-----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, Q8NL90oy+PHTV6H7AqBbSg2z76QiFJ6dXcUe14vCqPj2/mX6gnEgLpYDPlb7S2IL LDC3hVl8YUo2b71SCJW7dA== 0000891618-97-004262.txt : 19971029 0000891618-97-004262.hdr.sgml : 19971029 ACCESSION NUMBER: 0000891618-97-004262 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19971028 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABAXIS INC CENTRAL INDEX KEY: 0000881890 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 770213001 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-19720 FILM NUMBER: 97701593 BUSINESS ADDRESS: STREET 1: 1320 CHESAPEAKE TERRACE CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4087340200 MAIL ADDRESS: STREET 2: 1320 CHESAPEAKE TERRACE CITY: SUNNYVALE STATE: CA ZIP: 94089 10-K405/A 1 FORM 10-K405/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K/A Amendment No. 1 (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended March 31, 1997 or Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1937 For the transition period from ______ to ______ Commission file number 000-19720 ABAXIS, INC. (Exact name of registrant as specified in its charter) California 77-0213001 - -------------------------------------------------------------------------------- (State of Incorporation) (I.R.S Employer Identification No.) 1320 Chesapeake Terrace Sunnyvale, CA 94089 (Address of principal executive offices) Registrant's telephone number, including area code, is (408) 734-0200 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, No par value (Title of Class) 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. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X] The aggregate market value of the voting stock held by non-affiliates of the registrant, as of June 16, 1997 was approximately $33,648,540 based upon the closing sale price reported for such date on the NASDAQ National Market. For purposes of this disclosure, shares of Common Stock held by persons who hold more than 5% of the outstanding shares of Common Stock and shares held by officers and directors of the registrant have been excluded because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily conclusive for other purpose. The number of shares of the registrant's Common Stock outstanding as of June 16, 1997, was 11,886,153. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the Annual Meeting of Shareholders of Abaxis, Inc. tentatively scheduled to be held on September 9, 1997 are incorporated by reference in Part III of this Report on Form 10-K. This report contains 27 pages. 1 2 FORM 10-K/A AMENDMENT NO. 1 The undersigned registrant hereby amends the following items of its Annual Report on Form 10-K for the fiscal year ended March 31, 1997, as set forth in the pages attached hereto: The number of shares of the registrant's Common Stock outstanding as of June 16, 1997 on the cover page of this report. Part II Item 6. Selected Financial Data Item 8. Financial Statements and Supplementary Data Part IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K Exhibit 11.1-Computation of Earnings Per Share Exhibit 23.1-Consent of Deloitte & Touche LLP, Independent Auditors Exhibit 23.2-Consent of Ernst & Young LLP, Independent Auditors Exhibit 27.1-Financial Data Schedule 2 3 ITEM 6. SELECTED FINANCIAL DATA The following selected financial data of the Company are qualified by reference to and shall be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with the financial statements, related notes and other financial information included elsewhere in this report.
-------------------------------------------------------------------------------------- Years Ended March 31, 1997 1996 1995 1994 1993 ------------ ----------- ------------ ------------ ----------- STATEMENT OF OPERATIONS DATA: Total revenues $ 7,294,000 $ 2,948,000 $ 1,044,000 $ 1,163,000 $ -- ------------ ----------- ------------ ------------ ----------- Operating expenses: Cost of product sales 7,661,000 4,883,000 2,587,000 -- -- Research and development 1,315,000 1,326,000 4,166,000 8,540,000 7,529,000 Selling, general and administrative 4,867,000 3,482,000 3,504,000 2,175,000 1,577,000 ------------ ----------- ------------ ------------ ----------- Total costs and operating expenses 13,843,000 9,691,000 10,257,000 10,715,000 9,106,000 ------------ ----------- ------------ ------------ ----------- Loss from operations (6,549,000) (6,743,000) (9,213,000) (9,552,000) (9,106,000) Interest income and other 360,000 547,000 376,000 874,000 1,197,000 Interest expense -- -- (149,000) (240,000) (131,000) ------------ ----------- ------------ ------------ ----------- Net loss $ (6,189,000) $(6,196,000) $ (8,986,000) $ (8,918,000) $(8,040,000) ============ =========== ============ ============ =========== Loss per share (1) - As restated $ (0.72) $ (0.65) $ (1.24) $ (1.43) $ (1.30) ============ =========== ============ ============ =========== Shares used in calculating net loss per share 10,502,646 9,466,084 7,268,315 6,226,087 6,176,142 ============ =========== ============ ============ ===========
-------------------------------------------------------------------------------------- March 31, 1997 1996 1995 1994 1993 ------------ ----------- ------------ ------------ ----------- BALANCE SHEET DATA: Cash, cash equivalents, and short-term investments $ 5,321,000 $ 7,778,000 $ 7,195,000 $ 5,573,000 $ 9,801,000 Working capital 6,825,000 7,912,000 7,109,000 3,971,000 6,887,000 Long-term investments -- 500,000 700,000 4,500,000 10,943,000 Total assets 11,977,000 13,046,000 12,147,000 13,569,000 23,370,000 Long-term portion of notes payable and capital lease obligation -- -- -- 1,089,000 1,489,000 Total shareholders' equity 9,358,000 10,726,000 10,436,000 10,003,000 18,752,000
(1) See Note 1 to the Financial Statements for explanation of the loss per share calculation. 3 4 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA Report of Deloitte & Touche LLP, Independent Auditors Report of Ernst & Young LLP, Independent Auditors Balance Sheets at March 31, 1997 and 1996 Statements of Operations for Each of the Three Years in the Period Ended March 31, 1997 Statements of Shareholders Equity for Each of the Three Years in the Period Ended March 31, 1997 Statements of Operations for Each of the three Years in the Period Ended March 31, 1997 Statements of Cash Flows for Each of the Three Years in the Period Ended March 31, 1997 Notes to Financial Statements 4 5 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of Abaxis, Inc.: We have audited the accompanying balance sheets of Abaxis, Inc. as of March 31, 1997 and 1996, and the related statements of operations, shareholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of the Company for the year ended March 31, 1995 were audited by other auditors whose report, dated April 21, 1995, expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. As discussed in Note 11, the accompanying financial statements have been restated. DELOITTE & TOUCHE LLP San Jose, California April 22, 1997 (April 30, 1997 as to Note 10; October 24, 1997 as to Note 11) 5 6 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS To the Board of Directors and Shareholders of Abaxis, Inc. We have audited the accompanying statements of operations, shareholders' equity, and cash flows of Abaxis, Inc. for the year March 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, these financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Abaxis, Inc. for the year ended March 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP San Jose, California April 21, 1995 6 7 ABAXIS, INC. BALANCE SHEETS
MARCH 31, ------------------------------- ASSETS 1997 1996 ------------ ------------ Current assets: Cash and cash equivalents ........................................ $ 1,436,000 $ 1,591,000 Short-term investments ........................................... 3,885,000 6,187,000 Trade and other receivables ...................................... 1,690,000 690,000 Interest receivable .............................................. 80,000 41,000 Inventories ...................................................... 2,218,000 1,456,000 Prepaid expenses ................................................. 135,000 92,000 ------------ ------------ Total current assets .................................... 9,444,000 10,057,000 Property and equipment - net ....................................... 2,453,000 2,427,000 Long-term investments .............................................. -- 500,000 Deposits and other assets .......................................... 80,000 62,000 ------------ ------------ Total assets ....................................................... $ 11,977,000 $ 13,046,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable ................................................. $ 695,000 $ 1,017,000 Accrued payroll and related expenses ............................. 604,000 417,000 Other accrued liabilities ........................................ 554,000 225,000 Warranty reserve ................................................. 495,000 249,000 Deferred rent .................................................... 24,000 94,000 Deferred revenue ................................................. 247,000 143,000 ------------ ------------ Total current liabilities ............................... 2,619,000 2,145,000 ------------ ------------ Customer deposits .................................................. -- 175,000 ------------ ------------ Commitments and contingencies (Note 5) Shareholders' equity: (As restated - Note 11) Convertible preferred stock, no par value: authorized shares - 5,000,000; none issued ......................................... -- -- Common stock, no par value: authorized shares - 35,000,000; issued and outstanding shares - 11,886,153 in 1997 and 9,857,628 in 1996 ........................................................ 59,783,000 53,556,000 Accumulated deficit .............................................. (50,425,000) (42,830,000) ------------ ------------ Total shareholders' equity .............................. 9,358,000 10,726,000 ------------ ------------ Total liabilities and shareholders' equity ......................... $ 11,977,000 $ 13,046,000 ============ ============
See notes to financial statements. 7 8 ABAXIS, INC. STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31, --------------------------------------------- 1997 1996 1995 ------------ ----------- ------------ Revenues: Product sales, net ................................................ $ 7,294,000 $ 2,948,000 $ 845,000 Other development revenue ......................................... -- -- 199,000 ------------ ----------- ------------ Total revenues ...................................................... 7,294,000 2,948,000 1,044,000 ------------ ----------- ------------ Costs and operating expenses: Cost of product sales ............................................. 7,661,000 4,883,000 2,587,000 Research and development .......................................... 1,315,000 1,326,000 4,166,000 Selling, general and administrative ............................... 4,867,000 3,482,000 3,504,000 ------------ ----------- ------------ Total costs and operating expenses .................................. 13,843,000 9,691,000 10,257,000 ------------ ----------- ------------ Loss from operations................................................. (6,549,000) (6,743,000) (9,213,000) Interest and other income ........................................... 360,000 547,000 376,000 Interest expense .................................................... -- -- (149,000) ------------ ----------- ------------ Net loss............................................................. $ (6,189,000) $(6,196,000) $ (8,986,000) ------------ ----------- ------------ Loss per share(a) - (As restated - Note 11).......................... $ (0.72) $ (0.65) $ (1.24) ============ =========== ============ Weighted average shares outstanding ................................. 10,502,646 9,466,084 7,268,315 ============ =========== ============
(a) Loss attributable to common shareholders used in computation of loss per share for the year ended March 31, 1997 was $7,595,000 (See Note 1) See notes to financial statements 8 9 ABAXIS, INC. STATEMENTS OF SHAREHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK COMMON STOCK TOTAL -------------------- ---------------------- ACCUMULATED DEFERRED SHAREHOLDERS' SHARES AMOUNT SHARES AMOUNT DEFICIT COMPENSATION EQUITY -------- ----------- ---------- ------------ ------------ ------------ ------------- Balances at April 1, 1994 ................ -- $ -- 6,260,922 $ 37,782,000 $(27,648,000) $(131,000) $ 10,003,000 Stock option exercises ................... -- -- 111,752 115,000 -- -- 115,000 Issuance of common stock in a public offering, net of issuance costs of $167,000 ............................ -- -- 2,347,250 9,222,000 -- -- 9,222,000 Amortization of deferred compensation and cancellation of stock options ...... -- -- -- (2,000) -- 84,000 82,000 Net loss ................................. -- -- -- -- (8,986,000) -- (8,986,000) -------- ----------- ---------- ------------ ------------ --------- ------------ Balances at March 31, 1995 ............... -- -- 8,719,924 47,117,000 (36,634,000) (47,000) 10,436,000 Stock option exercises ................... -- -- 157,704 389,000 -- -- 389,000 Issuance of common stock in a private placement, net of issuance costs of $23,000 ............................. -- -- 980,000 6,050,000 -- -- 6,050,000 Amortization of deferred compensation .... -- -- -- -- -- 47,000 47,000 Net loss ................................. -- -- -- -- (6,196,000) -- (6,196,000) -------- ----------- ---------- ------------ ------------ --------- ------------ Balances at March 31, 1996 ............... -- -- 9,857,628 53,556,000 (42,830,000) -- 10,726,000 Stock option exercises ................... -- -- 20,925 67,000 -- -- 67,000 Issuance of Series A preferred stock in a private placement, net of issuance costs of $220,000 ............................ 500,000 2,738,000 -- 2,042,000 -- -- 4,780,000 Preferred dividends paid ................. -- -- -- -- (26,000) -- (26,000) Accretion of preferred stock ............. -- 1,380,000 -- -- (1,380,000) -- -- Conversion of preferred stock into common stock ..................................(500,000) (4,118,000) 2,007,600 4,118,000 -- -- -- Net loss ................................. -- -- -- -- (6,189,000) -- (6,189,000) -------- ----------- ---------- ------------ ------------ --------- ------------ Balances at March 31, 1997 (As restated - Note 11) ............................... -- $ -- 11,886,153 $ 59,783,000 $(50,425,000) $ -- $ 9,358,000 ======== =========== ========== ============ ============ ========= ============
See notes to financial statements 9 10 ABAXIS, INC. STATEMENTS OF CASH FLOWS
YEAR ENDED MARCH 31, ---------------------------------------------- 1997 1996 1995 ------------ ------------ ------------ Operating activities: Net loss ................................................ $ (6,189,000) $ (6,196,000) $ (8,986,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization ......................... 934,000 657,000 978,000 Amortization of deferred compensation ................. -- 47,000 82,000 Changes in assets and liabilities: Trade and other receivables ......................... (1,000,000) (405,000) (183,000) Interest receivable ................................. (39,000) (6,000) 198,000 Inventories ......................................... (762,000) (414,000) (783,000) Prepaid expenses .................................... (43,000) (19,000) 208,000 Deposits and other assets ........................... (18,000) (17,000) 6,000 Accounts payable .................................... (322,000) 519,000 (248,000) Accrued payroll and related expenses ................ 187,000 99,000 (164,000) Other accrued liabilities ........................... 505,000 (28,000) 264,000 Deferred revenue .................................... 104,000 34,000 109,000 Customer deposits ................................... (175,000) (15,000) 190,000 ------------ ------------ ------------ Net cash used in operating activities ............. (6,818,000) (5,744,000) (8,329,000) ------------ ------------ ------------ Investing activities: Purchase of available-for-sale securities ............... (27,370,000) (17,194,000) (28,026,000) Maturities of available-for-sale securities ............. 30,172,000 15,250,000 26,337,000 Sales of available-for-sale securities .................. -- -- 7,323,000 Purchase of property and equipment ...................... (960,000) (620,000) (1,184,000) Capital lease deposits .................................. -- -- 4,000 ------------ ------------ ------------ Net cash provided by (used in) investing activities 1,842,000 (2,564,000) 4,454,000 ------------ ------------ ------------ Financing activities: Principal payments under notes payable and capital lease obligations ..................................... -- -- (2,006,000) Proceeds from issuance of common and preferred stock .... 4,847,000 6,439,000 9,337,000 Preferred dividends paid ................................ (26,000) -- -- ------------ ------------ ------------ Net cash provided by financing activities ......... 4,821,000 6,439,000 7,331,000 ------------ ------------ ------------ Increase (decrease) in cash and cash equivalents .......... (155,000) (1,869,000) 3,456,000 Cash and cash equivalents at beginning of year ............ 1,591,000 3,460,000 4,000 ------------ ------------ ------------ Cash and cash equivalents at end of year .................. $ 1,436,000 $ 1,591,000 $ 3,460,000 ============ ============ ============ Supplemental disclosures of cash flow information - Cash paid for interest .................................. $ -- $ -- $ 149,000 ============ ============ ============ Noncash financing activity - Conversion of preferred stock into common stock ......... $ 4,118,000 $ -- $ -- ============ ============ ============
See notes to financial statements. 10 11 ABAXIS, INC. NOTES TO FINANCIAL STATEMENTS AS RESTATED YEARS ENDED MARCH 31, 1997, 1996 AND 1995 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Abaxis, Inc. (the Company) was incorporated in California in 1989 and develops, manufactures and markets portable blood analysis systems. The Company was in the development stage until fiscal 1997. FUTURE FINANCING - The Company expects to incur substantial costs in fiscal 1998 related to the continued development and marketing of its products. In addition, future capital requirements will include amounts necessary to fund accounts receivable, inventories, and capital equipment acquisitions. The Company does not believe that its existing capital resources and anticipated revenue from VetScan and Piccolo product sales will be adequate to satisfy its currently planned financial requirements through fiscal 1998. Consequently, the Company will need to raise additional funds from private or public financing if it is to sustain its currently planned level of operating expenses during fiscal 1998, or in the event that the Company is unsuccessful in raising sufficient funding, the Company will have to significantly reduce its operating expenses. CASH EQUIVALENTS AND INVESTMENTS - Cash equivalents consist of short-term financial instruments with original maturities of less than 90 days from the date of acquisition that are readily convertible into cash. Short-term investments have maturities of less than one year from the balance sheet date and long-term investments have maturities greater than one year from the balance sheet date. Investments consist primarily of marketable debt securities that are classified as "available-for-sale" and are carried at amounts approximating fair value. The fair values for marketable debt securities are based on quoted market prices. Unrealized gains and losses, net of tax, are reportable in shareholders' equity; however, such amounts have not been material and therefore were not recorded. The cost basis of investments is adjusted for the amortization of premiums and the accretion of discounts to maturity, which is included in interest income. Realized gains and losses are also included in interest income. The cost of securities sold is based on the specific identification method. CONCENTRATION OF CREDIT RISK - Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents, short- and long-term investments, as well as accounts receivable. The Company has placed the majority of its cash and cash equivalents and short-and long-term investments in high-credit, high-quality corporate notes and commercial paper. 11 12 The Company sells its products primarily to organizations in the United States, Japan and Europe. The Company monitors the credit status of its customers on an ongoing basis and generally does not require its customers to provide collateral or other security to support accounts receivable. The Company maintains allowances for potential bad debt losses. At March 31, 1997, three customers accounted for 25%, 25% and 15% of accounts receivable, respectively. At March 31, 1996, three customers accounted for 54%, 11% and 10% of accounts receivable, respectively. PROPERTY AND EQUIPMENT - Property and equipment are stated at cost. Depreciation and amortization are generally provided using the straight-line method over the shorter of the estimated useful lives of the assets (two to five years) or the lease term. INVENTORIES - Inventories are stated at the lower of cost (first-in, first-out method) or market. REVENUE RECOGNITION - Under a distribution agreement, a veterinary products distributor has certain rights of return for products unsold by the distributor. The Company defers recognition of such sales and profits until the products are resold by the distributor. For direct sales and for distributors where significant rights of return for products unsold do not exist, revenues are recognized upon shipment. A provision for the estimated future cost of warranty is made at the time revenue is recognized. INCOME TAXES - The Company accounts for income taxes using an asset and liability approach to recording deferred taxes. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES - The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such management estimates include the allowance for doubtful accounts receivable, the net realizable value of inventory, certain accruals and warranty reserves. Actual results could differ from those estimates. The Company operates in a dynamic industry, and accordingly, can be affected by a variety of factors. For example, management of the Company believes that changes in any of the following areas could have a negative effect on the Company in terms of its future financial position and results of operations: ability to obtain additional financing; regulatory changes; uncertainty regarding health care reforms; fundamental changes in the technology underlying blood testing; the ability to develop new products that are accepted in the marketplace; competition, including, but not limited to pricing and products or product features and services; litigation or other claims against the Company; the adequate and timely sourcing of inventories; and the hiring, training and retention of key employees. NET LOSS PER SHARE - Net loss per share is computed using the weighted average number of shares of common stock outstanding. Common equivalent shares from stock options are excluded from the computation as their effect is antidilutive. In the computation of loss per share, loss attributable to common shareholders includes the accretion of preferred stock totaling $1,380,000 and preferred stock dividends totaling $26,000 in fiscal 1997 (Note 7). 12 13 STOCK-BASED COMPENSATION - The Company accounts for stock-based awards to employees using the intrinsic value method in accordance with APB No. 25, "Accounting for Stock Issued to Employees." RECENTLY ISSUED ACCOUNTING STANDARD - In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). The Company is required to adopt SFAS 128 in the third quarter of fiscal 1998. SFAS 128 replaces current earnings per share (EPS) reporting requirements and requires a dual presentation of basic and diluted EPS. Basic EPS exclude dilution and is computed by dividing net income by the weighted average of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The adoption of SFAS 128 will not have an impact on the Company's historically reported EPS. 2. INVESTMENTS The amortized cost and the estimated fair value of available-for-sale securities at March 31 are materially the same and are shown below by contractual maturity:
1997 1996 ---------- ---------- Due in one year or less: Commercial paper and bankers' acceptances $ -- $4,987,000 Corporate debt securities ............... 3,885,000 1,200,000 ---------- ---------- $3,885,000 $6,187,000 ========== ========== Due after one year through two years - Corporate debt securities ............... $ -- $ 500,000 ========== ==========
3. INVENTORIES Inventories at March 31 consist of the following:
1997 1996 ---------- ---------- Raw materials............................. $1,235,000 $ 829,000 Work in process .......................... 723,000 467,000 Finished goods ........................... 260,000 160,000 ---------- ---------- $2,218,000 $1,456,000 ========== ==========
13 14 4. PROPERTY AND EQUIPMENT Property and equipment at March 31 consist of the following:
1997 1996 ----------- ----------- Machinery and equipment ................. $ 3,412,000 $ 3,325,000 Furniture and fixtures .................. 935,000 635,000 Computers and computer equipment ........ 812,000 876,000 Leasehold improvements .................. 230,000 414,000 Construction in progress ................ 1,367,000 679,000 ----------- ----------- 6,756,000 5,929,000 Accumulated depreciation and amortization (4,303,000) (3,502,000) ----------- ----------- Net property and equipment .............. $ 2,453,000 $ 2,427,000 =========== ===========
5. COMMITMENTS AND CONTINGENCIES LEASES - The Company leases its principal facility under a noncancelable operating lease agreement that expires in July 2000. Monthly rental payments increase based on a predetermined schedule. The Company recognizes rent expense on a straight-line basis over the life of the lease. The future minimum payments under the operating lease at March 31, 1997 are as follows:
FISCAL YEAR ----------- 1998.................................................................$ 598,000 1999................................................................. 682,000 2000................................................................. 705,000 2001................................................................. 237,000 ----------- Total.................................................................$ 2,222,000 ===========
Rent expense under operating leases was approximately $390,000, $391,000 and $390,000 for the years ended March 31, 1997, 1996 and 1995, respectively. LITIGATION - The Company is involved in litigation in the normal course of business. In the opinion of management, the ultimate resolution of these matters will not have a material effect on the Company, the Company's financial position or results of operations. 6. RETIREMENT PLAN The Company has a tax deferred savings plan for the benefit of qualified employees. The plan is designed to provide employees with an accumulation of funds at retirement. Qualified employees may elect to have salary reduction contributions made to the plan on a quarterly basis. The Company may make annual contributions to the plan at the discretion of the Board of Directors. The Company has made no contributions since the inception of the plan. 14 15 7. SHAREHOLDERS' EQUITY CONVERTIBLE PREFERRED STOCK - During fiscal year 1997, the Board of Directors authorized and designated 500,000 shares of Series A convertible preferred stock. In September 1996, the company sold the 500,000 shares of Series A convertible preferred stock in a private placement, resulting in net proceeds of $4,780,000. Significant terms of the Series A convertible preferred stock included a conversion feature such that each share was convertible into common stock at the option of the shareholder based upon a variable exchange ratio ranging from 71% to 80% of the market price of the Company's common stock, at the time of conversion or the market price of common stock at the preferred stock issuance date, whichever was lower. The Series A convertible preferred stock was also subject to automatic conversion into common stock upon the earlier to occur of (1) the time the consent of at least a majority of the outstanding preferred stock to such conversion is obtained or (2) on the second anniversary of the issuance date. The significant terms of the Series A preferred stock also entitled the holders to cumulative dividends of $0.15 per share of preferred stock at fixed intervals of time subsequent to the issuance date. The calculated imbedded yield representing the discount on the assumed potential conversion of the preferred stock was allocated to common stock and was accreted to preferred stock over the preferred stock holding period. In November and December 1996, the 500,000 shares of Series A convertible preferred stock were converted into 2,007,600 shares of common stock in accordance with the specified exchange ratios. In connection with the conversion, a dividend of $26,000 was paid to the holders of the Series A preferred stock in accordance with the rights of the shareholders. STOCK OPTION PLAN - Under the Company's 1989 Stock Option Plan (the Option Plan), options to purchase common stock may be granted to employees and consultants of the Company. Options granted under the 1989 Stock Option Plan may be either incentive stock options or nonqualified stock options. Incentive stock options are granted at no less than the fair market value of the common stock on the date of grant, and nonqualified stock options are granted at no less than 85% of the current fair market value of the common stock on the date of grant. The stock options generally expire ten years from the date of grant and normally become exercisable ratably over four years. Under the Company's Outside Directors' Stock Option Plan (the Directors' Plan), options to purchase common stock may be granted only to directors of the Company who are not employees. Options under the Directors' Plan are nonqualified stock options and are granted at the fair market value on the date of grant and expire five years from the date of grant. In a prior year, the Company's Board of Directors reserved 20,000 shares of common stock of which options to purchase 15,000 shares were granted to a non-employee director at the fair market value of the Company's common stock on the date of grant. 15 16 Information with respect to stock option activity is summarized as follows:
OPTIONS OUTSTANDING ------------------------- WEIGHTED AVERAGE NUMBER EXERCISE OF SHARES PRICE --------- -------- Balances at April 1, 1994 763,945 $ 3.49 Granted ................................................ 326,750 5.53 Exercised .............................................. (111,752) 1.02 Canceled ............................................... (174,069) 6.79 --------- Balances at March 31, 1995 (323,778 vested at a weighted average price of $2.22) 804,874 3.95 Granted (weighted average fair value of $4.14 per share) 299,000 6.28 Exercised .............................................. (157,704) 2.42 Canceled ............................................... (147,565) 5.20 --------- Balances at March 31, 1996 (368,143 vested at a weighted average price of $3.64) 798,605 4.85 Granted (weighted average fair value of $2.99 per share) 634,350 4.56 Exercised .............................................. (20,925) 3.23 Canceled ............................................... (234,981) 5.75 --------- Balances at March 31, 1997 ............................. 1,177,049 $ 4.54 =========
Additional information regarding options outstanding as of March 31, 1997 is as follows:
OPTIONS OUTSTANDING ------------------------------------------------------------------------- OPTIONS EXERCISABLE WEIGHTED ------------------------ AVERAGE WEIGHTED WEIGHTED REMAINING AVERAGE AVERAGE RANGE OF NUMBER CONTRACTUAL LIFE EXERCISE NUMBER EXERCISE EXERCISE PRICES OUTSTANDING (YEARS) PRICE EXERCISABLE PRICE --------------- ----------- ---------------- -------- ----------- -------- $ 0.32 - $ 1.32 118,921 3.88 $ 0.91 118,921 $ 0.91 $ 2.50 - $ 2.50 149,850 9.94 $ 2.50 -- $ -- $ 2.87 - $ 4.00 113,000 5.54 $ 3.74 73,585 $ 3.93 $ 4.37 - $ 5.00 145,875 7.85 $ 4.70 118,448 $ 4.66 $ 5.12 - $ 5.12 255,000 9.23 $ 5.12 - $ -- $ 5.25 - $ 5.62 154,000 8.54 $ 5.60 39,208 $ 5.54 $ 5.75 - $ 6.25 133,736 7.81 $ 6.00 53,120 $ 6.13 $ 6.37 - $ 9.11 106,667 7.02 $ 7.31 60,783 $ 7.14 --------- ------- $ 0.32 - $ 9.11 1,177,049 7.80 $ 4.54 464,065 $ 4.15 ========= =======
At March 31, 1997, 378,512 and 93,750 shares were available for future grants under the Option Plan and the Directors' Plan, respectively. 16 17 ADDITIONAL STOCK PLAN INFORMATION - As discussed in Note 1, the Company continues to account for its stock-based awards using the intrinsic value method in accordance with APB No. 25, "Accounting for Stock Issued to Employees," and its related interpretations. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), requires the disclosure of pro forma net income and earnings per share had the Company adopted the fair value method as of the beginning of fiscal 1996. Under SFAS 123, the fair value of stock-based awards to employees is calculated through the use of option pricing models, even though such models were developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which significantly differ from the Company's stock option awards. These models also require subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The Company's calculations were made using the Black-Scholes option pricing method with the following weighted average assumptions: expected life, 19 months following vesting; volatility, 91% in 1997 and 92% in 1996; risk-free interest rates, 5.8% in 1997 and 4.9% in 1996; and no dividends during the expected term. The Company's calculations are based on a multiple option valuation approach, and forfeitures are recognized as they occur. If the computed fair values of the 1997 and 1996 awards had been amortized to expense over the vesting period of the awards, pro forma net loss would have been $7,022,000 ($0.67 per share) in 1997 and $6,446,000 ($0.68 per share) in 1996. However, the impact of outstanding non-vested stock options granted prior to 1996 has been excluded from the pro forma calculation; accordingly, the 1997 and 1996 pro forma adjustments are not indicative of future period pro forma adjustments, when the calculation will apply to all applicable stock options. 8. INCOME TAXES As of March 31, 1997, the Company had federal and state net operating loss carryforwards of approximately $46,000,000 and $15,000,000, respectively. The Company also had federal and state research and development tax credit carryforwards of approximately $1,600,000 and $800,000, respectively. The net operating loss and credit carryforwards will expire at various dates from 1998 through 2011, if not utilized. Use of the Company's net operating loss and tax credit carryforwards may be limited if a change in ownership, as defined by the Internal Revenue Code, occurs. 17 18 Significant components of the Company's deferred tax assets are as follows:
1997 1996 ------------ ------------ Deferred tax assets: Net operating loss carryforwards ................. $ 16,500,000 $ 14,800,000 Research and development credit and manufacturer's investment credit carryforwards ................ 2,400,000 2,100,000 Capitalized research and development ............. 1,000,000 1,300,000 Other, net ....................................... 600,000 800,000 ------------ ------------ 20,500,000 19,000,000 Valuation allowance for deferred tax assets ........ (20,500,000) (19,000,000) ------------ ------------ Total deferred tax assets .......................... $ -- $ -- ============ ============
The Company has not recorded any tax provision or credit for income taxes due to the Company's historic losses and uncertainties surrounding the ability to utilize its deferred tax assets in the future. 9. CUSTOMER AND GEOGRAPHIC INFORMATION Three customers accounted for 34%, 20% and 10%, respectively, of total revenues for the fiscal year ended March 31, 1997. In fiscal year 1996, one customer accounted for 64%, and in fiscal year 1995, two customers accounted for 76% and 23%, respectively, of total revenues. The following is a summary of revenues by geographic region:
YEARS ENDED MARCH 31, ------------------------------------------- 1997 1996 1995 ---------- ---------- ---------- United States $4,995,000 $2,436,000 $1,044,000 Europe ...... 695,000 263,000 -- Japan ....... 1,452,000 82,000 -- Other ....... 152,000 167,000 -- ---------- ---------- ---------- Total ....... $7,294,000 $2,948,000 $1,044,000 ========== ========== ==========
10. SUBSEQUENT EVENT On April 30, 1997, the Company obtained a $2,000,000 equipment financing loan to be used for equipment purchases and immediately borrowed $600,000 against the line. Borrowings under this new equipment financing loan are collateralized by the Company's equipment and bear interest at approximately 16%. In connection with this new equipment financing loan, warrants to purchase 106,667 shares of the Company's common stock at an exercise price of $3.00 per share were issued to the lender. 18 19 11. RESTATEMENT Subsequent to the issuance of the Company's financial statements for the year ended March 31, 1997, the Company's management determined that the calculated imbedded yield representing the discount on the assumed potential conversion of the preferred stock issued by the Company should have been accreted to preferred stock and included in the loss per share computation. The effect of the restatement for the year ended March 31, 1997 was to increase loss attributable to common shareholders by $1,380,000 and to increase loss per share by $0.13. 19 20 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) List of documents filed as part of this report: 1. Financial Statements Reference is made to the Index to Financial Statements under Item 8 of Part II hereof, where these documents are included. 2. Financial Statement Schedules There are no financial statement schedules filed as part of this report because such schedules are not required to be set forth therein or the information is shown in the financial statements or notes thereto. 3. Exhibits filed with this Report on Form 10-K (numbered in accordance with Item 601 of Regulation S-K)
Exhibit Number Description ------ ----------- 10.20 Employment Agreement with Mr. Clinton H. Severson dated March 31, 1997 10.21 Amendment to the Lease Agreement between the Company and South Bay/Caribbean dated March 11, 1997 10.22 Equipment Loan Agreement between the Company and Transamerica Business Credit dated March 4, 1997 11.1 Computation of Earnings per share 22.1 Subsidiaries of the Registrant 23.1 Consent of Deloitte & Touche LLP, Independent Auditors 23.2 Consent of Ernst & Young LLP, Independent Auditors 27.1 Financial Data Schedule
20 21 (b) Reports on From 8-K None EXHIBITS INDEX Exhibit No. Description of Document - ------- ----------------------- 3.1 Restated Articles of Incorporation, as amended (5) (10) 3.2 By-laws of the Company (1) 10.5 1989 Stock Option Plan as amended and forms of agreement (3) 10.6 1992 Outside Directors Stock Option Plan and forms of agreement (4) 10.7 401(k) Plan (1) 10.8 Lease Agreement between the Company and South Bay/Caribbean dated March 11, 1992 (3) 10.13 Exclusive Distribution Agreement dated September 20, 1991 between the Company and Teramecs (1) (2) 10.14 Sponsored Research Agreement dated as of September 20, 1991 between the Company and Teramecs (1) (2) 10.15 Development Agreement between the Company and Becton Dickinson and Company (through its Becton Dickinson Immunocytometry Systems Division) dated April 9, 1993 (5) (6) 10.16 Distribution agreement between the Company and VedCo, Inc. dated June 20, 1994 (6) 10.17 Supply Agreement between the Company and Becton Dickinson and Company (through its Becton Dickinson Immunocytometry Systems Division) dated September 16, 1994 (6) (7) 10.18 Licensing agreement between the Company and Pharmacia Biotech, Inc. dated October 1, 1994 (6) (7) 10.19 Employment Agreement with Mr. Gary H. Stroy dated March 11, 1995 (8) 10.20 Employment Agreement with Mr. Clinton H. Severson dated March 31, 1997 (Page 46) 10.21 Amendment to the Lease Agreement between the Company and South Bay/Caribbean dated March, 11, 1997 (Page 50) 10.22 Equipment Loan Agreement between the Company and Transamerica Business Credit dated March 4, 1997 (Page 54) 11.1 Computation of Earnings per share 16.1 Letter from Ernst & Young LLP dated January 30, 1996 (9) 22.1 Subsidiaries of Registrant (Page 69) 23.1 Consent of Deloitte & Touche LLP, Independent Auditors (Page 70) 23.2 Consent of Ernst & Young LLP, Independent Auditors (Page 71) 27.1 Financial Data Schedule (Page 72) 21 22 (1) Incorporated by reference from Registration Statement No. 33-44326 filed December 11, 1991. (2) Confidential treatment of certain portions of these agreements has been granted. (3) Incorporated by reference to the exhibit filed with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1992. (4) Incorporated by reference to the exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992. (5) Incorporated by reference to the exhibit filed with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1993. (6) Confidential treatment of certain portions of these agreements has been granted. (7) Incorporated by reference to the exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994. (8) Incorporated by reference to the exhibit filed with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1995. (9) Incorporated by reference to the Company's Report on Form 8-K filed February 1, 1996. (10) Incorporated by reference to the exhibit filed with the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996. 22 23 FORM 10-K/A AMENDMENT NO. 1 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. ABAXIS, INC. By: /s/ Ting W. Lu ---------------------------------- Ting W. Lu Vice President of Finance and Administration and Chief Financial Officer Date: October 27, 1997 23 EX-11.1 2 COMPUTATIONS OF EARNINGS PER SHARE 1 EXHIBIT 11.1 COMPUTATION OF EARNINGS PER SHARE
Year ended March 31, 1997 1996 1995 Net loss $ (6,189,000) $ (6,196,000) $ (8,986,000) Cumulative preferred stock dividends 26,000 -- -- Value assigned to accretion of preferred 1,380,000 -- -- stock ------------ ------------- ------------ Loss attributable to common shareholders $ (7,595,000) $ (6,196,000) $ (8,986,000) ============ ============= ============ Loss per share $ (0.72) $ (0.65) $ (1.24) ============ ============= ============ Weighted average common shares outstanding 10,502,646 9,466,084 7,268,315
EX-23.1 3 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.1 CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement No. 333-36705 on Form S-3 and Registration Statements Nos. 33-49758, 33-85744 and 333-07541 on Form S-8 of Abaxis, Inc. of our report dated April 22, 1997, April 30, 1997 as to Note 10, October 24, 1997 as to Note 11 (which expresses an unqualified opinion and includes an explanatory paragraph relating to the restatement described in Note 11), appearing in this Annual Report on Form 10-K/A of Abaxis, Inc. for the year ended March 31, 1997. DELOITTE & TOUCHE LLP San Jose, California October 24, 1997 EX-23.2 4 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-3, No. 333-36705), the Registration Statement (Form S-8 No. 33-49758) pertaining to the 1989 Stock Option Plan, the Outside Directors Stock Option Plan and the Individual Written Compensation Agreement and the Registration Statements (Form S-8 Nos. 33-85744 and 333-07541) pertaining to the 1989 Stock Option Plan of our report dated April 21, 1995, with respect to the financial statements of Abaxis, Inc. included in this Annual Report (Form 10-K/A) for the year ended March 31, 1997. ERNST & YOUNG LLP San Jose, California October 27, 1997 EX-27.1 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the condensed statement of operations and condensed balance sheet and is qualified in its entirety to such Company's yearly report on form 10K for the year ended March 31, 1997. 0000881890 ABAXIS INC. 12-MOS MAR-31-1997 APR-01-1996 MAR-31-1997 1,436,000 3,885,000 1,830,000 (61,000) 2,218,000 9,444,000 6,756,000 (4,303,000) 11,977,000 2,619,000 0 0 0 59,783,000 (50,425,000) 11,977,000 7,294,000 7,294,000 7,661,000 7,661,000 6,182,000 0 0 (6,189,000) 0 (6,189,000) 0 0 0 (6,189,000) (0.72) (0.72)
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