-----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, U1tUJPSgy8aOoNEF+NNUiGP1U6jSWJioJuzLMIOk+KgkMnew36CQ4CUy8BCaT8MD yDNZtd6wL3HQa/GFxBxtQg== 0000893220-96-000785.txt : 19960701 0000893220-96-000785.hdr.sgml : 19960701 ACCESSION NUMBER: 0000893220-96-000785 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOMATRIX INC CENTRAL INDEX KEY: 0000747952 STANDARD INDUSTRIAL CLASSIFICATION: 2836 IRS NUMBER: 133058261 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-91066 FILM NUMBER: 96563029 BUSINESS ADDRESS: STREET 1: 65 RAILROAD AVE CITY: RIDGEFIELD STATE: NJ ZIP: 07657 BUSINESS PHONE: 2019459550 MAIL ADDRESS: STREET 2: 65 RAILROAD AVE CITY: RIDGEFIELD STATE: NJ ZIP: 07657 10-Q 1 FORM 10-Q, BIOMATRIX, INC. 1 FORM 10-Q --------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1996 Commission File Number 0-19373 BIOMATRIX, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-3058261 - - ------------------------------- --------------------------------- (State of other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 65 Railroad Avenue, Ridgefield, N.J. 07657 --------------------------------------------------- (Address of principal executive offices) (Zip Code) (201)945-9550 --------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (1) Yes X No --- --- The number of shares outstanding of the issuer's common stock as of the latest practicable date: Class March 31, 1996 ----- -------------- Common stock, $ 0.0001 par value 10,182,872 1 2 BIOMATRIX, INC. TABLE OF CONTENTS
PAGE NO. -------- PART I. FINANCIAL INFORMATION ITEM 1 - Unaudited Financial Statements Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995 3 Consolidated Statements of Operations for the Three Months Ended March 31, 1996 and 1995 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 PART II. OTHER INFORMATION ITEM 6 Exhibits and Reports on Form 8-K 9 Signatures 10
2 3 BIOMATRIX, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, 1996 1995 ---- ---- ASSETS Current assets: Cash and cash equivalents .................................. $ 3,966,784 $ 8,888,869 Held-to-maturity investments ............................... 5,889,712 1,598,397 Accounts receivable, less allowance for doubtful accounts of $25,500 in 1996 and 1995 .............................. 1,037,871 1,035,699 Inventory, at lower of cost (average) or market ............ 531,203 660,607 Prepaid expenses and other current assets .................. 500,434 431,802 ----------- ----------- Total current assets ................................ 11,926,004 12,615,374 Property, plant and equipment, net ............................ 4,553,166 4,635,656 Other assets .................................................. 61,725 130,546 ----------- ----------- Total assets ........................................ $16,540,895 $17,381,576 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of notes payable ........................... $ 693,484 $ 792,615 Accounts payable ........................................... 566,723 435,329 Accrued expenses and deferred income ....................... 1,101,878 1,309,298 ----------- ----------- Total current liabilities .......................... 2,362,085 2,537,242 Notes payable less current maturities ......................... 705,510 728,525 Deferred income ............................................... 450,000 - ----------- ----------- Total liabilities .................................. 3,517,595 3,265,767 ----------- ----------- Commitments and contingent liabilities Shareholders' equity: Common stock, $.0001 par value: 20,000,000 shares authorized; 10,185,686 and 10,125,949 issued and 10,182,872 and 10,123,135 outstanding in 1996 and 1995, respectively ......................... 1,019 1,013 Preferred stock, 3,000 shares authorized; none issued ...... - - Additional paid-in capital ................................. 53,445,842 53,286,223 Accumulated deficit ........................................ (39,583,288) (38,334,485) Equity adjustment from foreign currency translation ........ (828,313) (824,982) Treasury stock, 2,814 shares of common stock at cost ....... (11,960) (11,960) ----------- ----------- Total shareholders' equity ......................... 13,023,300 14,115,809 ----------- ----------- Total liabilities and shareholders' equity .......... $16,540,895 $17,381,576 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements 3 4 BIOMATRIX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ------------------- 1996 1995 ---- ---- Revenues: Net sales ...................................... $ 1,096,900 $ 666,029 Income from licenses, royalties, research contracts and grants ......................... 641,947 430,767 ----------- ----------- Total revenues ......................... 1,738,847 1,096,796 ----------- ----------- Costs and expenses: Cost of sales .................................. 713,848 519,208 Research and development expenses .............. 1,366,844 1,347,465 Selling, general and administrative expenses ... 1,005,874 1,307,278 ----------- ----------- Total costs and expenses ............... 3,086,566 3,173,951 ----------- ----------- Loss from operations .............................. (1,347,719) (2,077,155) Interest expense .................................. (28,455) (14,991) Interest and miscellaneous income ................. 127,371 127,700 ----------- ----------- Net loss .......................................... $(1,248,803) $(1,964,446) =========== =========== Net loss per share: Net loss per common share ................. $ (0.12) $ (0.21) =========== =========== Weighted average common shares outstanding 10,161,437 9,512,469 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements 4 5 BIOMATRIX, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, -------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss ................................................. $(1,248,803) $(1,964,446) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization ...................... 134,776 129,415 Amortization of deferred income .................... - (229,289) Stock option compensation .......................... - 12,375 Change in assets and liabilities: Accounts receivable ................................ (1,611) 19,222 Inventory .......................................... 130,646 40,845 Prepaid expenses and other current assets .......... (66,366) (64,196) Other assets ....................................... 14,830 921 Accounts payable, accrued expenses and deferred income ............................. 358,186 (471,456) ----------- ----------- Total adjustments ........................... 570,461 (562,163) ----------- ----------- Net cash used in operating activities ....... (678,342) (2,526,609) ----------- ----------- Cash flows from investing activities: Redemption of held-to-maturity securities .......... 1,591,105 3,660,582 Purchases of held-to-maturity securities ........... (5,882,420) (1,953,743) Capital expenditures ............................... (40,192) (52,173) ----------- ----------- Net cash provided by (used for) investing activities .................... (4,331,507) 1,654,666 ----------- ----------- Cash flows from financing activities: Payments of note payable ........................... (126,928) (5,598) Stock options exercised ............................ 159,624 - Sale of common stock ............................... - 2,000,000 ----------- ----------- Net cash provided by financing activities ... 32,696 1,994,402 ----------- ----------- Effect of exchange rate changes on cash ............ 55,068 579 ----------- ----------- Net increase (decrease) in cash and cash equivalents ..... (4,922,085) 1,123,038 Cash and cash equivalents at beginning of period ......... 8,888,869 481,328 ----------- ----------- Cash and cash equivalents at end of period ............... $ 3,966,784 $ 1,604,366 =========== =========== Supplemental cash flow data: Interest paid ...................................... $ 28,455 $ 14,991
The accompanying notes are an integral part of the consolidated financial statements 5 6 BIOMATRIX, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The financial statements at March 31, 1996 and for the three months ended March 31, 1996 and 1995 are unaudited but include all adjustments which the Company considers necessary for a fair presentation of the financial position at such date and the operating results and cash flows for those periods. These condensed financial statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 1995, which were included as part of the Company's Form 10-K, filed with the Securities and Exchange Commission. Results for the interim periods are not necessarily indicative of results for the entire year. NOTE 2 - CONTINGENCY In August 1990, the Company received a notice from the Pennsylvania Department of Environmental Resources ("DER") that it is one of approximately 1,000 potentially responsible parties ("PRPs") that may have clean-up responsibility at the Industrial Solvents and Chemical Company site in York Haven, Pennsylvania (the "Site"). During the late 1980's, the Company, through a licensed waste disposal transport company, shipped industrial solvents to the Site, which was operating as a recycling facility. The DER is in the process of reviewing hazardous waste found at the Site as well as the DER's own records in order to identify additional PRPs and to quantify PRPs' volumetric contributions. The Company has joined a steering committee that consists of many PRPs. Although neither the total clean-up cost nor the portion of the total clean-up cost assigned to each PRP has been determined, the Company estimated based upon the advice of an environmental consultant, that its liability at December 31, 1992 was approximately $417,000, which amount was provided for in the financial statements at that date. On February 2, 1994, the same consultant provided the Company with an updated report on the site. Based upon this analysis, the Company revised its expected liability to $780,000. Further, the same consultant has reported to the Company that there is less than a 10% chance that its liability might exceed $1,070,033. During the second quarter of 1995 the Company paid its first assessment for clean-up costs of $79,390. Therefore the reserve at December 31, 1995, represents $700,610. There have been no significant changes in the projected total clean-up costs nor the PRPs assigned portion of the total costs in the first quarter of 1996, therefore, the Company's reserve of $700,610 has remained unchanged at March 31, 1996. NOTE 3 - INVENTORIES Inventories at March 31, 1996 and December 31, 1995 consisted of :
March 31, December 31, 1996 1995 --------- ------------ Finished Goods...................................... $120,684 $120,057 Work-in-Process..................................... 294,543 427,193 Raw Materials....................................... 115,976 113,357 ------- -------- 531,203 $660,607 ======= ========
6 7 BIOMATRIX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Biomatrix, Inc., which includes Biomatrix Svenska AB, a wholly owned subsidiary, and Biomatrix Medical Canada, Inc., a majority owned subsidiary, (the "Company"), has been principally engaged in the research and development and commercial application of proprietary viscoelastic biological polymers called hylans, for use in therapeutic medical applications and skin care. For the past two years, a significant source of revenue for the Company has been from corporate license and distribution agreements which have included certain one-time payments. Until the Company commences sales of its products in major markets, payments from corporate agreements are expected to continue to be a major source of revenues. The Company's business is subject to significant risks. Forward-looking comments included herein are subject to and should be read in conjunction with the "Risk Factors" section of the Company's 1995 Annual Report on Form 10-K, including the risks and uncertainties associated with the regulatory approval process and with obtaining and enforcing patents important to the Company's business. As a significant amount of Biomatrix' future revenues may be based on payments from corporate license and distribution agreements, the Company's total revenues and profit and losses are expected to fluctuate from quarter to quarter. Some of these fluctuations may be significant and, as a result, quarter to quarter comparisons may not be meaningful. As of March 31, 1996, the Company's accumulated deficit was $39,583,288. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 REVENUES. Total revenues for the three months ended March 31, 1996 were $1,738,847, an increase of $642,051, or 58.5%, from the same period in 1995. Product sales were $1,096,900 in the first quarter of 1996, an increase of $430,871, or 64.7%, from the same period in 1995, and represented 63.1% of total first quarter 1996 revenues. New product sales of Synvisc(R), the Company's product for the treatment of osteoarthritis, in Sweden and an increase in the sales of skin care intermediate products were the major factors which contributed to the product sales increase. Revenues from licenses, royalties, research contracts and grants were $641,947 in the first quarter of 1996, an increase of $211,180, or 49.0%, from the comparable period in 1995. This favorable change was primarily attributed to a non-refundable payment associated with negotiations for a strategic corporate distribution agreement. COSTS AND EXPENSES. Total costs and expenses for the first quarter of 1996 were $3,086,566, a decrease of $87,385, or 2.8%, from the same period in 1995. Selling, general and administrative expenses in the first quarter were $1,005,874, a decrease of $301,404, or 23.1%, from the same period in 1995. Such decrease was principally due to changes made in the Canadian subsidiary whereby the Company, in accordance with its distribution agreement in Canada, was reimbursed for certain selling and administrative expenses by its corporate partner. Additionally, as a result of such agreement, a major portion of the Company's marketing expenses and customer service personnel have become the responsibility of its corporate partner. This decrease was partially offset by an increase in cost of sales of $194,640 to $713,848 due to the higher sales volumes. Cost of sales as a percentage of sales was 65.1% in the first quarter of 1996 versus 78.0% in the same quarter of 1995. This favorable change was primarily due to an increase in production volumes at the Company's manufacturing facility in Canada to support the demand for medical products in Sweden and Canada. Such change was offset partially as a result of the Company's corporate partner distribution arrangement in Canada, under which the Company now receives a percentage of its corporate partner's sales of Synvisc. However, the Company expects that cost of sales will decline further as a percentage of sales as production volumes increase and as the Company expands the sales of its medical products globally. INTEREST AND MISCELLANEOUS INCOME. Interest expense was $28,455 for the first quarter of 1995, an increase of $13,464 from the prior year due to a construction and equipment loan from the Quebec government. Interest and miscellaneous income was $127,371 for the first three months of 1996, which was consistent with the same period in 1995. 7 8 BIOMATRIX, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES The Company's capital needs have been financed in the past from several sources, including private and public placements of its equity securities, loans from shareholders and the Canadian government, license fees, product revenues, royalties, research contracts and grants. Through March 31, 1996, the Company had raised an aggregate of approximately $50 million from the sale of equity securities and an aggregate of approximately $10.6 million from corporate license and distribution agreements. The Company had cash and cash equivalents of $3,966,784 and investments, invested in U.S. government securities, of $5,889,712 at March 31, 1996. Overall, the Company's cash and investment position decreased by $630,770 for the first quarter of 1996. As of March 31, 1996, the Company had provided a reserve of $700,610 for a contingent liability related to an environmental matter. This reserve is included in accrued expenses. See Note 2 of Notes to the Consolidated Financial Statements. In connection with the Company's acquisition in 1991 of the manufacturing facility in Canada, the Company's majority-owned Canadian subsidiary obtained a five-year loan of approximately $600,000. The anticipated outstanding balance of $525,053 will be due in June 1996. The Company plans to renew this loan for an additional five-year term. The Company's present cash and investments together with revenues generated from ongoing business operations are expected to be sufficient to enable the Company to conduct its present business activities into 1997. The Company is pursuing arrangements with potential corporate partners, which could add additional capital in the form of equity, up-front license payments and anticipated future revenue payments, in addition to the potential milestone payments it could receive from existing corporate partners to support ongoing operations. There can be no assurance that any such arrangements will be consummated on terms satisfactory to the Company, or at all. 8 9 BIOMATRIX, INC. AND SUBSIDIARIES ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. EXHIBITS 27.1 Financial Data Schedule B. REPORT ON FORM 8-K None 9 10 BIOMATRIX, INC. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: May 13, 1996 BIOMATRIX, INC. By: /s/Endre A. Balazs --------------------------------------- Endre A. Balazs Chief Executive Officer By: /s/Brian J. Hayden --------------------------------------- Brian J. Hayden Chief Financial & Accounting Officer 10 11 BIOMATRIX, INC. AND SUBSIDIARIES INDEX TO EXHIBITS 27.1 Financial Data Schedule
11 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 JAN-01-1999 MAR-31-1996 3,966,784 5,889,712 1,063,371 25,500 531,203 11,926,004 7,719,200 3,166,034 16,540,895 2,362,085 1,398,994 0 0 1,019 13,022,281 16,540,895 1,096,900 1,738,847 713,848 3,086,566 0 0 28,455 (1,248,803) 0 (1,248,803) 0 0 0 (1,248,803) (.12) (.12)
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