-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GgY0pWmi1DsBrT+pZ+9TwiiPRAs1P3cibOSNWeDHDaY959L6BV/eYw/3NycduwtU fGdrEPndrFBOkG+L3fAUoA== 0000912057-02-022311.txt : 20020530 0000912057-02-022311.hdr.sgml : 20020530 20020530081242 ACCESSION NUMBER: 0000912057-02-022311 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020531 FILED AS OF DATE: 20020530 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISIBLE GENETICS INC CENTRAL INDEX KEY: 0001010819 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28550 FILM NUMBER: 02665499 BUSINESS ADDRESS: STREET 1: 700 BAY ST STREET 2: SUITE 1000 CITY: TORONTO ONTARIO CANA STATE: A6 ZIP: 00000 BUSINESS PHONE: 2127025700 MAIL ADDRESS: STREET 1: 700 BAY ST STE 1000 STREET 2: TORONTO ONTARIO CANADA CITY: M5G 1Z6 6-K 1 a2081294z6-k.txt FORM 6-K ------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 FILING NO. 2 FOR THE MONTH OF MAY, 2002 VISIBLE GENETICS INC. (Exact name of Registrant) 700 BAY STREET, SUITE 1000, TORONTO ON, CANADA M5G 1Z6 (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F Form 20-F X Form 40-F __ Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X --- --- ------------------------------------------------------------------------ VISIBLE GENETICS INC. On May 30, 2002, we reported our financial results for the first quarter of 2002. We reported sales of $4.3 million for the first quarter ended March 31, 2002, compared to $3.6 million for the same period in 2001. The net loss attributable to common shareholders for the quarter was $10.8 million or $0.56 per share, compared to a net loss attributable to common shareholders of $9.4 million or $0.58 for the same period in 2001. (All amounts are in United States dollars.) Sales of genotyping kits and consumables increased by 40% to $3.6 million in the first quarter of 2002 compared to $2.6 million in the fourth quarter of 2001. In addition, total expenses fell by 7% to $11.1 million in the first quarter of 2002, from $11.9 in the fourth quarter of 2001. The decrease in expenses was due primarily to bringing the Atlanta kit manufacturing facility on line. We also announced today that we are in discussions with third parties regarding various strategic alternatives including a potential sale of the Company. Bear, Stearns & Co. Inc. has been retained as our financial advisor and has been assisting management and the Board of Directors in this process. Any potential sale transaction being discussed at this time would likely include a modest premium to the Company's current share price. While we are committed to acting in the best interest of our shareholders, the timing and outcome of this process is uncertain. As a result of these developments, we have postponed today's scheduled conference call to discuss first quarter results. We intend to schedule an investor call when appropriate to provide an update. Assuming we do not consummate a strategic transaction, we estimate that our 2002 revenue will be in the range of $20-$25 million compared to the $32-$37 million range previously estimated. This revision reflects a slower up-take of genotyping kits and consumables, and delays in securing a distribution partner for our hepatitis C product. THIS FORM 6-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. A VARIETY OF FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE ANTICIPATED RESULTS OR OTHER EXPECTATIONS EXPRESSED IN THESE FORWARD LOOKING STATEMENTS. THE RISKS AND UNCERTAINTIES THAT MAY AFFECT THE OPERATIONS, PERFORMANCE, DEVELOPMENT AND RESULTS OF THE COMPANY INCLUDE BUT ARE NOT LIMITED TO: THE TIMING OF OUR FUTURE CAPITAL NEEDS AND/OR INABILITY TO RAISE ADDITIONAL CAPITAL WHEN NEEDED; UNCERTAINTY OF ACCEPTANCE OF GENOTYPING IN GENERAL, AND OF OUR PRODUCTS, IN PARTICULAR IN THE CLINICAL DIAGNOSTIC MARKET; DESIRE OF THE FDA TO TAKE ENFORCEMENT ACTION TO RESTRICT THE USE OF HOME BREW GENOTYPING TESTS TO PROVIDE DRUG RESISTANCE REPORTS AND TESTS TO PHYSICIANS AND OTHER HEALTH CARE PROVIDERS; REFUSAL OF INSURANCE COMPANIES AND OTHER THIRD PARTY PAYORS TO REIMBURSE PATIENTS OR PHYSICIANS FOR OUR PRODUCTS; PROBLEMS THAT WE MAY FACE IN BRINGING OUR HEPATITIS C GENOTYPING KIT TO MARKET; PROBLEMS THAT WE MAY FACE IN MANUFACTURING, MARKETING AND DISTRIBUTING OUR PRODUCTS; DELAYS WHICH MAY OCCUR IN MAKING OUR ATLANTA MANUFACTURING FACILITY FULLY OPERATIONAL; DELAYS IN OBTAINING OR OUR INABILITY TO OBTAIN APPROVAL BY THE FDA FOR CHANGES MADE TO FDA-APPROVED PRODUCTS; DELAYS IN OBTAINING OR OUR INABILITY TO OBTAIN APPROVAL BY CERTAIN FOREIGN REGULATORY AUTHORITIES FOR OUR HIV OPENGENE SYSTEM AND CERTAIN OTHER PRODUCTS; DELAYS IN OBTAINING OR OUR INABILITY TO OBTAIN FDA APPROVAL FOR CERTAIN OF OUR FUTURE PRODUCTS; PROBLEMS WE MAY FACE WITH FUTURE CLINICAL TRIALS; PROBLEMS IN ACQUIRING AND PROTECTING INTELLECTUAL PROPERTY IMPORTANT TO OUR BUSINESS THROUGH PATENTS, LICENSES AND OTHER ARRANGEMENTS; OUR ABILITY TO SUCCESSFULLY DEFEND CLAIMS THAT OUR PRODUCTS MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS; PROBLEMS WITH IMPORTANT SUPPLIERS AND BUSINESS PARTNERS; DELAYS IN DEVELOPING OR THE FAILURE TO DEVELOP NEW PRODUCTS AND ENHANCED VERSIONS OF EXISTING PRODUCTS; AND OTHER ISSUES DETAILED FROM TIME TO TIME IN THE COMPANY'S SEC FILINGS. THESE FORWARD LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE HEREOF. VISIBLE GENETICS DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE THESE FORWARD LOOKING STATEMENTS. We hereby incorporate by reference this Form 6-K (except for the fourth paragraph of this Form 6-K) into our Registration Statements on Form F-3 and into the prospectuses contained therein (File Nos. 333-76786 and 333-81406), and our outstanding Registration Statements on Form S-8 and into the reoffer prospectuses contained therein. Exhibit 1 - First Quarter 2002 Financial Results 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. VISIBLE GENETICS INC. Date: May 30, 2002 By: /s/ Richard T. Daly --------------------------------- Name: Richard T. Daly Title: Chief Executive Officer EX-99.1 3 a2081294zex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 VISIBLE GENETICS INC. CONSOLIDATED BALANCE SHEETS (UNITED STATES DOLLARS)
MARCH 31 DECEMBER 31 2002 2001 ------------- ------------- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 749,510 $ 15,502,095 Short-term investments 40,965,089 37,692,756 Trade receivables, net of allowance for doubtful accounts 4,080,560 3,136,754 Other receivables 419,298 437,888 Prepaid and deposits 598,353 392,454 Inventory 3,504,377 2,756,950 ------------- ------------- TOTAL CURRENT ASSETS 50,317,187 59,918,897 ------------- ------------- FIXED ASSETS 18,194,524 18,656,995 PATENTS AND LICENSES 13,608,737 14,336,439 OTHER LONG-TERM ASSETS 452,419 456,744 ------------- ------------- $ 82,572,867 $ 93,369,075 ============= ============= LIABILITIES CURRENT LIABILITIES Accounts payable $ 3,685,837 $ 3,851,701 Accrued liabilities 4,128,599 5,081,814 ------------- ------------- TOTAL CURRENT LIABILITIES 7,814,436 8,933,515 ------------- ------------- MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED SHARES 27,775,615 26,886,004 ------------- ------------- SHAREHOLDERS' EQUITY Share capital 195,418,956 195,408,884 Cumulative translation adjustment (929,226) (1,018,839) Deficit (147,506,914) (136,840,489) ------------- ------------- 46,982,816 57,549,556 ------------- ------------- $ 82,572,867 $ 93,369,075 ============= =============
VISIBLE GENETICS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNITED STATES DOLLARS)
THREE MONTHS ENDED MARCH 31 2002 2001 ------------ ------------ (UNAUDITED) (UNAUDITED) SALES Products $ 4,226,002 $ 3,532,687 Services 105,812 41,140 ------------ ------------ 4,331,814 3,573,827 ------------ ------------ COST OF SALES Products 3,159,754 2,284,687 Services 102,786 28,443 ------------ ------------ 3,262,540 2,313,130 ------------ ------------ GROSS MARGIN 1,069,274 1,260,697 ------------ ------------ EXPENSES Sales, general and administrative 8,329,349 7,757,560 Research and development 2,814,915 2,720,060 Exit and termination costs -- 540,000 ------------ ------------ 11,144,264 11,017,620 ------------ ------------ LOSS FROM OPERATIONS BEFORE INTEREST (10,074,990) (9,756,923) Interest income 191,025 1,178,195 Interest and financing expense (2,537) (955) ------------ ------------ NET LOSS FOR THE PERIOD (9,886,502) (8,579,683) Accretion of preferred dividends and discount attributable to preferred shares (889,611) (832,946) ------------ ------------ NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(10,776,113) $ (9,412,629) ============ ============ Weighted average number of common shares outstanding 19,201,591 16,293,708 BASIC AND FULLY DILUTED LOSS PER SHARE $ (0.56) $ (0.58) ============ ============
VISIBLE GENETICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNITED STATES DOLLARS)
THREE MONTHS ENDED MARCH 31 2002 2001 ------------ ------------ (UNAUDITED) (UNAUDITED) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net loss for the period $ (9,886,502) $ (8,579,683) Add: Items not involving cash - Depreciation 1,595,070 1,230,469 Amortization 752,666 756,381 Foreign exchange 3,196 (77,758) Increase ( decrease ) from changes in - Trade receivables (986,213) (399,565) Other receivables 12,018 (549,514) Prepaids and deposits (209,159) (265,735) Inventory (733,023) (120,715) Other long-term assets 4,325 2,265 Accounts payable (143,316) 10,516 Accured liabilities (907,412) 1,217,919 ------------ ------------ (10,498,350) (6,775,420) ------------ ------------ CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES Purchase of fixed assets (1,099,392) (7,017,719) Licenses and patents acquired (24,964) (32,506) Purchase of short-term investments (23,502,904) (10,895,636) Redemption of short-term investments 20,230,571 7,209,136 ------------ ------------ (4,396,689) (10,736,725) ------------ ------------ CASH PROVIDED BY FINANCING ACTIVITIES Common shares issued, net of expenses 209,373 344,516 ------------ ------------ 209,373 344,516 ------------ ------------ EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH BALANCES (66,919) (142,595) ------------ ------------ (DECREASE) IN CASH AND CASH EQUIVALENTS, DURING THE PERIOD (14,752,585) (17,310,224) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 15,502,095 18,476,303 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 749,510 $ 1,166,079 ============ ============ SUPPLEMENTAL INFORMATION Interest paid $ 2,537 $ 955 Income taxes paid $ -- $ --
VISIBLE GENETICS INC. CONSOLIDATED STATEMENTS OF DEFICIT (UNITED STATES DOLLARS)
THREE MONTHS ENDED MARCH 31 2002 2001 ------------- ------------- (UNAUDITED) (UNAUDITED) Deficit, beginning of year $(136,840,489) $ (92,038,849) Net loss for the period (9,886,502) (8,579,683) Accretion of preferred dividends and discount attributable to preferred shares transferred to deficit (779,923) (799,045) ------------- ------------- Deficit, end of the period $(147,506,914) $(101,417,577) ============= ============= VISIBLE GENETICS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNITED STATES DOLLARS) THREE MONTHS ENDED MARCH 31 2002 2001 ------------- ------------- (UNAUDITED) (UNAUDITED) Net loss for the period $ (9,886,502) $ (8,579,683) Other comprehensive income: Foreign currency translation adjustments 89,613 (99,443) ------------- ------------- Comprehensive loss for the period $ (9,796,889) $ (8,679,126) ============= =============
VISIBLE GENETICS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2002 Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in United States dollars, in accordance with accounting principles generally accepted in the United States. The principal accounting policies of the Company have been applied on a consistent basis. See the Company's 2001 Annual Report for a description of the Company's significant accounting policies. These interim financial statements do not include all of the information and note disclosure required by generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of results for the reported periods have been included. Note 2 - RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". This statement features new accounting rules for goodwill and intangible assets. The Company adopted SFAS No. 142 on January 1, 2002, and such adoption did not have any impact on the carrying values of assets and liabilities recorded in the consolidated balance sheets. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This statement supercedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". The Company reviews long-lived assets, including fixed assets, patents and licenses, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. Under SFAS No. 144, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is measured using fair market value of the asset. The Company adopted SFAS No. 144 on January 1, 2002, and such adoption did not have any impact on the carrying values of assets and liabilities recorded in the consolidated balance sheets. Note 3 -INVENTORY
March 31, --------- 2002 2001 ---- ---- Raw materials $1,387,975 $1,055,404 Work in process 620,050 451,205 Finished goods 1,496,352 846,461 ---------- ---------- $3,504,377 $2,353,070 ========== ==========
Note 4 - EXIT COSTS During the first quarter of 2001 the Company approved a plan to close its Pittsburgh facility and move all of its kit manufacturing to productions lines in the Company's facility in Atlanta. The Pittsburgh facility will be closed in the second quarter of 2002. As a result of the decision to centralize kit manufacturing in Atlanta certain employees were terminated and the Pittsburgh facility will be vacated. Accordingly, the Company recorded a charge of $540,000 in the statement of operations in the first quarter of 2001, which is included in accrued liabilities at March 31, 2001. This amount represents severance payments made to terminated employees, the remaining future lease commitments, the unamortized balance of leasehold improvements and other costs related to closure of the facility. As of March 31, 2002, approximately $270,628 of these costs were paid and the remaining balance is included in accrued liabilities. Note 5 - SEGMENT INFORMATION The Company's reportable segments are Sequencing Systems, GeneKits and Other Consumables, and Testing, Sequencing and Other Services. Total assets shown below are as of March 31, while all other numbers are for the three-month period ended March 31, of the respective year.
MARCH 31, 2002 - -------------- Sequencing GeneKits Testing, Reconciling Total Systems and Other Sequencing and Items(A) Consumables Other Services Revenues $ 610,690 $ 3,615,312 $ 105,812 $ -- $ 4,331,814 Depreciation & Amtz. 499,609 1,795,634 52,493 -- 2,347,736 (Loss) from operations before interest (1,435,757) (8,587,815) (51,418) -- (10,074,990) Additions to fixed assets 9,437 1,089,955 -- -- 1,099,392 Total assets 3,019,519 37,660,687 178,062 41,714,599 82,572,867 MARCH 31, 2001 - -------------- Sequencing GeneKits Testing, Reconciling Total Systems and Other Sequencing and Items(A) Consumables Other Services Revenues $ 590,908 $ 2,941,779 $ 41,140 $ -- $ 3,573,827 Depreciation & Amtz. 529,349 1,207,179 250,322 -- 1,986,850 (Loss) from operations before interest (1,632,411) (8,111,843) (12,669) -- (9,756,923) Additions to fixed assets 60,992 6,870,180 86,547 -- 7,017,719 Total assets 3,113,117 31,186,665 1,904,976 66,775,266 102,980,024
(A) Reconciling items consist of cash, cash equivalents and short-term investments. Note 6 - CONTINGENCIES In September 2001, a lawsuit was filed in the United States District Court for the Northern District of California against the Company by The Board of Trustees of the Leland Stanford Junior University claiming that the Company's TRUGENE HIV-1 Genotyping Kit infringes patents owned by the university. The Company has received an attorney opinion that it does not infringe any claim of the patents-in-suit. No amount has been provided in these consolidated financial statements in respect of these allegations, as the amount of loss, if any, cannot be determined and the results of such allegations cannot be predicted with certainty. On February 27, 2002, the Company received notice of a lawsuit that has been filed in Milan, Italy against Visible Genetics Inc. and two of the Company's wholly owned subsidiaries by Nuclear Laser Medicine Srl. The lawsuit seeks unspecified damages and specific performance relating to an alleged distribution agreement pertaining to the Company's Hepatitis C and HIV products in Italy. No amount has been provided in these consolidated financial statements in respect of these allegations, as the amount of loss, if any, cannot be determined and the results of such allegations cannot be predicted with certainty. -----END PRIVACY-ENHANCED MESSAGE-----