-----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, Vb2gw5PlgQVs8FaR4PwEfsfW5a4NlYuUKa+anNRH5Dcy7hbGVVBnKKdYlp/kgzUM dPy+xozT0HF35nS/reEseA== 0000950137-97-002840.txt : 19970818 0000950137-97-002840.hdr.sgml : 19970818 ACCESSION NUMBER: 0000950137-97-002840 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970815 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACCUMED INTERNATIONAL INC CENTRAL INDEX KEY: 0000888335 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 364054899 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20652 FILM NUMBER: 97665204 BUSINESS ADDRESS: STREET 1: 920 N FRANKLIN ST STREET 2: STE 402 CITY: CHICAGO STATE: IL ZIP: 60610 BUSINESS PHONE: 3126429200 MAIL ADDRESS: STREET 1: 920 N FRANKLIN STREET STREET 2: SUITE 402 CITY: CHICAGO STATE: IL ZIP: 60610 FORMER COMPANY: FORMER CONFORMED NAME: ALAMAR BIOSCIENCES INC DATE OF NAME CHANGE: 19950504 10QSB/A 1 FORM 10-QSB/A 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Amendment No. 2 on FORM 10-QSB/A (Mark One) X QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997. TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT - --- For the transition period from to . ----- ----- Commission file number 0-20652 ACCUMED INTERNATIONAL, INC. ------------------------------------------------------------------ (Exact name of small business issuer as specified in its charter) Delaware 36-4054899 ---------------------------- ------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 900 N. Franklin St., Suite 401, Chicago, IL 60610 -------------------------------------------------- (Address of principal executive offices) (312) 642-9200 -------------- (Issuer's telephone number including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares of Common Stock outstanding as of May 6, 1997: 22,147,232 Transitional Small Business Disclosure Format (check one): Yes No X --- --- 2 ACCUMED INTERNATIONAL, INC. INDEX
Page Number PART I Financial Information 1. Consolidated Financial Statements Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 . . . . . . . . . . . . 1 Consolidated Statements of Operations- Three Months Ended March 31, 1997 and 1996 . . . . . . . . 2 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1997 and 1996 . . . . . . . . 3 Notes to Consolidated Financial Statements. . . . . . . . . . . 4 PART II. Other Information 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 6 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 ACCUMED INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS
March 31, December 31, ASSETS 1997 1996 ---------- ---------- Current Assets Cash and cash equivalents $ 1,626,887 $ 2,801,359 Restricted cash 100,000 100,000 Accounts receivable 4,522,224 2,143,596 Prepaid expenses and deposits 327,369 217,198 Production inventory 3,229,249 1,772,127 ----------- ----------- Total current assets 9,805,729 7,034,280 ----------- ----------- Fixed assets, net 6,437,781 1,696,071 ----------- ----------- Notes receivable 208,273 214,273 Deferred financing costs 1,310,540 - Goodwill and intangible assets 5,160,036 5,340,411 Other assets 207,176 194,507 ----------- ----------- $23,129,535 $14,479,542 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 2,864,851 $ 2,340,769 Other current liabilities 1,232,316 879,808 Deferred revenue 44,303 146,968 Notes payable 25,100 198,555 Capital lease obligation due within one year 75,435 89,810 ----------- ----------- Total current liabilities 4,242,005 3,655,910 ----------- ----------- Warranty reserves 1,500,000 - Long term debt 8,715,793 230,795 Minority interest 419,118 456,841 ----------- ----------- 10,634,911 687,636 ----------- ----------- Stockholders' equity Common stock, $0.01 par value, 30,000,000 shares authorized, 21,888,631 shares issued and outstanding at March 31, 1997, 20,854,157 at December 31, 1996 218,886 208,542 Additional paid-in capital 48,736,351 44,424,646 Cumulative translation adjustment 13,436 32,586 Accumulated deficit (40,499,317) (34,335,313) Less treasury stock, 37,956 shares at March 31, 1997, and 31,812 shares at December 31, 1996, respectively (216,737) (194,465) ----------- ----------- Total stockholders' equity 8,252,619 10,135,996 ----------- ----------- $23,129,535 $14,479,542 =========== ===========
See accompanying notes to the consolidated financial statements. - 1 - 4 ACCUMED INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Three Months Ended Ended March 31, March 31, 1997 1996 ----------- ---------- Sales $3,049,414 $1,187,701 Less cost of sales (1,491,600) (595,210) ---------- ---------- Gross profit (loss) 1,557,814 592,491 ---------- ---------- Operating expenses: General and administrative 1,859,995 914,057 Acquired Research and development - 3,499,727 Research and development 1,153,784 575,059 Goodwill writeoff 3,582,068 - Sales and marketing 975,217 393,177 ---------- ---------- Total operating expenses 7,571,064 5,382,020 ---------- ---------- Operating loss (6,013,250) (4,789,529) ---------- ---------- Other income (expense): Interest income 11,598 5,837 Interest expense (199,898) (326,831) Other income (expense) 430 2,462,252 Minority interest 37,723 - ---------- ---------- Total other income (expense) (150,147) 2,141,258 ---------- ---------- Loss before income taxes (6,163,397) (2,648,271) Income tax expense - 850 ---------- ---------- Net loss ($6,163,397) ($2,649,121) ========== ========== Net loss per share ($0.29) ($0.17) ========== ========== Weighted average common shares outstanding 20,999,058 15,793,157 ========== ==========
See accompanying notes to the consolidated financial statements. - 2 - 5 ACCUMED INTERNATIONAL, INC. CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Three Months Ended Ended March 31, March 31, 1997 1996 ------------ ------------ Cash flows from operating activities: Net loss $ (6,163,397) $ (2,649,121) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 181,724 133,344 Write-off of in-process research and development - 3,499,727 Write-off of impaired goodwill 3,582,068 - Minority interest (7,839) - Expenses paid with issuance of warrants - 1,350,390 Shares received for litigation settlement 22,272 - Changes in assets and liabilities: Decrease (Increase) in restricted cash - 53,000 Decrease (Increase) in accounts receivable 335,113 5,355 Decrease (Increase) in prepaid expenses and deposits (110,171) 11,383 Decrease (Increase) in production inventory (456,346) (205,558) (Increase) in other assets and intangible assets 20,040 (6,508) Increase in accounts payable 21,322 475,631 (Increase) in deferred financing costs and intangibl (650,920) - Increase in other current liabilities and reserves 39,545 (115,595) Increase in notes payable - 314,446 Increase (Decrease) in deferred revenue (102,665) (1,454,450) ------------ ------------ Net cash used in operating activities (3,211,255) 1,412,044 ------------ ------------ Cash used in investing activities: Purchase of fixed assets (275,153) (200,685) Acquisition of business, net (6,000,000) - ------------ ------------ Net cash used in investment activities (6,275,153) (200,685) ------------ ------------ Cash flows from financing activities: Proceeds from issuances of common stock net 38,097 16,924 Notes receivable (issued) collected (13,150) - Payment of capital lease obligation (24,557) (26,663) Proceeds from issuance of notes payable 8,500,000 - Proceeds from bridge loan 6,000,000 - Payment of notes payable and bridge loan (6,188,455) - ------------ ------------ Net cash provided by financing activities 8,311,935 (9,739) ------------ ------------ Net increase (decrease) in cash and cash equivalents (1,174,473) 1,201,620 Cash and cash equivalents at beginning of period 2,801,359 180,508 ------------ ------------ Cash and cash equivalents at end of period $ 1,626,887 $ 1,382,128 ============ ============
See accompanying notes to consolidated financial statements. - 3 - 6 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. ACCUMED INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Preparation of Interim Financial Statements: The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB and, therefore, do not include all information and footnotes necessary for a presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, such consolidated financial statements reflect all normal and recurring adjustments necessary for a fair presentation of the results of operations and financial position for the interim periods presented. Operating results for the three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. 2. Basis of Presentation: The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany balances, transactions and stockholdings have been eliminated. 3. Merger Transaction: On December 29, 1995, the Company acquired all of the common stock of AccuMed, Inc. and its wholly-owned subsidiary. Pursuant to the terms of the merger agreement, 1,881,910 shares of Common Stock and 126,945 warrants were issued to AccuMed, Inc. stockholders and warrantholders, respectively, which were contingent and subject to forfeiture if specified performance goals were not achieved by the merged entity. The contingency associated with 940,955 shares of Common Stock and 63,473 warrants was resolved (performance goal achieved) in March 1996 resulting in contingent consideration of $5,430,326. Such amount has been allocated to identifiable intangibles of acquired proprietary technology ($1,930,599) and in-process research and development ($3,499,727). The acquired proprietary technology is being amortized over the expected period to be benefited of ten years, with the in-process research and development charged to operations during the three months ended March 31, 1996. The contingency associated with the remaining 940,955 shares of Common Stock and 63,472 warrants was resolved (performance goal achieved) in March 1997 resulting in contingent consideration of $3,582,068. Such amount has been recorded as goodwill associated with the merger and charged off in its entirety to operations during the three months ended March 31, 1997 as an impaired asset as such amount cannot be reasonably recovered against future operating results of the Company. 4. Notes Payable: On March 14, 1997, the Company consummated a private placement (the "Private Placement") of 85 Units each consisting of $100,000 in principal amount of 12% Convertible Promissory Notes (the "Notes") and Warrants (the "Warrants") to purchase 10,000 shares of the Company's common stock, par value $0.01 per share (the "Common Stock"). The Company received net proceeds of approximately $7.8 million from the Private Placement after deducting commissions and related expenses. The Notes bear interest at the rate of 12% per annum, payable semi-annually in arrears on August 15 and February 15 of each year during the term of the Notes. Principal under the Notes is due March 14, 2000. Commencing three months following the date of issuance, and subject to shareholder approval of an amendment to the Certificate of Incorporation (the "Charter Amendment") to increase the authorized shares of Common Stock by an amount sufficient to permit the Company to reserve for issuance a sufficient number of shares to allow for the conversion of the Notes, the Notes will become convertible at the option of the holder into shares of Common Stock at a conversion price equal to $3.125 (the "Conversion Price"). If the Company does not have sufficient authorized shares to accommodate conversion of the Notes by May 31, 1997, (i) the Notes will become due and payable 30 days thereafter at an amount equal to 150% of the outstanding principal amount, and (ii) the Conversion Price will be reduced by 20%. At the Company's annual stockholders meeting on May 23, 1997 the stockholders approved an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of Common Stock to 50,000,000 shares. This increase provides sufficient shares to accommodate conversion of the notes. The Warrants are exercisable to purchase Common Stock at an exercise price of $3.125 per share. Of the 10,000 Warrants included in each Unit, 8,823 are immediately exercisable for a period of six months following March 14, 1997, and 1,177 Warrants will become immediately exercisable upon effectiveness of the Charter Amendment and will remain exercisable for six months thereafter. If the Notes are redeemed by the Company within three months following March 14, 1997, the term of the Warrants will be reset to March 14, 2002. The Company has agreed to register the resale of the Common Stock underlying the Notes and the Warrants under the Securities Act of 1933, as amended. If the Company fails to file with the Securities and Exchange Commission a registration statement covering such underlying Common Stock on or prior to May 31, 1997, (i) the interest rate on the Notes will increase to 16% per annum until such registration statement is filed, and (ii) the Conversion Price will be reduced by 20%. The Company filed the required registration statement on May 30, 1997. The total proceeds received of $8,500,000 were allocated to the notes payable and warrants based on the estimated fair value of $8,222,500 and $277,500, respectively. The original issue discount of $277,500 relating to the notes payable has been recorded in Deferred Finance Costs on the March 31, 1997 Balance Sheet, and will be amortized over the term of the notes. The placement agent, a shareholder of the - 4 - 7 Company, received fees estimated at $961,500 representing out of pocket expenses of $56,500, a placement fee equal to $595,000 or 7% of the proceeds of the offering and five year warrants to purchase 200,000 shares of the Company's Common Stock with a fair value of $310,000. The Company utilized the Black-Scholes pricing model to determine the fair value of the warrants granted. The following assumptions were incorporated into the model: risk free rate 7%, expected life five years, expected volatility .2, and expected dividend zero. Of the loan proceeds, $6,130,000 (including $130,000 of interest) was used to repay a $6,000,000 bridge loan used for the ESP Culture System II product line acquisition on March 3, 1997 (see note 5), $651,500 was used for issuance costs, and the remaining $1,718,500 was retained to cover transition costs of the acquired business. The costs associated with the issuance of these notes of $1,321,000 will be amortized over the three year term of the notes. 5. Acquisitions: On March 3, 1997, the Company acquired certain assets and liabilities of Difco Microbiology Systems, Inc ("Difco") for a total purchase price of $6,000,000 in cash. The acquisition was accounted for using the purchase method of accounting with the purchase price allocated to the net assets acquired based on their estimated fair values. This treatment resulted in no excess purchase price over fair value of tangible assets acquired. The operations of Difco have been included in the consolidated statement of operations since the date of acquisition. - 5 - 8 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. The following exhibits are filed herewith: 27.1 Financial Data Schedule (b) Reports on Form 8-K. The following Current Report on Form 8-K was filed by the Company with the Securities and Exchange Commission during the quarter ended March 31, 1997 1. On March 18, 1997, a Current Report on Form 8-K dated March 3, 1997: Item 2 - Acquisition or Disposal of Assets - reporting the acquisition of the ESP Culture System II product line, and Item 7 - - Financial Statements and Exhibits. - 6 - 9 SIGNATURES In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has caused this Amendment No. 2 to the Report to be signed on its behalf by the undersigned thereunto duly authorized. ACCUMED INTERNATIONAL, INC. /s/ Leonard R. Prange ---------------------------- Leonard R. Prange Chief Financial Officer and Chief Operating Officer Date: August 15, 1997 - 7 - EX-27 2 FDS
5 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1,627 0 4,522 0 3,229 9,806 6,438 0 23,130 4,242 8,716 0 0 219 8,034 23,130 3,049 3,049 1,492 1,492 7,571 0 200 (6,163) 0 (6,163) 0 0 0 (6,163) (0.29) (0.29)
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