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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 quarter ended November 30, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-11047
SPARTA SURGICAL CORPORATION
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 22-2870438
--------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
Bernal Corporate Park
7068 Koll Center Parkway, Pleasanton, CA 94566
----------------------------------------------
(Address of principal executive offices)
(925) 417-8812
--------------------------
(Issuer's telephone number)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
As of November 30, 1998, 2,868,898 shares of Common Stock, 119,783 shares of
Redeemable Convertible Preferred Stock and 28,068 shares of Series A Convertible
Redeemable Preferred Stock were outstanding.
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SPARTA SURGICAL CORPORATION
Form 10-QSB
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance 3
Sheet as of November 30, 1998
Condensed Consolidated Statements 4
of Operations for the three months and nine
months ended November 30, 1998 and 1997
Condensed Consolidated Statements 5
of Cash Flows for the nine months
ended November 30, 1998 and 1997
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and 7 - 10
Analysis of Financial Condition
and Results of Operations
Part II. Other Information and Signatures 11 - 12
-2-
SPARTA SURGICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
November 30, 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,000
Accounts receivable - net of allowance
for doubtful accounts of $ 34,000 243,000
Inventories 2,057,000
Other 88,000
-----------
Total current assets 2,389,000
-----------
Property and equipment, at cost:
Equipment 416,000
Other 20,000
-----------
436,000
Less accumulated depreciation (286,000)
-----------
Net property and equipment 150,000
Other assets:
Intangible assets 506,000
Other 110,000
-----------
Total other assets 616,000
-----------
Total assets $ 3,155,000
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term obligations $ 507,000
Account payable - trade 415,000
Accrued expenses 107,000
-----------
Total current liabilities 1,029,000
Revolving credit facility and long term obligations 1,837,000
Stockholders' Equity:
Preferred stock: $4.00 par value,
750,000 shares authorized:
Non-cumulative convertible redeemable
preferred stock: 165,000 shares authorized,
119,783 shares issued and outstanding 482,000
Series A cumulative convertible preferred stock:
30,000 shares authorized, 28,068 shares
issued and outstanding 112,000
Common stock: $.002 par value, 8,000,000 shares
authorized, 2,868,898 shares issued and outstanding 6,000
Additional paid in capital 9,051,000
Accumulated deficit (9,362,000)
-----------
Total stockholders' equity 289,000
-----------
Total liabilities and stockholders' equity $ 3,155,000
===========
-3-
SPARTA SURGICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
November 30, November 30,
----------------------------- -----------------------------
1998 1997 1998 1997
---- ---- ---- ----
Net sales $ 371,000 $ 609,000 $ 1,673,000 $ 1,819,000
Cost of sales 181,000 299,000 878,000 884,000
----------- ----------- ----------- -----------
Gross profit 190,000 310,000 795,000 935,000
Selling, general and administrative expenses 261,000 450,000 772,000 1,419,000
Research and development expense 3,000 8,000
----------- ----------- ----------- -----------
Income from operations (71,000) (143,000) 23,000 (492,000)
Other income(expense):
Interest and other income 0 0 304,000 85,000
Interest expense (66,000) (73,000) (258,000) (211,000)
----------- ----------- ----------- -----------
Total other income (expense) (66,000) (73,000) 46,000 (126,000)
----------- ----------- ----------- -----------
Income (loss) before provision for income taxes (137,000) (216,000) 69,000 (618,000)
Provision for income taxes 0 0
----------- ----------- ----------- -----------
Net income (loss) ($ 137,000) ($ 216,000) $ 69,000 ($ 618,000)
=========== =========== =========== ===========
Preferred stock dividends (4,000) (4,000) (25,000) (25,000)
----------- ----------- ----------- -----------
Net income/(loss) applicable to
common shareholders ($ 141,000) ($ 220,000) $ 44,000 ($ 643,000)
=========== =========== =========== ===========
Shares used to calculate basic net incom
(loss) per common share 1,923,858 924,033 1,413,438 869,667
=========== =========== =========== ===========
Basic net income (loss) per common share ($ 0.07) ($ 0.24) $ 0.03 ($ 0.74)
=========== =========== =========== ===========
Shares used to calculate diluted net income
(loss) per common share 1,923,858 924,033 1,531,388 869,667
=========== =========== =========== ===========
Diluted net income (loss) per common share ($ 0.07) ($ 0.24) $ 0.03 ($ 0.74)
=========== =========== =========== ===========
-4-
SPARTA SURGICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
November 30,
----------------------------------
1998 1997
---- ----
Cash flows from operating activities
Net income (loss) $ 69,000 ($ 618,000)
Adjustments to reconcile net income
(loss) to net cash used by
operating activities:
Depreciation and amortization 200,000 229,000
Reduction of accrued liabilities (304,000) (85,000)
Changes in operating assets and liabilities:
Accounts receivable (28,000) (52,000)
Inventories 108,000 99,000
Other assets (85,000) (72,000)
Accounts payable and accrued expenses (345,000) (357,000)
----------- -----------
Net cash used by operating activities ($ 385,000) ($ 856,000)
Cash flows from investing activities:
Capital expenditures (9,000) (6,000)
Increase in intangible assets (13,000) (117,000)
Increase in receivables from related entities 17,000
Principal payments received on notes receivable 578,000
----------- -----------
Net cash provided (used) by investing activities (22,000) 472,000
----------- -----------
Cash flows from financing activities
Proceeds from borrowing 1,918,000 4,118,000
Principal payments on long term obligations (1,511,000) (3,734,000)
----------- -----------
Net cash provided by financing activities 407,000 384,000
----------- -----------
Net change in cash and cash equivalents -- --
Cash and cash equivalents at beginning of the period 1,000 --
----------- -----------
Cash and cash equivalents at end of the period $ 1,000 --
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 190,000 $ 140,030
Income taxes -- --
Supplemental disclosure of noncash investing and financing activities:
Conversion of debt into common stock 751,000.00 --
Conversion of preferred stock into common stock 8,000.00 152,000
Dividends payable on Series A convertible
redeemable preferred stock 4,000.00 4,000
Stock dividends paid on Series A
convertible redeemable preferred stock 25,000.00 25,000
Issuance of common stock and warrants in payment of loan costs -- 236,000
-5-
SPARTA SURGICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying condensed consolidated financial statements of the Company
as of November 30, 1998 and for the three and nine months ended November
30, 1998 and 1997 have been prepared on the same basis as the audited
financial statements. In the opinion of management, such unaudited
information includes all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of this interim information.
Operating results and cash flows for interim periods are not necessarily
indicative of results for the entire year. The information included in this
report should be read in conjunction with the Company's audited financial
statements and notes thereto included in the Company's Annual Report on
Form 10-KSB for the year ended February 28, 1998 previously filed with the
Securities and Exchange Commission.
2. Effective "March 1, 1998, the Company adopted the provisions of Statement
No. 130," Reporting Comprehensive Income that modifies the financial
statement presentation of comprehensive income and its components. Adoption
of this Statement had no effect on the Company's financial position or
operating results.
Comprehensive income (loss) for the nine months ended November 30, 1998 and
1997, representing all changes in Stockholders' deficit during the period
other than changes resulting from the Company's stock, was $69,000 and
$(618,000), respectively.
3. Basic income (loss) per share is based upon weighted average common shares
outstanding. Diluted income (loss) per share is computed using the weighted
average common shares outstanding plus any potentially dilutive securities.
Dilutive securities include stock options, warrants, convertible debt, and
convertible preferred stock. The following table sets forth the computation
of basic and diluted net income (loss) per common share:
Three Months Ended November 30, Nine Months Ended November 30
1998 1997 1998 1997
Numerator
Net income (loss) $(137,000) $(216,000) $ 69,000 $(618,000)
Preferred stock dividends ( 4,000) ( 4,000) (25,000) ( 25,000)
--------- --------- --------- ---------
Net income (loss) available
common shareholders $(141,000) $(220,000) $ 44,000 $(643,000)
========= ========= ========= =========
Denominator
Weighted average common shares
outstanding during the period 1,923,858 924,333 1,413,438 869,667
--------- --------- --------- ---------
Shares used in computing basic income
(loss) per common share 1,923,858 924,333 1,413,438 869,667
Dilutive effect of conversion
of preferred stock -- -- -- --
Dilutive effect of options and
warrants using
the treasury stock method -- -- 117,950 --
Dilutive effect of convertible debt
using the
if-converted method -- -- -- --
---------- --------- --------- ----------
Shares used in computing diluted income
(loss) per common share 1,923,858 924,033 1,531,388 869,667
========== ========= ========= ==========
-6-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three months ended November 30, 1998
as Compared to Three months ended November 30, 1997
Net sales for the three months ended November 30, 1998 ("Third Quarter
Fiscal 1999") were $371,000, a 39% decrease from net sales of $609,000 for the
three months ended November 30, 1997 ("Third Quarter Fiscal 1998"). The net
sales decrease is the result of a decrease of $211,000 or 61% in electrotherapy
product sales from $346,000 to $136,000 coupled with a decrease of $ 28,000 or
11% in surgical product sales from $263,000 to $235,000. The decrease in sales
for the electrotherapy product line can be primarily attributed to the
completion of purchase orders from two of the Company's largest OEM accounts.
However, the Company expects to receive a new purchase order from one of these
OEM accounts during the Fourth Quarter Fiscal 1999. The further loss of any of
the Company's electrotherapy OEM accounts could have a material adverse effect
on the Company's business, operating results and financial condition.
Nine months ended November 30, 1998
as Compared to Nine months ended November 30, 1997
Net sales for the nine months ended November 30, 1998 ("Nine Months Fiscal
1999") were $1,673,000, an 8% decrease from net sales of $1,819,000 for the nine
months ended November 30, 1997 ("Nine Months Fiscal 1998"). The net sales
decrease during the Nine Months Fiscal 1999 as compared to the Nine Months
Fiscal 1998 is the result of a decrease of $91,000 or 9% in electrotherapy
product sales from $1,014,000 to $923,000. The decrease in sales for the
electrotherapy product line can be primarily attributed to the completion of two
purchase orders from two of the Company's largest OEM customers. Net sales to
two OEM customers accounted for approximately 30% of the Company's revenues for
the Nine Months Fiscal 1999. The further loss of any of the Company's
electrotherapy OEM accounts could continue to have a material adverse effect on
the Company's business, operating results and financial condition. The net sales
decrease during the Nine Months Fiscal 1999 for the surgical products of
$55,000, or 7% from $805,000 to $750,000 is attributed primarily to the
reduction of the Company's surgical independent sales representatives, and the
elimination of various surgical trade show attendance. In an effort to increase
surgical sales, the Company recently signed a Strategic Alliance Marketing
Agreement with Pilling Weck Surgical, a division of Teleflex, (NYSE:TFX).
Pilling Weck is the nation's oldest and most respected manufacturer and marketer
of hand-held surgical instruments to hospitals and physician's offices
worldwide. Under the term of the agreement, Pilling Weck will identify Sparta as
an allied single-source provider of the Company's ophthalmic microsurgical
hand-held instruments whenever negotiating sales contracts with national
hospital buying groups and international distributors.
Gross profit was $795,000 or 48 % of net sales for the Nine Months Fiscal
1999 as compared to $935,000% or 51% of net sales for the Nine Months Fiscal
1998. The decrease in gross profit percentage is primarily due to product mix
changes in the electrotherapy products, especially as to the completion of the
electrotherapy purchase orders from two of the Company's largest OEM customers,
which yield slightly higher gross profit margins.
Selling, general and administrative ("SG&A") expenses for the Nine Months
Fiscal 1999 were $772,000, a 46% decrease from SG&A expenses of $1,419,000 for
the Nine Months Fiscal 1998. The decrease in SG&A expenses for the Nine Months
Fiscal 1998 as compared to the Nine Months Fiscal 1997 is primarily due to the
Company's implementation of a restructuring plan involving a reduction of
personnel, a Company wide reduction in salaries, and an overall cost containment
program in effect.
-7-
The increase in total net income is primarily due to the lower selling,
general and administrative expenses, as well as the reduction of $304,000 in
accrued liabilities during the period as compared to the reduction of $85,000 in
accrued liabilities during the Nine Months Fiscal 1998. The accrued liabilities
were originally accrued in connection with the lease termination costs relating
to the sale of the wound care product line in December 1995. Conversely,
interest expenses increased from $211,000 in Nine Months Fiscal 1998 to $258,000
in Nine Months Fiscal 1999, an increase of $47,000 in net interest expense
resulting primarily from higher loan balances and banking expenses to
NationsCredit, the Company's primary lender. As a result of the foregoing, the
net income for the Nine Months Fiscal 1999 was $69,000, an increase from a net
loss of $(618,000) for the Nine Months Fiscal 1998.
As has been the Company's strategy since the sale of the woundcare product
line in fiscal year 1996, the Company intends to continue to concentrate its
efforts on increasing its level of sales to achieve profitable operations. In
addition, the Company intends to consider growth through selective strategic
acquisitions in complementary lines of business.
The Company may make additional acquisitions of companies, divisions of
companies or products in the future. Acquisitions entail numerous risks,
including difficulties or an inability to successfully assimilate acquired
operations and products, diversion of management's attention and loss of key
employees of acquired businesses, all of which the Company may require dilutive
issuances of equity securities and the incurrence of additional debt, and the
creation of goodwill or other intangible assets that could result in
amortization expense. These factors could have a material adverse effect on the
Company's business, operating results and financial condition.
LIQUIDITY AND CAPITAL RESOURCES
The Company develops, manufactures and markets surgical and non-invasive
electrotherapy devices to the healthcare industry worldwide. Since inception,
the Company's primary sources of working capital have been revenues from
operations, bank and private party loans and proceeds from the sale of
securities. The healthcare products industry is intensely competitive, and many
of the Company's competitors have financial, marketing and other resources
substantially greater than those of the Company. Some of the Company's larger
competitors enjoy an additional competitive advantage by reason of their ability
to offer product discounts for volume purchases across product lines. Some of
the companies which the Company competes, have significantly greater resources,
established sales organizations and greater experience in marketing and sales
products through direct distribution and is dominated by general industry giants
such as Johnson and Johnson, Allegiance Healthcare Corporation, Empi and
Rehabilicare, Inc.
On July 17, 1998, J&C Resources ("J&C") agreed to convert indebtedness
owing to it from the Company in the amount of $751,300 into shares of the
Company's common stock $0.002 par value (the "Common Stock") at a conversion
price of $0.75 per share. The conversion resulted in J&C's being issued
1,001,733 shares of the Company's Common Stock. In conjunction with the
conversion of the J&C indebtedness into equity, the Company borrowed $150,000
from an affiliate of J&C, Asset Factoring, Inc., DBA Asset Factoring
International ("Asset Factoring"). Under the terms of the loan, the note bears
interest at a rate of twelve percent (12%) per annum and shall become due and
payable on or before the first to occur of the following events: (1) receipt by
the Company of proceeds of at least one million dollars ($1,000,000) upon a
private sale of its equity securities; or (2) the one year anniversary of the
date of such note. In addition, Asset Factoring was issued warrants to purchase
up to 150,000 shares of the Common Stock at a price of $0.75 per share, which
warrants shall be exercisable at any time within four years of the date of the
$150,000 note and which shall carry piggyback registration rights.
On July 25, 1997, NationsCredit Commercial Funding Division of
NationsCredit Commercial Corporation, A NationsBank Company ("NationsCredit")
provided the Company with a 48-month Revolving Line of Credit of up to
$2,500,000 (the "Loan"). The Company agreed to pay NationsCredit interest on the
average outstanding principal amount of the Loan at a per annum rate of prime
plus 3 1/2%. The Loan is advanced to the Company based on a percentage of
eligible assets and is secured by a first position security interest on all of
the assets of the Company. In addition, $250,000 of the Loan is personally
guaranteed by Mr. Thomas F. Reiner. As of January 8, 1998, the outstanding
balance on the Loan was $1,316,000 and approximately $4,000 in credit was
available. The Loan is being used to provide working capital for current
operations. In connection with the financing, the Company issued NationsCredit a
warrant to purchase up to 42,500 shares of its Common Stock exercisable at $1.11
per share at any time until July 25, 2002.
-8-
On June 1998, the Company entered into a Working Capital Secured Credit
Facility ("WCSCF") agreement with Mr. Reiner, the Company's Chairman and CEO,
pursuant to which Mr. Reiner is providing the Company up to $500,000 in working
capital on an as needed basis. Providing the Company is not in default under the
WCSCF, the working capital advances made under the WCSCF and any accrued and
unpaid interest are due the earlier of (i) June 1999; (ii) upon the closing of a
minimum of $1,000,000 equity or debt financing by the Company. As of January 10,
1999, the amount due to Mr. Reiner under the WCSCF was approximately $462,000.
The WCSCF is secured by a second position security interest on all of the assets
of the Company.
On July 27, 1998, Mr. Reiner agreed to accept a temporary salary reduction
in the approximate amount of $50,000 during the fiscal year 1999 under his
Employment Agreement. The temporary salary reduction may continue until cash
flow of the Company improves and/or Mr. Reiner elects to terminate such
agreement. As a consideration for Mr. Reiner providing further assistance to the
Company's cash flow problems, the Company agreed to issue to Mr. Reiner an
option to purchase 100,000 shares of the Company's Common Stock, $0.002 par
value, at $1.47 per share at any time until July 26, 2005. To further improve
the Company's cash flow and earnings during the Third Quarter Fiscal 1999, Mr.
Reiner agreed to waive approximately $15,000 of his salary payments under his
Employment Agreement. Mr. Reiner received no consideration for waiving his
salary.
As of February 28, 1998, the Company had net operating loss carry forwards
of approximately $9,450,000. Availability of the Company's net operating loss
carry forwards, if not utilized, will expire at various dates through the year
2012. The Company's working capital at November 30, 1998 was approximately
$1,360,000 as compared to $1,122,000 at February 28, 1998. The Company's working
capital position increased by 238,000, primarily due to the conversion of debt
to equity.
The Company is registered with the FDA as a medical device establishment.
The Company's office and distribution facilities in California are subject to
various state and local regulations such as zoning requirements, health and fire
codes and the like. All of the Company's products must be approved, registered
and/or licensed by the FDA and other domestic and foreign regulatory
authorities. These authorities also regulate labeling, advertising and other
forms of product claims.
Under the federal Food, Drug and Cosmetic Act, the Company is required to
file with the FDA a new device description and obtain FDA approval for any new
medical device which the Company proposes to manufacture and market. The
procedure for obtaining such approval differs depending upon the uniqueness of
the device, with devices similar to those marketed prior to 1976 being eligible
for expedited approval and those devices which represent significant departures
from devices on the market in 1976 requiring pre-marketing approval. The devices
are also subject to inspection by the FDA after approval, with devices that are
potentially life-threatening being subject to more stringent standards. The FDA
has established manufacturing and sterilization standards for medical devices
known as "Good Manufacturing Practices" which require the Company's distribution
facility and its suppliers to be registered annually and subject to regular
inspections by the FDA.
Although applicable government regulations vary in their provisions, they
are stringent and continuing. The cost of compliance with these regulations is
difficult to determine, but such cost is and will continue to be a significant
expense for the Company. The Company believes that it has obtained all
applicable government and regulatory approvals for its existing products,
facilities and processes and expects that all of its current license will be
renewed on a regular basis. There can be no assurance that the Company will
continue to be in compliance with all current regulations or that it will be
able to comply with all future regulations.
The Company sells its products under a variety of trademarks, some of which
the Company has registered in the United States and various foreign countries.
The Company currently holds two patents granted by the United States Patent
Office relating to its Electrotherapy TENS units obtained through the
acquisition of Medical Design, Inc. Notwithstanding the trademarks and patents
held by the Company, there can be no assurance that competitors will not develop
similar trademark outside the Company's trademark protection or functionally
similar products outside the Company's patent protection. There also can be no
assurance that any patents issued to or licensed by others, that others will not
obtain patents that the Company will need to license or design around, that the
Company's patents will not inadvertently infringe upon the patents of others, or
that others will not use the Company's patents upon expiration of such patents.
There can be no assurance that existing or future patents will not be
invalidated or that the Company will have adequate funds to finance the high
cost of prosecuting or defending patent validity or infringement issues.
Therefore, the scope or enforceability of claims allowed in the patents on which
the Company will rely, cannot be predicted with any certainty.
-9-
The Company's performance is substantially dependent on the performance of
its executive officers and key employees. In particular, the services of Thomas
F. Reiner, the Company's Co-founder, Chairman of the Board, President and CEO
would be difficult to replace. The Company has entered into an Employment
Agreement with Mr. Reiner. The loss of the services of Mr. Reiner, any of its
executive officers or other key employees could have a material adverse effect
on the business, results of operations or financial condition of the Company.
The Company is currently evaluating the potential impact of the year 2000
on the processing of date-sensitive information by the Company's computerized
information system. The year 2000 problem is the result of computer programs
being written using two digits (rather that four) to define the applicable year.
Any of the Company's computer programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000, which
could result in miscalculations or system failure. Based on preliminary
information, the costs of addressing the potential problems are not currently
expected to have a material adverse effect on the Company's financial position,
liquidity or results of operations in future periods. However, if the Company or
its customers or vendors, are unable to resolve such processing issued in a
timely manner, it could pose a material financial risk. Accordingly, the Company
plans to devote the necessary resources to resolve all significant year 2000
issues in a timely mannaer.
The Company's current operations continue to be cash flow negative, further
straining the Company's working capital resources. The Company's future capital
requirements will depend on numerous factors, including the acquisition of new
product lines and/or other business operations and the continued development of
existing product sales, distribution and marketing capabilities. In order to
continue its current level of operations, it will be necessary for the Company
to obtain additional working capital, from either debt or equity sources. If the
Company is unable to obtain such additional working capital, it may be necessary
for the Company to restructure its operations to reduce its ongoing
expenditures.
The Company has experienced difficulty from time to time in obtaining some
of its products, and there can be no assurance that its current or alternate
suppliers will be able to meet the Company's needs on a timely basis. Although
some products are currently available from multiple sources, at present the
Company obtains approximately 75% of the products it sells from single sources.
A lack of availability from current suppliers could cause distribution delays,
loss of customers, increased cost to the Company and decrease in levels of
sales. In addition, reliance on these suppliers could adversely affect the
Company's quality control efforts and its ability to control delivery schedules.
Except for the historical information contained herein, the matters set
forth in this report are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. These risks are detailed
from time to time in the Company's periodic reports filed with the Securities
and Exchange Commission, including the Company's Annual Report on Form 10-KSB,
Quarterly Reports on Form 10-QSB and other periodic filings. These
forward-looking statements speak only as of the date hereof. The Company
disclaims any intent or obligation to update these forward-looking statements.
-10-
Part II. Other Information
-----------------
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
The Company leases corporate and warehouse facilities located in
Pleasanton, Califonria. On October 1, 1998 the Company entered into a three (3)
year term lease for its corporate facility. Under the terms of the lease, the
Company leased 4,344 square feet at a base monthly rent of $6,299. On November
1, 1998 the Company entered into a two (2) year term lease for its warehouse
facility. Under the terms of the lease, the Company leases 3,768 square feet at
a base monthly rent of $2,897. The Company believes its facilities are adequate
for its needs in the foreseeable future and that additional space is available
at reasonable rates.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A. Exhibit No.
27 Financial Data Schedule
B. Reports on Form 8-K
None.
-11-
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.
SPARTA SURGICAL CORPORATION
/s/ Thomas F. Reiner
- ---------------------------------------
Thomas F. Reiner
Chairman of the Board,
President & CEO
/s/ H. Dale Biggs
- ---------------------------------------
H. Dale Biggs
Controller and Chief Financial Officer
January 15, 1999
-12-