-----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, WMKuNQta16x8Fk1QNUjeSqiaopFzsDO5seosgy3EG43a1ziAsdDgD+LTiJ0U4HZU i1H4xSunB0+o7V07G2DPnw== 0000897101-97-000764.txt : 19970715 0000897101-97-000764.hdr.sgml : 19970715 ACCESSION NUMBER: 0000897101-97-000764 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970714 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CELOX LABORATORIES INC CENTRAL INDEX KEY: 0000883720 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 333384240 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19866 FILM NUMBER: 97640108 BUSINESS ADDRESS: STREET 1: 856 SOUTH FIFTH ST CITY: HOPKINS STATE: MN ZIP: 55343 BUSINESS PHONE: 6129332616 MAIL ADDRESS: STREET 1: 856 S FIFTH STREET CITY: HOPKINS STATE: MN ZIP: 55343 FORMER COMPANY: FORMER CONFORMED NAME: CELOX CORPORATION DATE OF NAME CHANGE: 19930328 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X) Quarterly report under Section 13 of 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended MAY 31, 1997 or ( ) Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________. Commission file number 0-19866 CELOX LABORATORIES, INC. (Exact name of small business issuer as specified in its charter) MINNESOTA 36-3384240 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1311 HELMO AVENUE, OAKDALE MN 55128 (Address of principal executive offices) (Zip Code) Issuers telephone number, including area code: (612) 730-1500 Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or for such shorter periods that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ____ State the number of shares outstanding of each the issuer's classes of common equity, as of the latest practicable date. THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OUTSTANDING ON JUNE 30, 1997 WAS 2,742,169. Transitional small business format disclosure: Yes ____ No __X__ Table of Contents CELOX LABORATORIES, INC. Report on Form 10-QSB for fiscal quarter ended May 31, 1997 PART I -- FINANCIAL INFORMATION Page ---- ITEM 1. Financial Statements Balance Sheet as of August 31, 1996 and May 31, 1997 3 Statement of Operations -- Three months ended May 31, 1997 and May 31, 1996, and nine months ended May 31, 1997 and May 31, 1996 5 Statement of Changes in Shareholders' Equity for the year ended August 31, 1996 and the nine months ended May 31, 1997 6 Statement of Cash Flows -- Nine months ended May 31, 1997 and May 31, 1996 7 Notes to Financial Statements 8 ITEM 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations 10 PART II -- OTHER INFORMATION 16 CELOX LABORATORIES, INC. BALANCE SHEET May 31, August 31, ASSETS 1997 1996 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 499,879 $ 420,222 Certificates of deposit 737,212 968,663 Trade receivables 22,691 91,802 Investor settlement receivable - current 0 57,328 Accrued interest receivable 13,244 19,002 Inventories 49,695 74,372 Prepaid expenses 4,336 814 ----------- ----------- Total current assets 1,327,057 1,632,203 ----------- ----------- INVESTOR SETTLEMENT RECEIVABLE 22,446 22,446 EQUIPMENT AND LEASEHOLD IMPROVEMENTS Laboratory and production equipment 204,882 204,882 Office furniture and equipment 78,764 78,764 Leasehold improvements 115,558 64,390 ----------- ----------- 399,204 348,036 Less accumulated depreciation (217,488) (254,432) ----------- ----------- 181,716 93,604 ----------- ----------- TOTAL ASSETS $ 1,531,219 $ 1,748,253 =========== =========== CELOX LABORATORIES, INC. BALANCE SHEET May 31, August 31, LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996 ----------- ----------- CURRENT LIABILITIES Accounts payable $ 27,757 $ 29,748 Accrued liabilities 32,511 34,225 Bank note payable-current 3,694 0 ----------- ----------- Total current liabilities 63,962 63,973 ----------- ----------- BANK NOTE PAYABLE 95,074 0 SHAREHOLDERS' EQUITY Common stock 27,422 27,422 Additional contributed capital 5,251,756 5,251,756 ----------- ----------- 5,279,178 5,279,178 Accumulated deficit (3,906,995) (3,594,898) ----------- ----------- Total shareholders' equity 1,372,183 1,684,280 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,531,219 $ 1,748,253 =========== =========== See Notes to Financial Statements.
CELOX LABORATORIES, INC. STATEMENT OF OPERATIONS Three months ended Nine months ended May 31, May 31, ----------------------------- ----------------------------- 1997 1996 1997 1996 REVENUES Net sales $ 37,809 $ 76,462 $ 163,546 $ 325,694 ----------- ----------- ----------- ----------- Cost of products sold 31,816 39,263 93,710 149,484 ----------- ----------- ----------- ----------- GROSS MARGIN 5,993 37,199 69,836 176,210 ----------- ----------- ----------- ----------- OPERATING EXPENSES Research and development 14,724 32,582 48,966 112,108 Marketing and sales 39,614 65,142 114,742 188,630 Administrative 69,468 81,906 244,097 235,689 ----------- ----------- ----------- ----------- Total operating expenses 123,806 179,630 407,805 536,427 OPERATING LOSS (117,813) (142,431) (337,969) (360,217) OTHER INCOME (EXPENSE) Interest and investment income 17,214 20,398 53,032 91,319 Investment gain (loss) 0 0 0 27,750 Other income 0 0 1,041 0 Interest expense (701) 0 (701) 0 Legal settlement (27,500) 0 (27,500) 0 ----------- ----------- ----------- ----------- Total other income (expense) (10,987) 20,398 25,872 119,069 NET LOSS $ (128,800) $ (122,033) $ (312,097) $ (241,148) =========== =========== =========== =========== LOSS PER COMMON SHARE $ (0.05) $ (0.04) $ (0.11) $ (0.09) =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 2,742,169 2,742,169 2,742,169 2,742,169 =========== =========== =========== =========== See Notes to Financial Statements.
CELOX LABORATORIES, INC. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Common Stock Additional Unrealized ------------------------- Paid-in Accumulated Gain on Inv. Shares Amount Capital Deficit Avail. for Sale Total --------- --------- ----------- ----------- --------------- ----------- BALANCE AT AUGUST 31, 1994 2,764,669 $ 27,647 $ 5,268,681 ($2,864,260) 0 $ 2,432,068 --------- --------- ----------- ----------- --------- ----------- Common stock repurchased (22,500) (225) (16,925) (17,150) Unrealized gains for the period 38,798 38,798 Net loss for the period (346,614) (346,614) --------- --------- ----------- ----------- --------- ----------- BALANCE AT AUGUST 31, 1995 2,742,169 $ 27,422 $ 5,251,756 ($3,210,874) $ 38,798 $ 2,107,102 Net change in unrealized gains for the year (38,798) (38,798) Net loss for the period (384,024) (384,024) --------- --------- ----------- ----------- --------- ----------- BALANCE AT AUGUST 31, 1996 2,742,169 $ 27,422 $ 5,251,756 ($3,594,898) $ 0 $ 1,684,280 Net loss for the period (312,097) (312,097) --------- --------- ----------- ----------- --------- ----------- BALANCE AT MAY 31, 1997 2,742,169 $ 27,422 $ 5,251,756 ($3,906,995) $ 0 $ 1,372,183 See Notes to Financial Statements.
CELOX LABORATORIES, INC. STATEMENT OF CASH FLOWS Nine months ended May 31, May 31, 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss for the period ($312,097) ($241,148) --------- --------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 27,446 35,788 Deferred rent expense (773) (3,469) Changes in assets and liabliities: (Increase) decrease in: Accounts receivable 69,111 (85,462) Accrued interest receivable 5,758 10,353 Inventories 24,677 (14,859) Prepaid expenses (3,523) 203 Officer note receivable 0 4,000 Increase (decrease) in: Accounts payable (1,991) 2,748 Accrued liabilities (940) (1,978) --------- --------- Net cash used in operating activities (192,332) (293,824) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Maturity (Purchase) of bank certificates of deposit 231,450 (766,839) Proceeds from sale of short-term investments held for sale 0 728,538 Proceeds from investor settlement receivable 57,328 0 Purchase of equipment and leasehold improvements (115,558) (12,842) --------- --------- Net cash from (used for) investing activities 173,220 (51,143) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank note payable 98,769 0 --------- --------- Net cash from financing activities 98,769 0 --------- --------- Net increase (decrease) in cash and cash equivalents 79,657 (344,967) CASH AND CASH EQUIVALENTS: Beginning of period 420,222 919,404 --------- --------- End of period $ 499,879 $ 574,437 ========= ========= See Notes to Financial Statements.
CELOX LABORATORIES, INC, NOTES TO FINANCIAL STATEMENTS May 31, 1997 NOTE A--BASIS OF PRESENTATION The accompanying 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 Item 310 of Regulation S-B. 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 only of normal recurring adjustments) considered necessary for a fair presentation have been included. The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company's financial statements filed as part of the Company's August 31, 1996 Form 10-KSB. This quarterly report should be read in connection with such annual report. NOTE B--CASH AND CASH EQUIVALENTS For purposes of reporting the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. NOTE C--SHORT-TERM INVESTMENTS The Company had invested excess cash in the Piper Jaffray Institutional Government Income Portfolio Fund (Piper Fund). During the quarter ended February 29, 1996, the Company sold all remaining shares in this Fund. As an alternative to the Piper Fund, the Company has utilized bank certificates of deposit. As of May 31, 1997 the Company had investments of $737,212 in Certificates of Deposit. Certificates of deposit are made only with the highest rated banks and less than $100,000 is deposited at any one bank. The Company also utilizes a money market fund, which is restricted by its charter to Tier 1 instruments, for a portion of its investments. NOTE D--NOTES PAYABLE BANK During April, 1997 the Company borrowed $100,000 from a local bank with the proceeds used for financing a portion of the tenant improvements in the Company's new facility. The loan is secured by a certificate of deposit at this bank. The interest rate for this loan, currently 7.5% , is tied to the certificate of deposit rate. The loan will be paid off monthly over a five year period. NOTE E--REPURCHASE OF COMMON STOCK Effective July 30, 1993, the Board of Directors authorized the repurchase of up to 300,000 shares of the Company's common stock in open market transactions at prices not to exceed $1.75 per share. At May 31, 1997 the Company had repurchased 136,700 shares at prices ranging from $0.85 to $1.58 per share. NOTE F--FACILITY LEASE AGREEMENT The Company's new facility is located at 1311 Helmo Avenue in Oakdale, Minnesota (a suburb of St. Paul). A new Lease Agreement was executed on December 6, 1996 and calls for the lease of 9,500 square feet of office, laboratory and warehouse space. The term of the lease is seven (7) years with an option to renew for extended periods. Base rent for each of the seven (7) years is $73,725 plus charges for common area maintenance and other tenant expenses. The initial lease payment commenced on April 1, 1997. NOTE G--LOSS PER COMMON SHARE Loss per share is computed based upon the weighted average number of common shares outstanding during the period. The Company has determined that under the modified treasury stock method, there would be no change in earnings per share due to outstanding common stock equivalents. Fully diluted and primary loss per share are the same amounts for each of the periods presented. NOTE H--RECLASSIFICATION Certain 1996 amounts have been reclassified to conform with the 1997 presentation. These reclassifications had no effect on net income (loss) as previously reported. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction Celox Laboratories, Inc. ("Celox" or the "Company") is a biotechnology company formed in 1985 that researches, develops, manufactures and markets cell biology products used in the propagation of cells derived from mammals, including humans, and other species. These specialized cell growth products are used primarily in academic, pharmaceutical, diagnostic and other commercial laboratories to improve the growth condition, productivity and quality of cell-derived medical and other biological products such as vaccines, monoclonal antibodies, interferons and human growth factor. The Company focuses primarily on solving the fundamental problems associated in culturing cells with the use of serum, which is derived from the whole blood of animals and humans. The Company's research activities have resulted in proprietary technology which has been used to commercialize its non-serum growth media, cell freezing solutions and other cell biology products. Celox currently manufactures and markets over 30 products. Celox's proprietary products consist of four serum replacement products, TCM, TM-235(TM), TCH(TM), and VaxMax(TM) and a cell freezing medium, Cellvation(TM). VaxMax(TM) was developed specifically for use in the production of veterinary vaccines. Celox also manufactures ten basal media formulations, a series of buffered salt solutions, other cell biology reagents and a variety of custom formulations. An additional proposed product, ViaStem(TM), continues to undergo further analysis in pre-clinical testing. This product was developed to improve the preservation of critical cells (e.g. stem cells) which are required for bone marrow transplantation. Other potential applications for ViaStem(TM) include the preservation of umbilical cord blood and platelets. Currently, Memorial Blood Centers of Minnesota and the University of Cincinnati's Hoxworth Blood Center will be providing additional pre-clinical data on ViaStem(TM). During the quarter ended November 30, 1996, the Company received notice from the United States Patent and Trademark Office (USPTO) that a patent for ViaStem(TM) would be issued in early December, 1996. The actual patent was received by the Company in the first week of December. The Company has also filed the documents needed for an International Patent Application as required by the Patent Cooperation Treaty. During February, 1996 the Company entered into an agreement with the Department of the Army, Walter Reed Army Institute of Research (WRAIR) that provides for a Cooperative Research and Development Agreement for Material Transfer which encompasses the Company's ViaStem(TM) product. The Company has received its first Drug Master File classification from the Food and Drug Administration (FDA) for TCM. This classification will expedite the FDA approval process for customers who want to use the Company's TCM product in the manufacture of drugs or drug substances for human use. The Company is in the process of gaining similar status for its other proprietary products. In April, 1994 the Company entered into an agreement with American Type Culture Collection (ATCC), Rockville, MD, the world's largest public archive of living biological cultures and genetic materials. ATCC serves the international scientific community by acquiring, preserving and distributing strains of the most diverse collection of organisms and derivative biological materials in the world. Under the agreement, ATCC will distribute cell lines adapted to the Company's non-serum products as well as other associated products worldwide. Orders for growth media under this agreement have continued during the current fiscal year. During July of 1995, the Company completed a non-exclusive world-wide distribution agreement with ICN Pharmaceuticals, Inc., Costa Mesa, CA. Under the agreement, ICN is marketing Celox's TCM, TCH(TM), TM-235(TM) serum replacement products as well as Cellvation(TM). Initial orders under this agreement were shipped in the last quarter of fiscal 1995. Additional orders have been received during the this fiscal year. The Company has also entered into an agreement with ICN to provide the rest of the Company's products (except for ViaStem(TM)) to ICN for worldwide distribution. The first shipment of these additional products occurred in the third quarter. ICN manufactures and markets a broad range of prescription and over-the-counter pharmaceuticals, medical diagnostic products and biotechnology research products in North and Latin America, Eastern and Western Europe and the Pacific Rim countries. Beginning in fiscal 1997, the Company is providing its proprietary products to Sigma Chemical Company under a private label distribution agreement. The first shipment under this agreement occurred during the quarter ended November 30, 1996. Results of Operations The Company had recorded an Investor Settlement Receivable in the amount of $133,000 on the Balance Sheet in order to reflect the expected settlement proceeds from a class action lawsuit which was brought on behalf of investors in the Piper Fund. In December, 1995, the District Court Judge approved the Class Action Settlement. Payments from the Piper Fund have been received in accordance with the schedule agreed upon in the settlement. As of May 31, 1997 the Investor Settlement Receivable is $22,446. A separate Class Action lawsuit against the Fund's auditors, KPMG Peat Marwick, had been certified by the Court. In March of 1997, the federal court in Minnesota granted KPMG Peat Marwick's motion for partial summary judgement. The effect of this decision was to dismiss all of the remaining federal claims against KPMG Peat Marwick. Based on correspondence received from the plaintiff's attorneys, an appeal of this decision will be made. During the quarter ended May 31, 1997, the Company had net sales of $37,809 which was an decrease of $38,653 or 51% from $76,462 reported in the same quarter for the prior year. For the nine months ended May 31, 1997 net sales totalled $163,546 versus $325,694 for the nine months ended May 31, 1996. This represents a decrease of 50% from the previous period. The decrease between years for the quarter results primarily from the timing of orders received from a distributor. In addition, the Company moved into its new facility in April and had to re-validate all of the production equipment which limited the production of products during the third quarter. Both of these factors also contributed to the decline between years for the comparable nine month periods. The Company had a net loss of $128,800 for the quarter ended May 31, 1997 compared to a net loss of $122,033 for the same period in the previous year. For the nine month period, a net loss of $312,097 was incurred in fiscal 1997 as compared to a net loss of $241,148 in fiscal 1996. On a per share basis, the loss for the current quarter equalled 5 cents versus a 4 cent loss in the comparable period in fiscal 1996. For the nine months ended May 31, 1997 the net loss per share was 11 cents compared to a net loss of 9 cents per share in the prior year. The cost of products sold was 84% of net sales for the three months ended May 31, 1997, as compared to 51% of net sales for the three months ended May 31, 1996. For the nine month period, cost of products sold was 57% compared to 46% during the same period in the previous fiscal year. The increase in the cost of sales for each of the respective reporting periods is due primarily to lower sales volume to cover fixed manufacturing costs. In addition, the current quarter cost of sales was higher due to one-time start up costs associated with the move to new facility. The mix of proprietary products versus standard formulations will also affect comparisons between periods. Labor, raw materials and other production costs have been consistently controlled in light of the decline in sales for the periods. An operating loss of $117,813 was generated for the quarter ended May 31, 1997 compared to an operating loss of $142,431 for the same period in the previous year. For the nine months ended May 31, 1997 the Company had an operating loss of $337,969 versus a loss of $360,217 for the nine months ended May 31, 1996. The decrease between years for both reporting periods is due to a strict control of operating expenses in light of the lower sales volume. The Company received interest and investment income of $17,214 during the quarter ended May 31, 1997 as compared to $20,398 in the prior year. Interest and investment income for the nine month period was $53,032 in fiscal 1997 compared to $91,319 for the same period in 1996. Investment income is derived primarily from the investment of the proceeds of the Company's March 1992 initial public offering. The decrease in investment income during both the quarter and the nine month reporting period as compared to the previous year results from reduced investment balances as the Company uses capital in its operations as well as lower effective interest rates resulting from a transfer of amounts from the Piper Fund into bank certificates of deposit. Additionally, in the quarter ended November 30, 1995, the Company received special one-time dividends paid out from the Piper Fund. This also contributes to the variance for the nine month comparison. For the nine months ended May 31, 1997 the Company had no investment gains compared to investment gains of $27,750 nine month period during the previous fiscal year. In the prior year, gains were realized when shares of the Piper Jaffray fund were sold. As was disclosed in previous sections of this Form 10-QSB, Piper Jaffray and the Class Action Plaintiffs have agreed to settle a lawsuit which was brought against the Piper Fund by investors. A lawsuit filed against the Fund's auditors, KPMG Peat Marwick, is still being pursued by investors other than the Company. An appeal of the decision of the federal court in Minnesota to grant summary judgement to KPMG Peat Marwick will likely be made by the attorneys for the plaintiffs. The Company has not filed a lawsuit nor has it decided if it will join in any future class actions, but has not eliminated these options as a possibility in the future. Operating expenses decreased $55,824 (31%) to $123,806 from $179,630 for the quarter ended May 31, 1997 and decreased by $128,622 (24%) to $407,805 from $536,427 for the nine months ended May 31, 1997 compared to the comparable periods in the prior fiscal year. The decrease for both the three and nine month periods as compared to the prior year is due to the timing and amount of research and development expenditures as well as reduced marketing and sales expenses offset by higher administrative expenditures for the nine month results. Research and development costs decreased by $17,858 (55%) to $14,724 from $32,582 in the current quarter as compared to the previous fiscal year. For the comparative nine month periods, research and development expenses decrease by $63,142 (56%) to $48,966 from $112,108. The decrease for both of the reporting periods results from the timing of expenditures in the areas of salaries and wages and patent expenses incurred in connection with the ViaStem(TM) product. The Company expects the costs of research and development to fluctuate based on the status of pre-clinical and clinical trials for ViaStem(TM). Marketing expenses decreased by $25,528 (39%) to $39,614 from $65,142 for the quarter ended May 31, 1997 and by $73,888 (39%) to $114,742 from $188,630 for the nine months then ending as compared to the comparable periods in fiscal 1996. The decreases are attributable to the amount and timing of advertising, promotional materials and trade show expenses between years. The Company has instituted a focused advertising and marketing strategy and therefore expects that marketing and sales expenses will increase during subsequent quarters as programs and advertising materials are developed. Administrative expenses decreased by $12,438 (15%) for the quarter ended May 31, 1997 compared to the previous fiscal year to $69,468 from $81,906. For the nine months ended May 31, 1997 administrative expenses increased by $8,408 (4%) to $244,097 from $235,689 in the prior year. The decrease in the current quarter is due to lower operating expenses in the new facility along with strict cost controls. The increase between years for the nine month period is primarily due to moving expenses incurred as part of the Company's move to a new facility as well as increased legal expenditures. Liquidity and Capital Resources Capital resources on hand at May 31, 1997 include cash and short-term investments of $1,237,091 and net working capital of $1,263,095. This represents a decrease of $151,794 (11%) in cash and short-term investments and a decrease of $305,135 (19%) in net working capital as compared to August 31, 1996. The lease for the Company's facilities terminated in October, 1996. A new facility has been completed in Oakdale, Minnesota, a suburb of St. Paul. The Company is leasing approximately 9,500 square feet of office laboratory and warehouse space in this facility. The Company moved into the Oakdale facility during March, 1997. In the interim, the Company had leased office and warehouse space on a month-to-month basis. As partial payment for tenant improvements in the new facility, the Company borrowed $100,000 from a local bank. The balance of tenant improvements over this amount was paid for out of Company funds. The Company anticipates spending approximately $150,000 in fiscal 1997 on capital expenditures. Through May 31, 1997 the Company has made capital expenditures in the amount of $115,558. The majority of the planned expenditures will be used to fund additional sales, research and development, manufacturing growth and specialized tenant improvements. The Company believes that its capital resources on hand at May 31, 1997, together with revenues from product sales, will be sufficient to meet its cash requirements for the near future. PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is a member of the class in the KPMG Peat Marwick action as it relates to their audit of the Piper Jaffray Institutional Government Income Portfolio Fund, on whose behalf litigation has been commenced in federal district court in Minneapolis. The Company has not directly participated in the litigation. The Company expects that attorneys for the plaintiffs in this action will appeal the decision of the federal court in Minneapolis to grant partial summary judgement to KPMG Peat Marwick. The Company was a defendant in a wrongful termination lawsuit brought by a former employee who was in the probationary period at the time of the termination. The Company believes that the lawsuit was totally without merit. During the current quarter however, the Company agreed to a settlement reached as a result of court ordered mediation. A $27,500 settlement has been recorded in the financial statements. The Company has filed a lawsuit against its former landlord claiming, among other things, that the landlord repeatedly violated the terms of the lease agreement. Currently, both sides are involved in discovery. 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 Item 5. Other Information None Item 6. (A) Exhibits Exhibit 27 - Financial Data Schedule (B) Reports on Form 8-K None 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. CELOX LABORATORIES, INC. Dated: July 11, 1997 By: /S/ Milo R. Polovina --------------------------------- Milo R. Polovina, President & Principal Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS AUG-31-1997 MAY-31-1997 496,879 737,212 22,691 0 49,695 1,327,057 399,204 217,488 1,531,219 63,962 0 0 0 27,422 1,344,761 1,531,219 163,546 163,546 93,710 208,452 0 0 0 (312,097) 0 (312,097) 0 0 0 (312,097) (0.11) (0.11)
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