assets - - - - 3 3
Refund of deposit - - - - 11 11
Deposit (25) (23) (7) (18) (47) (83)
--------- -------- --------- --------- --------- ---------
Net cash used in investing activities ($ 2,955) ($ 1,454) ($ 778) ($ 559) ($ 2,435) ($ 5,720)
--------- -------- --------- --------- --------- ---------
Cash flows from financing activities:
Issue expenses ($ 1,462) $ - ($ 717) $ - $ - ($ 1,462)
Proceeds from loans received from parent company - - - - - 119
Principal payments on loans to parent company - - - - - (62)
Principal payments on capital lease obligation (43) (38) (13) (14) (54) (123)
Proceeds from the issuance of Ordinary Shares 32 13,655 32 13,655 - 3,924
Proceeds on account of share capital 2,745 5,829 2,745 885 - 2,745
Proceeds from the issuance of Series A
preferred Shares - - - - 28,648 28,648
--------- -------- --------- --------- --------- ---------
Net cash provided by financing activities $ 1,272 $19,446 $ 2,047 $14,526 $28,594 $33,789
--------- -------- --------- --------- --------- ---------
Effect of exchange rate changes on cash ($ 13) $ 9 $ 6 $4 $ 10 ($ 5)
--------- -------- --------- --------- --------- ---------
Increase in cash and cash equivalents ($14,802) $13,973 ($ 4,160) $12,020 $19,852 $6,558
Cash and cash equivalents at beginning of period 21,360 1,508 10,718 3,461 1,508 -
--------- -------- --------- --------- --------- ---------
Cash and cash equivalents at end of period $ 6,558 $15,481 $ 6,558 $15,481 $21,360 $6,558
========= ======== ========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
8
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows (Cont'd)
U.S. $ in thousands except per share data
(a) Non-cash transactions
Amounts
Nine month period ended Three month period ended Year ended Accumulated
September 30 September 30 December 31 During the
------------------------- -------------------------- ------------ Development
2001 2000 2001 2000 2000 Stage
----------- --------- ----------- ---------- ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited)
Capital lease obligations 28 53 - - $ 53 $ 321
Deemed dividend - - - - $ 1,664 $ 1,664
(b) Supplementary cash flow information
Amounts
Nine month period ended Three month period ended Year ended Accumulated
September 30 September 30 December 31 During the
------------------------- -------------------------- ------------ Development
2001 2000 2001 2000 2000 Stage
----------- --------- ----------- ---------- ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Unaudited)
Interest paid $10 $13 $ 4 $5 $17 $35
Income taxes paid $51 $11 $13 $5 $19 $86
The accompanying notes are an integral part of these consolidated financial
statements.
9
Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Notes To The Consolidated Financial Statements
U.S. $ in thousands except per share data
Note 1 - Organization and Summary of Significant Accounting Policies
A. Description of business
Given Imaging Ltd. (the "Company") was incorporated in Israel in
January 1998. The Company has generated revenue from sales of its
products commencing the third quarter of 2001. Due in large part to the
significant research and development expenditures required to develop
its product, the Company has generated losses each year since its
inception.
On August 1, 2001, the U.S. Food and Drug Administration cleared the
marketing in the United States of the Company's swallowable video
capsule.
The novel medical device industry in which the Company is involved is
characterized by the risks of regulatory barriers and reimbursement
issues. Penetration into the world market requires the investment of
considerable resources and continuous development efforts. The
Company's future success is dependent upon several factors including
the technological quality, regulatory approvals and sufficient
reimbursement of its products. There can be no assurance that the
Company will be able to maintain the high technological quality of its
product or to continue to develop or market its new products
effectively.
The Company devotes most of its efforts to activities such as:
acquiring equipment, recruiting and training personnel, developing
markets, starting up production and starting up sales, therefore it is
considered a development stage Company.
B. Basis of presentation
The accompanying unaudited consolidated financial statements were
prepared in accordance with the generally accepted accounting
principles in the United States. All adjustments which are, in the
opinion of management, of a normal recurring nature and are necessary
for a fair presentation of the interim financial statements, have been
included. The results of operations for the period ended September 30,
2001 are not necessarily indicative of the results that may be expected
for the entire fiscal year or any other interim period.
The accompanying consolidated financial statements include the accounts
of Given Imaging Ltd. and its wholly owned subsidiaries in the United
States, Europe and Australia. The accounts of the subsidiaries are
consolidated from the date of inception. All significant intercompany
balances and transactions have been eliminated in consolidation.
The accounting policy applied in these interim financial statements is
consistent with that applied to the audited financial statements as at
December 31, 2000.
C. Functional and reporting currency
The accounting records of Given Imaging Ltd. are maintained in New
Israeli Shekels ("NIS") and U.S. dollars. The Company's functional and
reporting currency is the U.S dollar.
Transactions denominated in foreign currencies other than the U.S.
dollar are translated into the reporting currency using current
exchange rates. Gains and losses from the translation of foreign
currency balances are recorded in the statement of operations.
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Given Imaging Ltd. And Its Consolidated Subsidiaries
(A Development Stage Company)
Notes To The Consolidated Financial Statements
U.S. $ in thousands except per share data
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
D. Revenue Recognition
The Company derives substantially all of its revenue from sales of its
gastrointestinal diagnostic system (Given System). The Given System
consists principally of the disposable M2A color-imaging capsule, a
portable data recorder with an array of sensors and a computer
workstation equipped with the Company's proprietary RAPID software.
The Company recognizes revenue from sale of the Given System upon
shipment. The Company's agreements with its customers and distributors
do not contain product return rights.
The Company accrues estimated warranty costs at the time of shipment
based on contractual rights and historical experience. Product returns
due to defects are insignificant and are included in warranty costs.
For sale contracts which include a Post Contract Customer Support
("PCS") component, revenues from PCS are deferred and recognized
ratably over the term of the support period, generally one year.
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Note 2 - Shareholders' Equity
Shareholders' equity
1) On August 20, 2001, the Company's Board of Directors resolved
to grant four of its directors options to purchase 25,000
shares each upon the Initial Public Offering (IPO) of the
Company's shares, at an exercise price equal to the IPO per
share price.
Upon each anniversary of service at the Board following the
IPO, each such director will be granted an additional option
to purchase 8,000 shares. Each such option shall be
exercisable at the shares' market price on the date of the
grant.
2) On August 20, 2001, the Company's Board of Directors resolved
to issue and sell to a consultant 33,000 Ordinary Shares of
the Company, par value NIS 0.01 per share for a total purchase
price of $33.
The Company's Board of Directors resolved to grant in the name
of the consultant a 10 year non-assignable Warrant to purchase
5,093 Ordinary Shares of the Company, par value NIS 0.01 per
shares ("Ordinary Shares"), fully vested as of the date of
grant at an exercise price of $6.48 per share.
3) On July 29, 2001, the Company's Board of Directors resolved,
pursuant to the terms of investment by Orbimed Investors LLP.
and funds managed thereby (Orbimed Group) to grant Orbimed
Group 10 year non-assignable Warrants to purchase 10,000
Ordinary Shares of the Company, par value NIS 0.01 per shares
("Ordinary Shares"), each Warrant for the number of Ordinary
Shares specified opposite to each such entity's name, fully
vested as of the date of grant and exercisable at an exercise
price of $ 2.103 per share.
4) See Note 4 as to the IPO of the Company's shares.
Note 3 - Commitments and Contingencies
To facilitate the transition of the Company to automated production, it
entered into a purchase and sale agreement with Pemstar, Inc., a U.S.
electronics manufacturing service and equipment company (Pemstar),
pursuant to which the Company issued purchase orders for two
semi-automated production lines, the first to be installed in Israel in
January 2002 and the second to be stored as a standby production line
at its facilities in the United States for operation as a back-up
facility upon 60 days notice.
Pemstar is responsible for the design, manufacture, installation and
testing of each production line, and for training Company personnel to
operate the production lines.
As of September 30, 2001, the Company's remaining contingent commitment
under this contract is $1,107.
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Note 3 - Commitments and Contingencies (cont'd)
The Company has also entered into a one year non-exclusive technical
services agreement with Pemstar, pursuant to which Pemstar will provide
it technical services relating to the manufacture of the M2A capsule
and purchasing the components necessary for producing the M2A capsule,
either through the Company or directly from the suppliers.
In consideration for providing these services to the Company, the
Company will pay monthly to Pemstar a fixed amount for each functional
M2A capsule that is delivered to the Company. This amount will decrease
as the volume of M2A capsules produced increases. The Company has an
option to extend the term of the technical services agreement for an
additional year on the same terms and for an additional two years on
negotiated terms.
Note 4 - Subsequent Events
In October 2001, the Company offered 5* million Ordinary shares in an
Initial Public Offering (IPO) on the NASDAQ and also, in a private
placement, offered PW Juniper Crossover Fund, LLC 500,000 * Ordinary
shares. The price of both the Public Offering and the Private Offering
was set at $12 per share.
The underwriters received a 30-day option to purchase additional
750,000 Ordinary shares on the same terms and conditions as set forth
in the Public Offering, to cover over allotments.
On October 10, 2001, the Company received the total proceeds, net of an
underwriting discount of $55.8 million.
Prior to the offering, the Company:
(1) issued 1,665,000 * Ordinary Shares upon the exercise of all
outstanding options held by certain of its shareholders
(excluding options issued under its 1998 and 2000 employee
stock option plans and options issued to the OrbiMed investors
and to a consultant) and received $5 million from the exercise
of these options.
(2) converted all of its Preferred Shares into Ordinary Shares on
a 1-to-1 basis before the share consolidation referred
to below; and
(3) commenced a three-for-five share consolidation of its ordinary
shares, following the conversion of the Company's preferred
shares into ordinary shares.
* After a three-for-five share consolidation effect.
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