-----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, UeYUfi9aF5YAG1nSA4UxDi3WsZtgZY9wEFsbzMJfjrlYVmLvF1o2MkKN8Sw4zQ1O Tq3bivi2H3WSCSXAULy02A== 0000830736-98-000032.txt : 19981118 0000830736-98-000032.hdr.sgml : 19981118 ACCESSION NUMBER: 0000830736-98-000032 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOPOOL INTERNATIONAL INC CENTRAL INDEX KEY: 0000830736 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 581729436 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-14257 FILM NUMBER: 98749882 BUSINESS ADDRESS: STREET 1: 6025 NICOLLE ST SUITE A CITY: VENTURA STATE: CA ZIP: 93003 BUSINESS PHONE: 8056540643 MAIL ADDRESS: STREET 1: 6025 NICOLLE STREET CITY: VENTURA STATE: CA ZIP: 93003 FORMER COMPANY: FORMER CONFORMED NAME: CYTRX BIOPOOL LTD DATE OF NAME CHANGE: 19890716 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-QSB /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1998 Commission file number 0-17714 BIOPOOL INTERNATIONAL, INC. (Exact name of Registrant as specified in its charter) Delaware 58-1729436 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6025 Nicolle Street, Ventura, (805) 654-0643 California 93003 (Registrant's telephone (Address of principal executive offices) 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 proceeding 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 / / Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Outstanding at September 30, 1998, Common Stock, $.01 par value per share, 8,617,886 shares. PART I. FINANCIAL INFORMATION Item 1. Financial Statements BIOPOOL INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1998 DECEMBER 31, 1997 (Unaudited) - ----------------------------------------------------------------------------- (in thousands except share data) ASSETS Current assets Cash $ 1,010 $ 1,376 Accounts receivable, net 2,735 2,677 Inventories 3,865 3,784 Prepaid expenses and other current assets 402 286 - ----------------------------------------------------------------------------- Total current assets 8,012 8,123 Property and equipment 6,669 6,583 Less accumulated depreciation (2,776) (2,398) - ----------------------------------------------------------------------------- Property and equipment, net 3,893 4,185 Other assets 1,340 1,370 - ----------------------------------------------------------------------------- TOTAL ASSETS $13,245 $13,678 - ----------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and other payables $ 1,644 $ 1,688 Debt 918 964 - ----------------------------------------------------------------------------- Total current liabilities 2,562 2,652 Long-term debt, net 1,214 1,873 Deferred tax liability 108 108 Stockholders' equity: Common stock, $.01 par value, 50,000,000 shares authorized; 8,617,886 and 8,648,828 shares issued and out- standing in 1998 and 1997, respectively 86 86 Other stockholders' equity 9,275 8,959 - ----------------------------------------------------------------------------- Total stockholders' equity 9,361 9,045 - ----------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,245 $13,678 - ----------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
BIOPOOL INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ending Nine Months Ending September 30, September 30, 1998 1997 1998 1997 - ----------------------------------------------------------------------------- (in thousands except share data) Sales $ 3,516 $ 4,315 $11,235 $12,661 Costs and expenses Cost of sales 2,306 2,458 6,931 7,478 Selling, general, administrative 997 1,078 3,173 3,215 Research and development 69 137 296 342 Restructuring costs 6 -- 144 -- Other 18 (18) 32 (51) Interest expense 50 75 166 238 - ----------------------------------------------------------------------------- Income before taxes 70 585 493 1,439 Income tax expense 27 92 123 286 - ----------------------------------------------------------------------------- Net income $ 43 $ 493 $ 370 $ 1,153 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- Earnings per share: Basic $ -- $ 0.06 $ 0.04 $ 0.13 Diluted $ -- $ 0.06 $ 0.04 $ 0.13
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ending September 30, 1998 1997 - ----------------------------------------------------------------------------- (in thousands) Operating activities $ 599 $ 516 Investing activities Acquisition of BCA - (4,729) Other (206) 4,128 Financing activities (736) (542) Effect of exchange rates (23) (166) - ----------------------------------------------------------------------------- Net increase (decrease) in cash $ (366) $ (793) - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- See accompanying notes to consolidated financial statements.
BIOPOOL INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 1998, are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 1997. The balance sheet at December 31, 1997, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 2. Inventories
September 30, December 31, 1998 1997 (in thousands) Raw materials $ 1,283 $ 821 Work in process 1,611 1,661 Finished products 971 1,302 ------------------------------ $ 3,865 $ 3,784
3. Earnings per Share During the year ended December 31, 1997, the Company adopted SFAS No. 128, "Earnings Per Share," which required a change in the method used to compute earnings per share. Under this new standard, primary and fully diluted earnings per share were replaced with "Basic" and "Diluted" earnings per share. There were no changes to earnings per share as a result of the new standards for the periods reported. Basic earnings per share is based upon the weighted-average number of common shares outstanding. Diluted earnings per share is based upon the weighted average number of common shares and dilutive potential common shares outstanding. Potential common shares are outstanding options under the Company's stock option plans and outstanding warrants, which are included under the treasury stock method. BIOPOOL INTERNATIONAL, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS Results of Operations Sales were $3.5 million for the three-month period and $11.2 million for the nine-month period ended September 30, 1998, compared with $4.3 million and $12.7 million for the corresponding periods of 1997. These amounts represent sales declines of 19% and 11%, respectively, and are the result of numerous, disparate factors. Approximately $641,000, or 45%, of the year-to-date decline in sales was the result of the unavailability of a finished product (BayRho ) from a single supplier for eight of the first nine months of 1998, as previously reported. Limited shipments of this product resumed in October, but it is too early to estimate the significance of the near-and long-term impact on the Company's sales as a result of the extended period of product unavailability. International sales of immunohematology products from the BCA Division were down approximately $340,000 for the nine-month period ended September 30, 1998, when compared with the prior year, in part as a result of the loss of business through certain key distributors in Europe. The Company's management continues to seek new distributors or other strategic business arrangements in these markets, although no assurances can be made that satisfactory arrangements will become available. Year-to-date sales of hemostasis products experienced a decline of approximately $474,000, largely as a result of the timing of orders placed by the Company's customers. Hemostasis products are often sold in large quantities at irregular intervals. Hemostasis sales for the third quarter of 1997 were particularly strong as the result of a single large order from an Original Equipment Manufacturer (OEM) customer. Conversely, hemostasis sales for the third quarter of 1998 were lower than usual as a result of some inventory buildup prior to the summer holidays in Europe and some key OEM orders delayed until the fourth quarter. Furthermore, the Company's domestic sales in general have suffered in 1998 as a result of a recent shift in customer buying patterns. Increasingly, purchasing decisions are being consolidated into the hands of fewer national purchasing groups. As a result, the Company temporarily lost access to certain customers. The Company is currently in the process of securing supply agreements with major vendors which have established relationships with the purchasing groups. The Company also recently hired a new Vice President of Marketing and Business Development with the express objective to develop and implement new strategies to significantly improve sales. Management anticipates measurable results from these efforts by the first quarter of next year, although no assurances can be made that such efforts will be successful in increasing sales materially. Cost of sales decreased $152,000 for the three months and $547,000 for the nine months ended September 30, 1998, compared with the respective 1997 periods as a result of lower sales. As a percentage of sales, year-to-date cost of sales rose to 62% in 1998 compared with 59% for the same 1997 period. These percentage increases are primarily due to the fixed nature of certain overhead costs relative to the declining sales levels. Selling, general and administrative expenses declined $81,000 and $42,000 for the three months and nine months ended September 30, 1998, compared with the same periods of 1997. The first nine months of 1997 included approximately $90,000 of incremental costs associated with the transition of the then newly acquired BCA business. Increased expenses for a general wage increase and allowance for BCA doubtful accounts receivable have been offset by third quarter savings as a result of the consolidation of the Canadian operations into the Company's Ventura facilities. Research and development expenses were reduced by $42,000 for the nine months ended September 30, 1998, compared to the same 1997 period, primarily as a result of the Canadian consolidation. On December 23, 1997, the Company announced the restructuring of its operations by closing its facilities in Canada and consolidating the operations of its subsidiary, Biopool Canada Inc., with operations conducted at the Company's facilities in Ventura, California. Restructuring charges of $342,000 were recorded in the fourth quarter of 1997 and $144,000 in 1998. The transfer of technology, manufacturing, and administrative functions was completed June 30, 1998, and no additional restructuring charges are anticipated. As expected, cost savings of approximately $75,000 from the consolidation were recognized in the third quarter of 1998. Interest expense for the three months and nine months ended September 30, 1998, decreased $25,000 and $72,000, respectively, from the same prior year periods as a result of lower outstanding loan balances. Total debt outstanding at September 30, 1998, was $2.1 million versus $2.8 million a year ago. Future interest expense will be further reduced as a result of a 1% interest rate decrease effective August 15, 1998. Income tax expense for the 1997 periods include benefits related to utilization of domestic NOL carryforwards. All NOL benefits were exhausted during 1997. Income taxes for the second quarter of 1998 included a tax benefit associated with certain restructuring charges accrued in the fourth quarter of 1997. Financial Condition The Company's liquidity and capital resources remained strong into the third quarter of 1998. Working capital as of September 30, 1998, was $5.5 million, with a current ratio of 3.1 to 1.0. Approximately $705,000 of cash was used to pay down debt during the first nine months of 1998. The total debt to equity ratio at September 30, 1998, was 23%. During the third quarter of 1998, the Company restructured its bank term loan to reduce the interest rate by 1% and extend the term by 18 months. The Company's management believes that the current availability of cash, lines of credit, working capital, and cash flow from operations are adequate to meet the Company's needs for at least the next twelve months. The Company continues to seek potential acquisitions and sources of capital to finance such acquisitions, although it has no commitments for either at this time. Pursuant to the Company's stock repurchase program announced June 5, 1998, the Company had repurchased at September 30, 1998, a total of 69,100 shares of its Common Stock on the open market at an average purchase price of $0.99 per share. Year 2000 Readiness The Company has formulated and is implementing a Year 2000 Readiness Plan. Phase I of this Plan, assessment and identification of potential issues, is currently underway. As part of Phase I, the Company has determined that it should not experience any material Year 2000 problems with its products and other non-information technology systems, and is assessing both its internal information technologies and those of its third party suppliers and customers. To date, the Company has not become aware of any material problems with either its own or any third party systems, and expects to complete Phase I by March 31, 1999. Phase II of the Plan will consist of remediation efforts, which the Company has targeted for completion by June 30, 1999; however, since all of the potential risks have not yet been determined, no assurance can be made that Phase II will be fully completed by that date. To date, the Company has spent an immaterial amount on its compliance program, and does not expect to spend in excess of $20,000 to complete both Phases of its Plan. The foregoing costs do not include the Company's internal costs (principally payroll costs for those persons working on the compliance program), which costs the Company does not track. The Company is unable at this time to fully assess its reasonably likely "worst case" scenario. However, failures to correct Year 2000 systems could result in failures or interruptions of critical business systems which could possibly have a material impact on the Company's liquidity and financial condition. The Company does not anticipate material problems with its power supply or telecommunications systems. Forward Looking Statements Except for the historical information contained herein, this report contains forward-looking statements (identified by the words "estimate," "anticipate," "expect," "believe," and similar expressions) which are based upon management's current expectations and speak only as of the date made. These forward-looking statements are subject to risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements and include, but are not limited to, competitors' pricing strategies and technological innovations, changes in health care and government regulations, litigation claims, foreign currency fluctuation, product acceptance, Year 2000 issues, as well as other factors discussed in the Company's last Report on Form 10-KSB. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (11) Statements regarding computation of earnings per share. (b) Reports on Form 8-K - None. 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: November 13, 1998 BIOPOOL INTERNATIONAL, INC. ------------------------- ----------------------------- (Registrant) /s/ Michael D. Bick, Ph.D. ----------------------------- Michael D. Bick, Ph.D. Chief Executive Officer and Chairman of the Board /s/ Robert K. Foote ----------------------------- Robert K. Foote Chief Financial Officer and Corporate Secretary EX-11 2 EXHIBIT 11 BIOPOOL INTERNATIONAL, INC. Statement Regarding Computation of Per Share Earnings Nine Months Ended September 30, (in thousands except per share data)
1998 1997 Numerator for basic and diluted earnings per share - net income $ 370 $1,153 ------ ------ Denominator: Denominator for basic earnings per share - weighted-average shares 8,667 8,609 Effect of dilutive securities - employee stock options and warrants 70 536 ------ ------ Denominator for diluted earnings per share - adjusted weighted-average shares 8,737 9,145 ------ ------ BASIC EARNINGS PER SHARE $ 0.04 $ 0.13 DILUTED EARNINGS PER SHARE $ 0.04 $ 0.13
EX-27 3
5 9-MOS DEC-31-1998 SEP-30-1998 1,010,000 0 2,735,000 0 3,865,000 8,012,000 6,669,000 2,776,000 13,245,000 2,562,000 0 0 0 86,000 9,275,000 13,245,000 11,235,000 11,235,000 6,931,000 10,576,000 0 0 166,000 493,000 123,000 370,000 0 0 0 370,000 0.04 0.04
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