SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 2003
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from to
--------------- ---------------
Commission file number: 001-16133
DELCATH SYSTEMS, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 06-1245881
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1100 Summer Street, 3rd Floor, Stamford, CT 06905
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(Address of Principal Executive Offices)
(203) 323-8668
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
As of July 21, 2003, there were 9,669,492 shares of the Issuer's common stock,
$.01 par value, issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
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DELCATH SYSTEMS, INC.
Index
Page No.
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Part I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited)
Balance Sheet- June 30, 2003................................................3
Statements of Operations for the Three and Six Months Ended.................4
June 30, 2003 and 2002 and Cumulative from Inception
(August 5, 1988) to June 30, 2003
Statements of Cash Flows for the Three and Six Months Ended.................5
June 30, 2003 and 2002 and Cumulative from Inception
(August 5, 1988) to June 30, 2003
Notes to Condensed Financial Statements.....................................6
Item 2. Management's Discussion and Analysis or
Plan of Operation...................................................9
Item 3. Controls and Procedures............................................11
Part II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds..........................11
Item 4. Submission of Matters to a Vote of Security Holders................12
Item 6. Exhibits and Reports on Form 8-K...................................13
Signatures.................................................................14
Certification by Chief Executive Officer...................................15
Certification by Chief Financial Officer...................................17
2
Delcath Systems, Inc.
Condensed Balance Sheet
(Unaudited)
June 30, 2003
June 30,
Assets 2003
-------------
Current assets:
Cash and cash equivalents ................................. $ 1,666,261
Certificate of deposit .................................... 2,000,000
Interest receivable ....................................... 961
Prepaid insurance ......................................... 35,582
------------
Total current assets ..................... 3,702,804
Furniture and fixtures, net .................................... 16,283
Due from affiliate ............................................. 24,000
------------
Total assets ............................. $ 3,743,087
============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses ..................... $ 422,921
------------
Total current liabilities ................ 422,921
------------
Stockholders' equity
Common stock .............................................. 96,695
Additional paid-in capital ................................ 21,744,532
Deficit accumulated during development stage .............. (18,521,061)
------------
Total stockholders' equity ............... 3,320,166
------------
Total liabilities and stockholders' equity $ 3,743,087
============
See accompanying notes to financial statements
3
Delcath Systems, Inc.
Condensed Statements of Operations
(Unaudited)
Cumulative
From Inception
Three Months Ended Six Months Ended (August 5, 1988)
June 30, June 30, to
2003 2002 2003 2002 June 30, 2003
---------------------------- ---------------------------- -------------
Costs and expenses:
General and administrative expenses $ 184,355 $ 166,067 $ 421,788 $ 462,398 $ 5,725,097
Research and development costs ...... 359,177 257,710 660,006 560,176 12,070,887
------------ ------------ ------------ ------------ ------------
Total costs and expenses .......... 543,532 423,777 1,081,794 1,022,574 17,795,984
------------ ------------ ------------ ------------ ------------
Operating loss .................... (543,532) (423,777) (1,081,794) (1,022,574) (17,795,984)
Interest income ..................... 6,917 24,838 14,538 48,696 945,001
Interest expense .................... -- -- -- -- (171,473)
------------ ------------ ------------ ------------ ------------
Net loss .......................... $ (536,615) $ (398,939) $ (1,067,256) $ (973,878) $(17,022,456)
============ ============ ============ ============ ============
Common share data:
Basic and diluted loss per share .... $ (0.09) $ (0.10) $ (0.21) $ (0.24)
============ ============ ============ ============
Weighted average number of shares of
common stock outstanding........... 6,141,455 4,146,997 5,135,763 4,025,407
============ ============ ============ ============
See accompanying notes to financial statements
4
DELCATH SYSTEMS, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
Cumulative
Six Months Ended from inception
June 30, (August 5, 1988)
2003 2002 to June 30, 2003
---------------------------- ----------------
Cash flows from operating activities:
Net loss ......................................... $ (1,067,256) $ (973,878) $(17,022,456)
Adjustments to reconcile net
loss to net cash used in operating activities
Stock option compensation expense .............. -- -- 2,520,170
Stock and warrant compensation expense ......... -- -- 236,286
Depreciation expense ........................... 2,496 3,468 23,670
Amortization of organization costs ............. -- -- 42,165
Changes in assets and liabilities:
Decrease (increase) in prepaid expenses .......... 61,001 44,000 (35,582)
Decrease (increase) in interest receivable ....... 4,445 967 (961)
Due from affiliate ............................... -- -- (24,000)
Increase (decrease) in accounts
payable and accrued expenses ................... 247,751 (599,490) 422,921
------------ ------------ ------------
Net cash used in operating activities ...... (751,563) (1,524,933) (13,837,787)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of furniture and fixtures ............... (5,029) (2,932) (39,953)
Purchase of short-term investments ............... (2,000,000) (1,590,261) (4,900,000)
Proceeds from maturities of short-term investments 370,000 -- 2,900,000
Organization costs ............................... -- -- (42,165)
------------ ------------ ------------
Net cash used in
investing activities .............. (1,635,029) (1,593,193) (2,082,118)
------------ ------------ ------------
Cash flows from financing activities:
Deferred costs in connection with a proposed
financing transaction .......................... 238,571 -- --
Net proceeds from sale of stock and
exercise of stock options and warrants ......... 2,750,632 267,500 16,431,840
Repurchases of outstanding common stock ............. -- -- (51,103)
Dividends paid ...................................... -- -- (499,535)
Proceeds from short-term borrowings ................. -- -- 1,704,964
------------ ------------ ------------
Net cash provided by
financing activities .............. 2,989,203 267,500 17,586,166
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents 602,611 (2,850,626) 1,666,261
Cash and cash equivalents at beginning of period .... 1,063,650 3,295,300 --
------------ ------------ ------------
Cash and cash equivalents at end of period .......... $ 1,666,261 $ 444,674 $ 1,666,261
============ ============ ============
Cash paid for interest ........................... $ -- $ -- $ 171,473
============ ============ ============
Supplemental disclosure of non-cash activities:
Conversion of debt to common stock ............... $ -- $ -- $ 1,704,964
============ ============ ============
Common stock issued for preferred stock dividends $ -- $ -- $ 999,070
============ ============ ============
Conversion of preferred stock to common stock .... $ -- $ -- $ 24,167
============ ============ ============
Common stock issued as compensation
for stock sale ................................. $ -- $ -- $ 510,000
============ ============ ============
Common stock, options and warrants issued as
compensation for consulting services ........... $ -- $ -- $ 236,286
============ ============ ============
See accompanying notes to financial statements
5
Delcath Systems Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
Note 1: Description of Business
Delcath Systems, Inc. (the "Company") is a development stage company that was
founded in 1988 for the purpose of developing and marketing a proprietary drug
delivery system capable of introducing and removing high doses of chemotherapy
agents to a diseased organ while greatly inhibiting their entry into the general
circulation system. It is hoped that the procedure will result in a meaningful
treatment for cancer. In November 1989, the Company was granted an
Investigational Device Exemption and an Investigational New Drug status for its
product by the Food and Drug Administration ("FDA"). The Company is seeking to
complete clinical trials in order to obtain FDA pre-market approval for the use
of its delivery system using doxorubicin, a chemotherapy agent, to treat
malignant melanoma that has spread to the liver.
Note 2: Basis of Presentation
The accompanying financial statements are unaudited and have been prepared by
the Company in accordance with accounting principles generally accepted in the
United States of America. Certain information and footnote disclosures normally
included in the Company's annual financial statements have been condensed or
omitted. The interim financial statements, in the opinion of management, reflect
all adjustments (consisting of normal recurring accruals) necessary for a fair
statement of the results for the interim periods ended June 30, 2003 and 2002
and cumulative from inception (August 5, 1988) to June 30, 2003.
The results of operations for the interim periods are not necessarily indicative
of the results of operations to be expected for the fiscal year. These interim
financial statements should be read in conjunction with the audited financial
statements and notes thereto for the year ended December 31, 2002, which are
contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2002 as filed with the Securities and Exchange Commission.
Note 3: Research and Development Costs
Research and development costs include the costs of materials, personnel,
outside services and applicable indirect costs incurred in development of the
Company's proprietary drug delivery system. All such costs are charged to
expense when incurred.
6
Note 4: Reclassifications
Reclassifications have been made to reflect cost and expense accounts,
particularly research and development, on a functional basis for 2002 and prior,
which is consistent with the Company's current presentation.
Note 5: Sale of Common Stock and Warrants
On May 20, 2003, the Company completed the sale of 677,419 units of its
securities at a selling price of $3.10 per unit. Each unit consisted of five
shares of common stock and five warrants (the "2003 Warrants") each to purchase
one share of common stock. The 2003 Warrants are exercisable at $0.775, and they
expire on May 20, 2008. A total of 3,387,095 shares of common stock and 2003
Warrants each were issued, and the Company received gross proceeds of
$2,099,999. In addition, the Company granted the underwriters an option to
purchase up to an aggregate of an additional 15% of the total units sold in the
public offering. On June 10, 2003 the underwriters exercised their option for
the full allotment of additional units, and the Company issued 508,060 shares of
its common stock and 2003 Warrants each, and received gross proceeds of
$314,997. The Company received $68 for granting the underwriters an option to
purchase until May 14, 2008, 67,741 units at 165% of the offering price. As a
result of the foregoing, the Company received $2,415,064 of proceeds ($1,517,666
after underwriting fees and other expenses).
As of June 30, 2003, the Company has received $1,232,966 of net proceeds from
the exercise of 2003 Warrants for which it has issued 1,655,440 shares of its
common stock.
The following table sets forth changes in stockholders' equity since December
31, 2002:
Common Stock, $.01 Par Value
Outstanding Deficit Accumulated
----------------------------- Additional During
No. of shares Amount Paid in Capital Development Stage Total
------------- ------ --------------- ----------------- -----
Balance at December 31, 2002 4,118,897 41,189 19,049,406 (17,453,805) $ 1,636,790
Sale of Stock May 20, 2003 .. 3,895,155 38,952 1,478,646 -- 1,517,598
including underwriter's
exercise of overallotment
option, net of related costs
Proceeds from sale of ....... -- -- 68 -- 68
underwriters' unit option
Exercise of 2003 Warrants ... 1,655,440 16,554 1,216,412 -- 1,232,966
Net loss for six months ended
June 30, 2003 ......... -- -- -- (1,067,256) (1,067,256)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2003 .... 9,669,492 $ 96,695 $ 21,744,532 $(18,521,061) $ 3,320,166
Note 6: Stock Option Plan
The Company has historically accounted for its employee stock option plans in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation expense is recorded on the date of grant only if the
current fair market value of the underlying stock exceeds the exercise price.
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation" permits entities to recognize as expense over the
vesting period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB
7
date of grant. Alternatively, SFAS No. 123 also allows entities to continue to
apply the provisions of APB Opinion No. 25 and provide pro forma net income
(loss) and pro forma earnings (loss) per share disclosures for employee stock
option grants as if the fair-value-based method defined in SFAS No. 123 had been
applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure required by of SFAS No. 123.
Had compensation cost for the Company's stock option grants been determined
based on the fair value at the grant dates consistent with the methodology of
SFAS No. 123, the Company's net loss and net loss per share for the six months
ended June 30, 2003 and 2002 would have been increased to the pro forma amounts
indicated as follows:
Three Months Ended June, 30, Six Months Ended June, 30,
---------------------------- --------------------------
2003 2002 2003 2002
---- ---- ---- ----
Net loss, as reported ....... $ (536,615) $ (398,939) $(1,067,256) $ (973,878)
Stock-based employee
compensation expense included
in net loss, net of related
tax effects ................. 0 0 0 0
Stock-based employee
compensation determined under
the fair value based method,
net of related tax effects .. (14,432) (8,638) (31,410) (17,277)
----------- ----------- ----------- -----------
Pro forma net loss .......... (551,047) (407,577) (1,098,666) (991,155)
Loss per share (basic and
diluted):
As reported .............. $ (0.09) $ (0.10) $ (0.21) $ (0.24)
Pro forma ................ $ (0.09) $ (0.10) $ (0.21) $ (0.25)
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(a) Plan of Operation
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements which are subject to certain
risks and uncertainties that can cause actual results to differ materially from
those described. Factors that may cause such differences include, but are not
limited to, uncertainties relating to our ability to successfully complete Phase
III clinical trials and secure regulatory approval of any of our current or
future drug-delivery systems and uncertainties regarding our ability to obtain
financial and other resources for our research, development and
commercialization activities. These factors, and others, are discussed from time
to time in the Company's filings with the Securities and Exchange Commission.
You should not place undue reliance on these forward-looking statements, which
speak only as of the date they are made. We undertake no obligation to publicly
update or revise these forward-looking statements to reflect events or
circumstances after the date they are made.
OVERVIEW
Since our founding in 1988 by a team of physicians, we have been a development
stage company engaged primarily in developing and testing the Delcath system for
the treatment of liver cancer. A substantial portion of our historical expenses
have been for the development of our medical device, the clinical trials of our
product and the vigorous pursuit of patents worldwide, which now total nine. We
expect to continue to incur significant losses from expenditures for product
development, clinical studies, securing patents, regulatory activities,
manufacturing and establishment of a sales and marketing organization without
any significant revenues. A detailed description of the cash used to fund
historical operations is included in the financial statements and the notes
thereto. Without an FDA-approved product and commercial sales, we will continue
to be dependent upon existing cash and the sale of equity or debt to fund future
activities. While the amount of future net losses and the time required to reach
profitability are uncertain, our ability to generate significant revenue and
become profitable will depend on our success in commercializing our device.
During 2001, Delcath initiated the clinical trial of the system for isolated
liver perfusion using the chemotherapy agent, melphalan. The Phase I clinical
trial at the National Cancer Institute ("NCI") marked an expansion in the
potential labeled usage beyond doxorubicin, the chemotherapy agent used in our
initial clinical trials.
In June 2003, we reported that the NCI researchers using our technology achieved
anti-tumor activity in 75 per cent (six of eight) of subjects with inoperable
metastatic liver cancers that began as ocular melanoma. The results were
excerpted from a presentation made by the project's principal and associate
investigator at the NCI to the American Society of Clinical Oncology at its
annual meeting on June 1.
Overall, eighteen patients have been evaluated in the study. A full forty per
cent (four of ten) of patients with some form of metastatic liver cancer
experienced either anti-tumor activity or clinically significant tumor
reductions. Three patients are still on treatment, and have not yet been
evaluated. The findings showed that melphalan can be used much more aggressively
than originally thought, and investigators reported encouraging efficacy at
higher dose levels. There were no unmanageable toxicities reported. We believe
that the NCI's results follow and in some cases improve on the tumor response
trends experienced in early Phase I and II studies using doxorubicin at MD
Anderson and Yale Medical School.
Enrollment of new patients by the NCI in the Phase I trial will continue further
into 2003.
9
NCI is currently preparing a clinical trial protocol for a Phase II trial of
melphalan, based on the data collected in the Phase I study. Enrollment in this
Phase II study is expected to begin before the end of this year.
We are finalizing arrangements with the Sydney Melanoma Unit of the University
of Sydney, Sydney Cancer Centre to proceed with recruiting patients for a Phase
III study of the Delcath drug delivery system using doxorubicin for inoperable
cancer in the liver.
Over the next 12 months, we expect to continue to incur substantial expenses
related to the research and development of our technology, including Phase III
clinical trials using doxorubicin with the Delcath system and Phase I and II
clinical trials using melphalan with the Delcath system. Additional funds, when
available, will be committed to pre-clinical and clinical trials for the use of
other chemotherapy agents with the Delcath system for the treatment of liver
cancer, and the development of additional products and components.
Liquidity and Capital Resources
-------------------------------
We stated in our Annual Report on Form 10-KSB for the year ended December 31,
2002 that, without raising any additional funds, we anticipated that our
available funds would be sufficient to meet our anticipated needs for working
capital and capital expenditures through at least the next 12 months. The funds
we raised in our common stock offering that closed in May, discussed below, was
less than we originally planned. Therefore, the Company intends to make efforts
to raise additional funds in the next 12 months. The Company is not projecting
any capital expenditures that will significantly affect the Company's liquidity
during the next 12 months unless we raise additional funds. Our cash and cash
equivalents and certificates of deposit balance at June 30, 2003 was $3,666,261.
Our future liquidity and capital requirements will depend on numerous factors,
including the progress of our research and product development programs, the
success or failure of our clinical studies, the timing and costs of making
various United States and foreign regulatory filings, obtaining approvals and
complying with regulations, the timing and effectiveness of product
commercialization activities including marketing arrangements overseas, the
timing and costs involved in preparing, filing, prosecuting, defending and
enforcing intellectual property rights and the effect of competing technological
and market developments.
Our future results are subject to substantial risks and uncertainties. We have
operated at a loss for our entire history and we may never achieve consistent
profitability. We had working capital at June 30, 2003 of $3,279,883. We expect
to require additional working capital in the future and such working capital may
not be available on acceptable terms, if at all. In addition, we may need
additional capital in the future to fully implement our business strategy.
In May 2003, we issued 3,387,095 shares of common stock and an equal number of
2003 Warrants upon the closing of an underwritten public offering. In June 2003,
we issued an additional 508,060 shares of common stock and an equal number of
2003 Warrants upon exercise in full of the overallotment option we had granted
to the underwriters. During June 2003, 1,655,440 of the 2003 Warrants were
exercised. As a result of the issuances and exercises, we received net proceeds
of approximately $2.8 million. We plan to use the net proceeds to fund, in part,
the Phase III clinical trial using doxorubicin and the Phase II clinical trial
at The National Cancer Institute using melphalan. We also anticipate using a
portion of the net proceeds to hire an additional employee.
Application of Critical Accounting Policies
-------------------------------------------
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.
Certain accounting policies have a significant impact on amounts
10
reported in the financial statements. A summary of those significant accounting
policies can be found in Note 1 to the Company's financial statements included
in the Company's 2002 Annual Report on Form 10-KSB. The Company has not adopted
any significant new accounting policies during the six months ended June 30,
2003, but has reclassified its Statements of Operations to reflect cost and
expense accounts on a functional basis for 2002 and prior.
(b) Management's Discussion and Analysis of Financial Condition and
Results of Operations
Not Applicable.
ITEM 3. CONTROLS AND PROCEDURES
Based on an evaluation of the Company's disclosure controls and procedures
performed by the Company's Chief Executive Officer and its Chief Financial
Officer within 90 days of the filing of this report, the Company's Chief
Executive Officer and its Chief Financial Officer concluded that the Company's
disclosure controls and procedures have been effective.
As used herein, "disclosure controls and procedures" means controls and other
procedures of the Company that are designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms issued by the Securities and
Exchange Commission. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer or officers and its
principal financial officer or officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
Since the date of the evaluation described above, there were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls, and there were no corrective actions with
regard to significant deficiencies and material weaknesses.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) - (c) Not applicable.
(d) Use of Proceeds. The effective date of our first registration statement,
filed on Form SB-2 under the Securities Act of 1933 (No. 333-39470) relating to
our initial public offering of our Common Stock, was October 19, 2000. Net
proceeds to Delcath were approximately $5.4 million. From the time of receipt
through June 30, 2003, all of the net proceeds have been expended as shown in
the table below.
11
Actual through
June 30, 2003
-------------
Research and development:
Phase III clinical trials using the Delcath system with doxorubicin $2,274,000
Phase I clinical trials using the Delcath system with melphalan $1,276,000
Product development costs $9,000
Research and development stage clinical trials for other chemotherapy $78,000
Agents
Repayment of indebtedness $270,000
Working capital, equity raising and general corporate purposes $1,464,000
Total $5,371,000
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On June 4, 2003, the Company held its 2003 Annual Meeting of
Stockholders. At the meeting, the stockholders voted to elect Class III
directors of the Company to hold office until the Annual Meeting of Stockholders
in 2006 and until their successors are elected and qualified. The stockholders
voted 3,326,264 shares in favor of electing each of Mark A. Corigliano and
Victor Nevins to serve as Class III directors and withheld the authority to vote
1,500 shares. The term of office for Daniel Isdaner will continue until the
Annual Meeting of Stockholders in 2004. The term of office for each of M. S.
Koly and Samuel Herschkowitz, M. D. will continue until the Annual Meeting of
Stockholders in 2005. No other matter was submitted for vote by the
stockholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
99.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99.2 Certification of 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.
The Company filed a Current Report on Form 8-K, dated May 20, 2003,
responding to Item 5 and issuing pro forma stockholders' equity numbers as
of March 31, 2003, upon the closing of an underwritten public offering of
the Company's securities, in the form of units, as if such proceeds had
been received as of March 31, 2003.
12
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
DELCATH SYSTEMS, INC.
(Registrant)
Date: July 30, 2003
/s/ Thomas S. Grogan
-------------------------------------------
Thomas S. Grogan
Chief Financial Officer (on behalf of the
registrant and as the principal financial
and accounting officer of the registrant)
13
CERTIFICATION
BY CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14
I, M. S. Koly, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of DELCATH
SYSTEMS, 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by others
within the registrant, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether there were any 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: July 25, 2003
/s/ M.S. Koly
--------------------------------
M. S. Koly
Chief Executive Officer
(Principal executive officer)
14
CERTIFICATION
BY CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14
I, Thomas S. Grogan, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of DELCATH
SYSTEMS, 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us by others
within the registrant, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls: and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether there were any 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: July 25, 2003
/s/ Thomas S. Grogan
--------------------------------
Thomas S. Grogan
Chief Financial Officer
(Principal financial officer)
15
EXHIBIT INDEX
No. Description
--- -----------
99.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.