-----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, VY/dWBa8KjfnpKz/neeogayAZYod4uWZvn8n88w/T3W0N2tINZ+KfHgOXEBELvJ4 +HPkdLGSjjFn8VmG+Ok7eA== 0001017062-96-000111.txt : 19960805 0001017062-96-000111.hdr.sgml : 19960805 ACCESSION NUMBER: 0001017062-96-000111 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960802 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNBIOTICS CORP CENTRAL INDEX KEY: 0000719483 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 953737816 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11303 FILM NUMBER: 96602707 BUSINESS ADDRESS: STREET 1: 11011 VIA FRONTERA CITY: SAN DIEGO STATE: CA ZIP: 92127 BUSINESS PHONE: 6194513771 10QSB 1 QUARTERLY STATEMENT FOR PERIOD ENDING 06/30/96 ============================================================================== U.S. 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, 1996 OR [_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-11303 SYNBIOTICS CORPORATION (Exact name of small business issuer as specified in its charter) CALIFORNIA 95-3737816 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11011 VIA FRONTERA SAN DIEGO, CALIFORNIA 92127 (Address of principal executive offices) (Zip Code) ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 451-3771 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 July 26, 1996, 5,999,956 shares of Common Stock were outstanding. Transitional Small Business Disclosure Format: Yes [_] No [X] ============================================================================== SYNBIOTICS CORPORATION INDEX
Page ---- PART I. Condensed Statement of Operations - Three and six months ended June 30, 1996 and 1995 2 Condensed Balance Sheet - June 30, 1996 and December 31, 1995 3 Condensed Statement of Cash Flows - Six months ended June 30, 1996 and 1995 4 Notes to Condensed Financial Statements 5 Management's Discussion and Analysis or Plan of Operation 6 PART II. Other Information 7
1 PART I. FINANCIAL INFORMATION ----------------------------- ITEM 1. FINANCIAL STATEMENTS -------------------- SYNBIOTICS CORPORATION CONDENSED STATEMENT OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------------- ------------------------ 1996 1995 1996 1995 ----------- ----------- ----------- ---------- Revenues: Product sales $ 5,101,000 $ 3,811,000 $10,851,000 $8,637,000 License fees and other 59,000 97,000 230,000 148,000 Interest 44,000 9,000 54,000 17,000 ----------- ----------- ----------- ---------- 5,204,000 3,917,000 11,135,000 8,802,000 ----------- ----------- ----------- ---------- Cost and expenses: Cost of sales 2,556,000 2,304,000 5,334,000 4,487,000 Research and development 244,000 217,000 461,000 418,000 Selling and marketing 1,130,000 982,000 2,358,000 2,360,000 General and administrative 469,000 361,000 854,000 712,000 ----------- ----------- ----------- ---------- 4,399,000 3,864,000 9,007,000 7,977,000 ----------- ----------- ----------- ---------- Income before gain on sale of securities available for sale and gain on disposition of investment in affiliated company 805,000 53,000 2,128,000 825,000 Gain on sale of securities available for sale 774,000 1,159,000 Gain on disposition of investment in affiliate 931,000 931,000 ----------- ----------- ----------- ---------- Income before income taxes 1,579,000 984,000 3,287,000 1,756,000 Provision for income taxes 60,000 4,000 118,000 22,000 ----------- ----------- ----------- ---------- Net income $ 1,519,000 $ 980,000 $3,169,000 $1,734,000 =========== =========== =========== ========== Net income per share $ .25 $ .17 $ .53 $ .30 =========== =========== =========== ========== Weighted average shares outstanding 6,028,000 5,806,000 5,968,000 5,805,000 =========== =========== =========== ==========
Net income per share was computed based upon the weighted average number of shares outstanding, including common stock equivalents. See accompanying notes to condensed financial statements. 2 ITEM 1. FINANCIAL STATEMENTS (CONTINUED) -------------------- SYNBIOTICS CORPORATION CONDENSED BALANCED SHEET - -------------------------------------------------------------------------------
JUNE 30, DECEMBER 31, 1996 1995 ------------ ------------- (unaudited) (audited) ASSETS Current assets: Cash and equivalents $ 2,970,000 $ 1,017,000 Securities available for sale 3,087,000 Accounts receivable 2,124,000 1,430,000 Inventories 4,824,000 3,439,000 Other current assets 565,000 578,000 ------------ ------------- Total current assets 13,570,000 6,464,000 Property and equipment, net 715,000 879,000 Securities available for sale 2,533,000 Other assets 1,778,000 1,582,000 ------------ ------------- $16,063,000 $ 11,458,000 ============ ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 1,590,000 $ 1,613,000 Other current liabilities 671,000 697,000 ------------ ------------- Total current liabilities 2,261,000 2,310,000 ------------ ------------- Shareholders' equity: Common stock, no par value, 24,800,000 shares authorized, 6,000,000 and 5,816,000 shares issued and outstanding at June 30, 1996 and December 31, 1995 29,801,000 29,351,000 Unrealized holding losses from securities available for sale (1,035,000) Accumulated deficit (15,999,000) (19,168,000) ------------ ------------- Total shareholders' equity 13,802,000 9,148,000 ------------ ------------- $16,063,000 $ 11,458,000 ============ =============
See accompanying notes to condensed financial statements. 3 ITEM 1. FINANCIAL STATEMENTS (CONTINUED) -------------------- SYNBIOTICS CORPORATION CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) - -------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, ------------------------- 1996 1995 ----------- ----------- Cash flows from operating activities: Net income $ 3,169,000 $1,734,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 417,000 507,000 Gain on sale of securities available for sale (1,159,000) Gain on disposition of investment in affiliate (931,000) Changes in assets and liabilities: Accounts receivable (694,000) (385,000) Inventories (1,385,000) 111,000 Other assets 35,000 Accounts payable and accrued expenses (23,000) (144,000) Other liabilities (26,000) 2,000 ----------- ----------- Net cash provided by operating activities 299,000 929,000 ----------- ----------- Cash flows from investing activities: Acquisition of property and equipment (37,000) (75,000) Investment in securities available for sale (3,087,000) Proceeds from sale of securities available for sale 4,727,000 ----------- ----------- Net cash provided by (used for) investing activities 1,603,000 (75,000) ----------- ----------- Cash flows from financing activities: Proceeds from issuance of common stock, net 51,000 (10,000) ----------- ----------- Net cash provided by (used for) financing activities 51,000 (10,000) ----------- ----------- Net increase in cash and equivalents 1,953,000 844,000 Cash and equivalents - beginning of year 1,017,000 447,000 ----------- ----------- Cash and equivalents - end of period $ 2,970,000 $1,291,000 =========== ===========
See accompanying notes to condensed financial statements. 4 ITEM 1. FINANCIAL STATEMENTS (CONTINUED) -------------------- SYNBIOTICS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - ------------------------------------------------------------------------------ NOTE 1 - INTERIM FINANCIAL STATEMENTS: The accompanying balance sheet as of June 30, 1996 and the statements of operations and of cash flows for the six month periods ended June 30, 1996 and 1995 have been prepared by Synbiotics Corporation (the Company) and have not been audited. These financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial position, results of operations and cash flows for all periods presented. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB filed for the year ended December 31, 1995. Interim operating results are not necessarily indicative of operating results for the full year. NOTE 2 - SECURITIES AVAILABLE FOR SALE: Included in current assets are securities available for sale which consist primarily of short-term commercial paper. NOTE 3 - INVENTORIES: Inventories consist of the following:
JUNE 30, DECEMBER 31, 1996 1995 ---------- ------------ Raw materials $ 911,000 $ 665,000 Work in process 636,000 633,000 Finished goods 3,277,000 2,141,000 ---------- ------------ $4,824,000 $3,439,000 ========== ============
5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION --------------------------------------------------------- RESULTS OF OPERATIONS Total revenue for the second quarter of 1996 increased by $1,287,000 or 33% over the quarter ended June 30, 1995, and increased for the six months ended June 30, 1996 by $2,333,000 or 27% over the six months ended June 30, 1995. The increases are primarily due to an increase in product sales of $1,290,000 or 34% during the second quarter of 1996, and an increase in product sales of $2,214,000 or 26% during the six months ended June 30, 1996, respectively. The increase in product sales during the second quarter of 1996 comprises an increase in diagnostic sales of $1,183,000 or 53% and a $107,000 or 7% increase in the sales of vaccines. The increased diagnostic sales are primarily due to increased average selling prices and the introduction of Assure/(R)//Parvo, for the detection of canine parvovirus, and ICT GOLD(TM) FeLV, the Company's new feline leukemia diagnostic. The increased average selling prices of the Company's existing diagnostic products resulted from a general price increase during the second quarter of 1996, as well as the non-recurrence of promotional pricing which was in effect during the second quarter of 1995. Vaccine sales increased due to sales through new distribution channels, offset by decreased international and domestic shipments of bulk feline leukemia vaccine. The six months ended June 30, 1996 saw an increase in diagnostic sales of $1,463,000 or 26% and a $751, 000 or 26% increase in vaccine sales, both explained by the respective factors discussed above. Also, in 1996 the Company was able to market its ICT GOLD(TM) HW canine heartworm diagnostic for the full six months (the product was introduced in March 1995). The cost of sales as a percentage of product revenue decreased to 50% during the second quarter of 1996 as compared to 60% for the quarter ended June 30, 1995. The decrease is due to the increase in average selling prices discussed above, as well as decreased domestic shipments of bulk feline leukemia vaccine to Rhone Merieux, Inc. (located in Athens, Georgia) during the second quarter of 1996. The Company has contracted to sell bulk vaccine to Rhone Merieux, Inc. at cost because the Company receives a royalty on Rhone Merieux, Inc.'s resulting product sales in the United States. By contrast, the Company's international sales of bulk feline leukemia vaccine to Rhone-Merieux of France are at a profit, not at cost. Cost of sales as a percentage of product revenue would have been 47% and 55% during the quarters ended June 30, 1996 and 1995, respectively, if the zero margin bulk sales were not taken into consideration. The cost of sales as a percentage of product revenue decreased to 49% for the six months ended June 30, 1996 as compared to 52% for the six months ended June 30, 1995. The increase is primarily due to factors similar to those discussed in the quarterly comparison. Research and development expenses during the second quarter of 1996 increased by $27,000 or 12% over the quarter ended June 30, 1995, and increased during the six months ended June 30, 1996 by $43,000 or 10% over the six months ended June 30, 1995. The increases are primarily due to amortization and consulting expenses related to certain technologies licensed from third parties in March 1996. Selling and marketing expenses during the second quarter of 1996 increased by $148,000 or 15% over the quarter ended June 30, 1995, and remained relatively unchanged during the six months ended June 30, 1996 as compared to the six months ended June 30, 1995. The increase during the second quarter is due primarily to advertising and sales promotion expenses related to the launch of the Company's new diagnostic products, Assure/(R)//Parvo and ICT GOLD(TM) FeLV, as well as continuing promotional expenses related to the Company's existing products. General and administrative expenses during the second quarter of 1996 increased by $108,000 or 30% over the quarter ended June 30, 1995, and increased during the six months ended June 30, 1996 by $142,000 or 20% over the six months ended June 30, 1995. The increases are due to the addition of a new Chief Executive Officer in May 1996 and an increase in certain patent-related legal expenses. 6 The Company's business is seasonal, and is concentrated within the canine heartworm selling season, which falls mainly in the quarters ending March 31 and June 30 of each year. Sales and results from operations in the quarters ending September 30 and December 31 of each year are expected to be less favorable than in the heartworm selling season. On February 27, 1996 and February 28, 1996, the Company sold a total of 614,000 shares of Texas Biotechnology Corporation ("TBC") common stock on the American Stock Exchange at an average selling price of $3.573 per share. As a result of the transactions, the Company recognized a gain of $385,00 during the first quarter of 1996. As a result of the sale of the shares, the Company's ownership of TBC was reduced to approximately 3%. During the period April 25, 1996 to May 2, 1996, the Company sold its remaining 614,000 shares of TBC common stock on the American Stock Exchange at an average selling price of $4.205 per share. As a result of the transactions, the Company recognized a gain of $774,000 during the second quarter of 1996. The net proceeds received from the sales, which totalled $4,727,000, will be used primarily for working capital requirements and to fund business opportunities such as acquisitions. FINANCIAL CONDITION Management believes that the Company's present capital resources, which included working capital of $11,309,000 at June 30, 1996, are sufficient to meet its current working capital needs and also the working capital needs associated with the intended acquisition of International Canine Genetics, Inc. ("ICG") (see Part II, Items 5-6). ICG has had operating losses to date and the Company expects that business's losses to continue through at least 1997. PART II. OTHER INFORMATION --------------------------- ITEM 1. LEGAL PROCEEDINGS: ------------------ No material developments. 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. 7 ITEM 5. OTHER INFORMATION: ------------------ As of July 23, 1996, the Company entered into a definitive Purchase Agreement calling for the Company to acquire substantially all of the assets of International Canine Genetics, Inc., subject to shareholder approval. On July 31, 1996, Robert L. Widerkehr retired from his positions as President and Chief Operating Officer of the Company, and resigned from his Director position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: --------------------------------- (a) Exhibits -------- 11.1 Computation of Earnings Per Share. 27 Financial Data Schedule (for electronic filing purposes only). (b) Reports on Form 8-K ------------------- The Company filed a Current Report on Form 8-K dated May 14, 1996 announcing it had entered into a non-binding letter of intent to acquire the assets of International Canine Genetics, Inc. and announcing the appointment of Kenneth M. Cohen to the positions of Chief Executive Officer and Director.
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. SYNBIOTICS CORPORATION Date: August 2, 1996 /s/ Michael K. Green ----------------------- Michael K. Green Vice President of Finance and Chief Financial Officer (signing both as a duly authorized officer and as principal financial officer) 8 EX-11.1 2 COMPUTATION OF EARNINGS PER SHARE SYNBIOTICS CORPORATION EXHIBIT 11.1 ------------ COMPUTATION OF EARNINGS PER SHARE - -------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------- ----------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- PRIMARY EARNINGS PER SHARE: Net income per statement of operations $1,519,000 $ 980,000 $3,169,000 $1,734,000 ========== ========== ========== ========== Weighted average number of shares outstanding 6,028,000 5,806,000 5,968,000 5,805,000 ========== ========== ========== ========== Primary earnings per share $ .25 $ .17 $ .53 $ .30 ========== ========== ========== ========== FULLY DILUTED EARNINGS PER SHARE: Net income per statement of operations $1,519,000 $ 980,000 $3,169,000 $1,734,000 ========== ========== ========== ========== Reconciliation of weighted average number of shares per primary computation above, to amount used for fully diluted computation: Weighted average number of shares outstanding, per primary computation 6,028,000 5,806,000 5,968,000 5,805,000 Add-effect of outstanding options (as determined by the application of the treasury method) 38,000 5,000 26,000 4,000 ---------- ---------- ---------- ---------- Weighted average number of shares, as adjusted 6,066,000 5,811,000 5,994,000 5,809,000 ========== ========== ========== ========== Fully diluted earnings per share $ .25 $ .17 $ .53 $ .30 ========== ========== ========== ==========
1 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED BALANCE SHEET AS OF JUNE 30, 1996 AND THE RELATED CONDENSED STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996 INCLUDED ELSEWHERE IN THIS FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 2,970 3,087 2,170 46 4,824 13,570 4,421 3,706 16,063 2,261 0 0 0 29,801 (15,999) 16,063 10,851 11,135 5,334 5,334 3,673 0 0 2,128 118 3,169 0 0 0 3,169 .53 .53
-----END PRIVACY-ENHANCED MESSAGE-----