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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 Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
COMMISSION FILE NO. 0-18602
ATS MEDICAL, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1595629
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3905 ANNAPOLIS LANE N., SUITE 105
MINNEAPOLIS, MINNESOTA 55447
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (763) 553-7736
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.01 par value
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
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes No X
--- ---
The number of shares outstanding of each of the registrant's classes of
common stock as of May 8, 2003, was:
Common Stock, $.01 par value 22,324,990 shares
ATS MEDICAL, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Statements of Financial Position -- 3
March 31, 2003 (unaudited) and
December 31, 2002
Statements of Operations - 4
Three Months Ended March 31, 2003 and
2002 (unaudited)
Statements of Cash Flows - 5
Three Months Ended March 31, 2003 and
2002 (unaudited)
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About 11
Market Risk
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Default Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of 13
Security Holders
Item 5. Other Information 13
Item 6. Exhibit and Reports on Form 8-K 14
Signatures 15
ITEM 1. FINANCIAL STATEMENTS
ATS MEDICAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
March 31, December 31,
2003 2002
-----------------------------------
ASSETS (Unaudited) (Note)
Current assets:
Cash and cash equivalents $6,526,369 $7,472,219
Short-term investments 3,006,797 2,501,669
-----------------------------------
9,533,166 9,973,888
Accounts receivable, less allowance of $425,000
in 2003 and $420,000 in 2002 4,209,599 3,557,055
Inventories 16,416,462 15,876,324
Prepaid expenses 553,193 382,107
-----------------------------------
Total current assets 30,712,420 29,789,374
Furniture, machinery and equipment, net 5,972,375 6,025,962
Inventories 34,000,000 37,000,000
Technology license 18,500,000 18,500,000
Other assets 436,631 440,362
-----------------------------------
Total assets $89,621,426 $91,755,698
===================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $451,253 $510,135
Due to related party 144,678 192,904
Accrued reorganization charges 341,020 492,572
Accrued payroll and expenses 534,208 321,521
Accrued distributor liabilities 789,675 1,597,323
Notes payable 5,087,500 5,000,000
-----------------------------------
Total current liabilities 7,348,334 8,114,455
Due to related party 434,033 434,033
Long-term debt 9,240,000 9,080,000
Shareholders' equity:
Common Stock, $.01 par value:
Authorized 40,000,000 shares; Issued and
outstanding 22,324,990 and 22,305,920 shares at
March 31, 2003 and December 31, 2002, respectively 223,250 223,059
Additional paid-in capital 111,482,850 111,473,528
Accumulated other comprehensive loss (1,978) (3,706)
Accumulated deficit (39,105,063) (37,565,671)
-----------------------------------
Total shareholders' equity 72,599,059 74,127,210
-----------------------------------
Total liabilities and shareholders' equity $89,621,426 $91,755,698
===================================
Note: The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed financial statements.
ATS MEDICAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS
(Unaudited)
Three months ended March 31,
2003 2002
--------------- ---------------
Net sales $3,964,849 $3,902,263
Less cost of goods sold 2,748,171 2,690,911
--------------- ---------------
Gross profit 1,216,678 1,211,352
Expenses:
Research, development and engineering 385,768 925,659
Sales and marketing 1,153,847 1,158,932
General and administrative 987,592 674,243
--------------- ---------------
Total expenses 2,527,207 2,758,834
--------------- ---------------
Operating loss (1,310,529) (1,547,482)
Interest (expense) income, net (228,862) 64,111
--------------- ---------------
Net loss ($1,539,391) ($1,483,371)
=============== ===============
Net loss per share:
Basic and diluted ($0.07) ($0.07)
Weighted average number of shares outstanding:
Basic and diluted 22,318,272 22,220,775
See notes to condensed financial statements.
ATS MEDICAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) THREE MONTHS ENDED MARCH 31,
2003 2002
------------- ------------
OPERATING ACTIVITIES
Net loss ($1,539,391) ($1,483,371)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation 183,928 182,896
Loss on disposal of equipment 0 570
Compensation expense on stock options 1,732 0
Imputed interest long-term debt 160,000 0
Changes in operating assets and liabilities:
Accounts receivable (652,544) (861,008)
Prepaid expenses (171,086) 105,228
Other assets 3,731 2,844
Inventories 2,459,862 108,136
Accounts payable and accrued expenses (766,121) 166
------------- ------------
Net cash used in operating activities (319,889) (1,944,539)
INVESTING ACTIVITIES
Purchase of short-term investments (1,500,187) (1,188,119)
Sale of short-term investments 995,059 5,615,017
Net purchases of furniture, machinery and equipment (130,341) (59,874)
------------- ------------
Net cash provided by (used in) investing activities (635,469) 4,367,024
FINANCING ACTIVITIES
Net proceeds from sale of common stock 7,781 57,091
------------- ------------
Net cash provided by financing activities 7,781 57,091
Effect of exchange rate changes on cash 1,727 0
------------- ------------
Increase (decrease) in cash and cash equivalents (945,850) 2,479,576
Cash and cash equivalents at beginning of period 7,472,219 5,078,750
------------- ------------
Cash and cash equivalents at end of period $6,526,369 $7,558,326
============= ============
See notes to condensed financial statements.
ATS MEDICAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2003
Note A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles in the United States for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles in the United
States 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 financial statements should be read in
conjunction with the audited financial statements for the year ended December
31, 2002 included in the Annual Report on Form 10-K of the Company filed with
the Securities and Exchange Commission. Operating results for the three months
ended March 31, 2003 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2003.
Note B -- IMPAIRMENT OF TECHNOLOGY LICENSE
At the end of the first quarter of 2002, the Company evaluated the carrying
value of its technology license asset of $13 million in accordance with the
provisions of FASB Statement 142 (FASB No. 142), Goodwill and Other Intangible
Assets, which were effective for the Company as of January 1, 2002. Utilizing a
discounted cash flow model, that analysis indicated the asset's carrying value
was recoverable and the Company recognized no impairment as a result of the
adoption of FASB No. 142. In the second quarter of 2002, the Company experienced
decreased sales volumes, decreased average selling prices and initiated certain
restructuring activities pertaining to its executive team and the manner in
which it sells its product, changing from a direct sales force to a hybrid sales
force of a few direct salespeople and several independent manufacturers
representatives. In response to these conditions, the Company modified its
pricing strategy and sales volume estimates in conjunction with the
reorganization plan implemented and the increased competitive pressures in the
European market. As a result of these conditions and changes, the Company
reviewed its future cash flow analysis and changed its expectations of the sales
volumes estimated and its selling prices of the heart valve in the cash flow
model to evaluate the recoverability of its technology license. When compared to
the revised fair value as calculated by discounting the new future cash flows
projections at June 30, 2002, the Company determined a non-cash charge
representing an impairment of this asset needed to be recognized in the amount
of $8.1 million in the second quarter. This charge also reflects in part the
effect of the amended milestone payments in the early years of the technology
transfer agreement relative to the benefits of lower cost carbon not being
realized until future years after the depletion of inventories currently on
hand.
Note C -- STOCK BASED COMPENSATION
The Company accounts for stock based compensation in accordance with the
provision of APB. Opinion No. 25. The following table summarizes relevant
information as if the fair value recognition provisions of SFAS 123, "Accounting
for Stock Based Compensation", had been applied to all stock-based awards:
THREE MONTHS ENDED MARCH 31,
2003 2002
------------ ------------
Net loss, as reported $(1,539,391) $(1,483,371)
Deduct: Stock-based employee
compensation expense determined under
fair value method for all awards (102,646) (388,798)
Adjusted net loss, assuming fair value
method for all stock-based awards $(1,642,037) $(1,872,169)
============ ============
Basic and diluted loss per share --
as reported $ (0.07) $ (0.07)
Basic and diluted loss per share --
SFAS No. 123 adjusted $ (0.07) $ (0.08)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ATS Medical manufactures and markets a mechanical bileaflet heart valve
with our patented open pivot design. Our heart valve is used to treat
valvular heart disease caused by the natural aging process, rheumatic
heart disease and congenital defects. We have received regulatory
approvals to market the ATS heart valve in the United States and most
international markets, principally Europe, Japan, China, Canada and
Australia.
We commenced selling the ATS heart valve in international markets in
1992. Internationally, we sell the valve to independent distributors
with assigned territories (generally a specific country or region) who
in turn sell the valve to hospitals or clinics. Most of our sales to
international distributors are denominated in U.S. dollars so currency
risk is borne by the distributor. In December 2002, we formed ATS
Medical France, a foreign subsidiary to sell our valves directly to
hospitals in France. In France, we have commenced the consignment of
valves to hospitals and invoice in euros when the valve is implanted.
In the U.S. market and in France, our revenue is the selling price to
the hospital. In other non-U.S. markets, our revenue is the selling
price to the distributor. As U.S. sales increase as a percentage of
overall sales, the overall average selling price may increase, even
though the average selling prices in some non-U.S. markets may be steady
or declining. Hospital administrators continue to apply pressure for
lower prices, and the willingness of competitors to reduce prices will
continue to put pressure on revenue growth and margins.
To date we have purchased all of the pyrolytic carbon components for the
ATS heart valve from Carbomedics, a division of Snia S.p.A. (formerly a
division of Centerpulse (formerly Sulzer Medica)) pursuant to a
multi-year supply agreement entered into in 1990. The cost of the
pyrolytic carbon components represents approximately 80% of the total
cost of the ATS heart valve. Under the supply agreement, the cost of the
pyrolytic carbon components has varied according to annual volume
purchases and is adjusted annually by reference to increases in the U.S.
Department of Labor Employment Cost Index.
In December 1999, we renegotiated the supply agreement with Carbomedics
resulting in significant reductions in our minimum purchase requirements
and unit costs beginning in 2001. In late June 2002, we again amended
the supply agreement such that our purchase obligations for the
remainder of 2002 (with the exception of approximately eight weeks of
work in process) would be suspended along with 100% of our purchase
obligations for 2003, 2004, 2005 and 2006. In January of 2007, the
purchase obligations for 2003 would resume, with the obligations for
2004 through 2006 to follow in each subsequent year. In addition, a
technology transfer fee of $5 million due to Carbomedics at the end of
2002 will be paid in two equal installments in June and December of
2003. Furthermore, technology payments due in 2003, 2004, 2005 and 2006
totaling $23 million will begin to be paid based on a percentage of the
cost of goods sold starting in January of 2005 with the first payment in
June 2005 and subsequent payments every six months based on a percent of
the cost of goods sold the previous six months subject to certain
cumulative minimum amounts being paid by the end of 2006, 2007, 2008 and
2009.
See our Form 10-K filed with the Securities and Exchange Commission for
the year ended December 31, 2002, for a discussion of the critical
accounting policies and estimates relevant to our business.
Results of Operations
Net sales for the quarter ended March 31, 2003 increased approximately
2% to $3,964,849 compared to $3,902,263 for the quarter ended March 31,
2002. The average selling price per unit increased in the first three
months of 2003 compared to the first three months of 2002 by about 3%.
Revenue in the North American market increased 23% in the quarter ended
March 31, 2003 compared to the quarter ended March 31, 2002, and
increased 56% compared to the quarter ended December 31, 2002.
Cost of sales for the three months ended March 31, 2003 totaled
$2,748,171 or 69% of sales compared to $2,690,911 or 69% of sales for
the three months ended March 31, 2002. ATS uses the first-in first-out
("FIFO") method of accounting for inventory. All of our valves sold in
the first quarter of 2003 were made with carbon purchased in 1999 (under
FIFO).
Gross profit totaled $1,216,678 for the quarter ended March 31, 2003 or
31% of sales, compared to gross profit of $1,211,352 or 31% of sales for
the quarter ended March 31, 2002.
Research, development and engineering expenses totaled $385,768 for the
quarter ended March 31, 2003 versus $925,659 for the quarter ended March
31, 2002, a decrease of 58%. Our focus during the first quarter of 2002
was making qualification and verification coating runs, and documenting
procedures at our carbon manufacturing facility. This culminated with
the submissions at the end of the first quarter 2002 to the TUV, who we
use as a notified body for our European approval, and to the U.S. Food
and Drug Administration. On May 29, 2002, we received notification from
the FDA of full approval of our carbon manufacturing plant. As our
existing inventories are depleted over the next few years, components
from this facility are expected to allow for significant reduction in
the cost of our components utilized in our valve.
Sales and marketing expenses in the quarter ended March 31, 2003 were
$1,153,847 compared to $1,158,932 in the quarter ended March 31, 2002.
During the quarter ended March 31, 2003, we have been rebuilding and
strengthening our worldwide sales and marketing organization. With the
exception of two remaining positions in North America and one
international position, we have completed our sales related hiring
objectives for 2003.
General and administrative expenses totaled $987,592 for the three
months ended March 31, 2003, an increase from the $674,243 reported for
the three months ended March 31, 2002. The increase is attributable
primarily to an increase in professional fees and a management bonus
accrual.
Net interest income (expense) totaled a net expense of $228,862 for the
quarter ended March 31, 2003 compared to interest income of $64,111 for
the quarter ended March 31, 2002. The interest expense is accrued and
primarily attributable to imputed interest on our long-term debt owed to
Carbomedics.
ATS recorded a net loss of $1,539,391 or ($0.07) per share for the
quarter ended March 31, 2003 compared to a net loss of $1,483,371 or
($0.07) per share for the quarter ended March 31, 2002. We are working
to increase sales, particularly in the United States, in order to return
to profitability in future years.
ATS has accumulated approximately $30 million of net operating loss
(NOL) carryforwards for U.S. tax purposes. ATS believes that its ability
to fully utilize the existing net operating loss carryforwards could be
restricted on a portion of the NOL for changes in control that may have
occurred or may occur in the future. We have not accrued any tax
benefits for such tax loss benefit.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments decreased by $440,722
from $9,973,888 at December 31, 2002 to $9,533,166 at March 31, 2003. In
March 2003, we paid approximately $890,000 which was accrued in
December, 2002 in conjunction with the termination of our French
distributor. Minus this payment, our cash flow would have been positive
for the quarter.
Accounts receivable increased from $3,557,055 at December 31, 2002 to
$4,209,599 at March 31, 2003. The majority of the receivable balances
are amounts owing from our international customers, where payments terms
are 60 days or longer.
Current liabilities decreased $766,121 from $8,114,455 at December 31,
2002 to $7,348,334 at March 31, 2003. Most of the decrease is in the
accrued distributor liabilities, where we paid our terminated French
distributor the amount owed. Accrued interest of $87,500 was added to
the $5 million short-term note on the technology transfer payment which
is due in two installments of $2.5 million each in June and December
2003. Accrued reorganization charges totaling $341,020 consist of
severance payments that will be paid out during 2003.
In the quarter ended March 31, 2003, we recorded imputed interest in the
amount of $160,000, which increased the long-term debt amount to
$9,240,000. In June 2002, long-term debt was set up for the discounted
amounts owing to Carbomedics for milestones achieved on the technology
transfer agreement that are payable in semi-annual installments
beginning June 2005 and beyond. There is no interest being charged to
the Company, so a present value calculation was done using a 7% interest
rate resulting in a discount of $2.4 million to recognize the present
value of the long term liability.
Based upon the current forecast of sales and our operating expenses,
along with the adjustments to the timing of our payments to Carbomedics,
we anticipate having cash to fund our operations through 2005. However,
as identified under the heading of "Cautionary Statements Pursuant to
the Private Litigation and Securities Reform Act of 1995" below, any
adverse change that affects our revenue, access to the capital markets
or future demand for our products will affect our long term viability.
Maintaining adequate levels of working capital depends in part upon the
success of our products in the marketplace, the relative profitability
of those products and our ability to control operating and capital
expenses. Funding of our operations in future periods may require
additional investments in ATS in the form of equity or debt. There can
be no assurance that we will achieve desired levels of sales or
profitability, or that future capital infusions will be available.
CAUTIONARY STATEMENTS PURSUANT TO THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a "safe harbor" for forward-looking statements to encourage
companies to provide prospective information about their business, so
long as those statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying important
factors that could cause actual results to differ materially from those
discussed in the statement. ATS desires to take advantage of the safe
harbor provisions with respect to any forward-looking statements it may
make in this filing,
other filings with the Securities and Exchange Commission and any public
oral statements or written releases. The words or phrases "will likely,"
"is expected," "will continue," "is anticipated," "estimate,"
"projected," "forecast," or similar expressions are intended to identify
forward-looking statements within the meaning of the Act. Such
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those projected. ATS
cautions readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made.
In accordance with the Act, the Company identifies the following
important general factors which, if altered from the current status,
could cause the Company's actual results to differ from those described
in any forward-looking statements: the continued acceptance of the
Company's mechanical heart valve in international markets, the rate of
increase of acceptance of the Company's valve in the United States, the
continued listing of our stock on The Nasdaq Stock Market, our ability
to successfully implement our sales strategy in the United States, the
continued clinical performance of the Company's mechanical heart valve,
the actions of the Company's competitors including pricing changes and
new product introductions, the continued performance of the Company's
independent distributors in selling the valve, the actions of the
Company's supplier of pyrolytic carbon components for the valve and
difficulties we may encounter in operating our own pyrolytic carbon
manufacturing capability as well as the matters discussed on our
"Cautionary Statements" filed as Exhibit 99.1 to our form 10-K for the
year ended December 31, 2002. This list is not exhaustive and the
Company may supplement this list in any future filing or in connection
with the making of any specific forward-looking statement.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The primary objective of our investment activities is to preserve
principal while at the same time maximizing the income we receive from
our investments without significantly increasing risk. Some of the
securities that we invest in may have market risk. This means that a
change in prevailing interest rates may cause the fair market value of
the principal amount of the investment to fluctuate. For example, if we
hold a security that was issued with a fixed interest rate at the
then-prevailing rate and the prevailing interest rate later rises, the
fair value of the principal amount of our investment will probably
decline. To minimize this risk our portfolio of cash equivalents and
short-term investments may be invested in a variety of securities,
including commercial paper, money market funds, government and
non-government debt securities. The average duration of all of our
investments has generally been less than one year. Due to the short-term
nature of these investments, we believe we have no material exposure to
interest rate risk arising from our investments.
In the United States and France, we sell our products directly to
hospitals. Revenue is recognized upon shipment of products to customers.
In international markets outside of France, we sell our products to
independent distributors who, in turn, sell to medical hospitals. Loss,
termination or ineffectiveness of distributors to effectively promote
our product would have a material adverse effect on our financial
condition and results of operations.
Transactions with U.S. and non-U.S. customers and distributors, other
than in France, are entered into in U.S. dollars, precluding the need
for foreign currency hedges on such sales. Sales through our French
subsidiary, which was established in 2002 to replace a distributor, are
being recorded in euros, thus we are now subject to profitability risk
arising from exchange rate movements. We have not used foreign exchange
contracts or similar devices to reduce this risk.
We will evaluate the need to use foreign exchange contracts or similar
devices, if sales in France increase substantially.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Company's Chief Executive Officer, Michael Dale, and Chief
Accounting Officer, Deborah Chapman, have reviewed the Company's
disclosure controls and procedures (as defined in Rule 13a-14(c) under
the Exchange Act) as of a date (the "Evaluation Date") within 90 days
prior to the filing date of this report. Based upon this review, these
officers believe that the Company's disclosure controls and procedures
are effective in ensuring that material information related to the
Company is made known to them by others within the company.
(b) Changes in Internal Control
There were no significant changes made in our internal controls or in
other factors that could significantly affect these controls during the
quarter covered by this report or from the end of the reporting period
to the date of this Form 10-Q.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
N/A
Item 2. Changes in Securities and Use of Proceeds
N/A
Item 3. Defaults Upon Senior Securities
N/A
Item 4. Submission of Matters to a Vote of Security Holders
N/A
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Cautionary Statements
99.2 Certification of the Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes--Oxley Act of 2002
99.3 Certification of the Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes--Oxley Act of 2002
(b) Reports on Form 8-K
Form 8-K filed on April 23, 2003 to report under Item
7 the issuance of a press release to report the Company's
results of operations and financial condition for the
completed fiscal quarter ended March 31, 2003. No financial
statements were required to be filed with the Form 8-K.
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 thereunto duly authorized.
Date: May 13, 2003 ATS MEDICAL, INC.
By: /s/ Michael D. Dale
-------------------
Michael D. Dale, Chief Executive Officer
(Principal Executive Officer and
Authorized Signatory)
By: /s/ Deborah K. Chapman
----------------------
Deborah K. Chapman, Controller
(Principal Accounting Officer)
CERTIFICATIONS
I, Michael D. Dale, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ATS
Medical, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers 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 we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers 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 function):
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 officers and I have
indicated in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003
/s/ Michael D. Dale
---------------------------------
Name: Michael D. Dale
Title: Chief Executive Officer
CERTIFICATIONS
I, Deborah K. Chapman, certify that:
1. I have reviewed this quarterly report on Form 10-Q of ATS
Medical, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers 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 we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers 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 function):
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 officers and I have
indicated in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003
/s/ Deborah K. Chapman
----------------------------
Name: Deborah K. Chapman
Title: Controller
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.1 Cautionary Statements
99.2 Certification of the Chief Executive Officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes -- Oxley Act of 2002
99.3 Certification of the Chief Financial Officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes -- Oxley Act of 2002