-----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, N1NJFVQw4UGrrc92HfxNqZsmTgoazjoLuErHLgaktYAMdvesSmpyJ6INdi3xIv2q 6AcGtqvt7qjwcmrD4Bbjfw== 0000896747-97-000012.txt : 19970912 0000896747-97-000012.hdr.sgml : 19970912 ACCESSION NUMBER: 0000896747-97-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19970905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BIO MEDICA CORP CENTRAL INDEX KEY: 0000896747 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28666 FILM NUMBER: 97675575 BUSINESS ADDRESS: STREET 1: 102 SIMMONS RD CITY: ANCRAMDALE STATE: NY ZIP: 12503 BUSINESS PHONE: 5183294485 10QSB 1 QUARTERLY REPORT U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB [x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended July 31, 1997. [ ] Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934. For the transition period from ______________ to ________________ Commission File Number: 0-28666 AMERICAN BIO MEDICA CORPORATION ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) New York 22-3378935 ------------------------------------------------------------------- (State or other jurisdiction (I.R.S.Employer incorporation or organization Identification No.) 102 Simons Road Ancramdale, New York 12503 ------------------------------------------- (Address of principal executive offices) 800-227-1243 --------------------------- (Issuer's telephone number) (Not Applicable) ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 [ ] State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: 13,680,627 common shares as of July 31, 1997 20 Convertible "A" Preferred Shares as of July 31, 1997 Transitional Small Business Disclosure Format Yes [ ] No [X] PART I FINANCIAL INFORMATION Item 1. Financial Statements The condensed financial statements for the periods ended July 31, 1997 included herein have been prepared by American Bio Medica Corporation, (the "Company") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission"). In the opinion of management, the statements include all adjustments necessary to present fairly the financial position of the Company as of July 31, 1997, and the results of operations and cash flows for the three month periods ended July 31, 1996 and 1997. 2 AMERICAN BIO MEDICA CORPORATION BALANCE SHEET July 31, April 30, 1997 1997 Unaudited --------- --------- Assets Current assets Cash $1,762,506 $2,143,974 Marketable securities, available for sale 1,053,000 -0- Accounts receivable 337,759 961,288 Loan receivable 102,250 102,250 Inventory 668,723 668,126 Prepaid expenses 4,425 4,424 -------- -------- Current assets 3,928,663 3,880,062 Capital assets-net 110,834 129,266 Other assets License rights 38,470 21,320 Patent costs 28,783 31,593 ------ ------- Total other asset 67,253 52,913 ------ ------ Total assets $4,106,750 $4,062,241 ========== ========== Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued expenses $380,155 $213,658 -------- -------- Total current liabilities 380,155 213,658 Capital stock Common stock-authorized 30,000,000 common shares, par value $.01 each, at April 30, 1997 and July 31, 1997, the shares outstanding were 13,379,507 and 13,680,577 respectively. 133,795 136,806 Preferred stock-authorized 5,000,000 preferred shares, par value $.01 each, at April 30, 1997 and July 31, 1997, the number of shares outstanding was 90 and 20 respectively 1 1 Additional paid in capital 6,499,791 6,496,780 Retained earnings (2,906,992) (2,785,004) ----------- ---------- Total stockholders' equity 3,726,595 3,848,583 ----------- ---------- Total liabilities and stockholders' equity $4,106,750 $4,062,241 ========== ========== See accompanying notes to financial statements. 3 AMERICAN BIO MEDICA CORPORATION STATEMENT OF OPERATIONS For the three For the three months ended months ended July 31, July 31, 1996 1997 Unaudited Unaudited ------------- ------------ Revenue $27,444 $816,917 Less cost of goods sold 6,226 356,782 -------- --------- Gross profit 21,218 460,135 Operations: General administrative 174,947 389,555 Depreciation and amortization 19,400 24,199 Research and development 57,258 ------ -------- Total expenses 251,605 413,754 Income (loss) from operations (230,387) 46,381 Other income and expenses Retirement of debt 126,500 Interest income 397 75,607 ------- ------ Total other income and expenses 126,897 75,607 ------- ------ Net Profit (Loss) from operations $(103,490) $121,988 ========== ======== Net income (loss) per share $(.01) $.01 ====== ====== Weighted number of shares outstanding 12,510,894 13,680,627 ========== ========== See accompanying notes to financial statements. 4 AMERICAN BIO MEDICA CORPORATION STATEMENT OF CASH FLOWS For the three For the three months ended months ended July 31, July 31, 1996 1997 Unaudited Unaudited --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net profit (loss) $(103,490) $121,988 Compensation 50,000 Retirement of debt (126,500) Amortization and depreciation 19,400 24,199 --------- -------- Adjustments to reconcile net income to net cash Accounts receivable 6,562 (623,529) Inventory (274) 597 Accounts payable and accrued expenses (10,086) (166,497) -------- --------- TOTAL CASH FLOWS FROM OPERATIONS (164,388) (643,242) CASH FLOW FROM FINANCING ACTIVITIES Sale of common shares 142,000 ------- TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 142,000 CASH FLOWS FROM INVESTING ACTIVITIES Marketable securities 1,053,000 Patent costs (2,810) Capital assets (14,252) (25,480) ------- ---------- TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (14,252) 1,024,710 NET INCREASE (DECREASE) IN CASH (36,640) 381,468 CASH BALANCE BEGINNING OF PERIOD 437,532 1,762,506 -------- --------- CASH BALANCE END OF PERIOD $400,892 $2,143,974 ======== ========== See accompanying notes to financial statements. 5 AMERICAN BIO MEDICA CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY Additional Common Common Preferred paid-in Retained Stock Stock Stock capital Earnings Total ---------- ------- --------- ---------- ---------- -------- 04-30-1996 11,977,357 119,774 2,636,127 (2,401,671) 354,230 06-04-1996 11,333 113 8,387 8,500 06-04-1996 25,000 250 24,750 25,000 07-31-1996(1) 176,000 1,760 130,240 132,000 07-31-1996(1) 13,333 133 9,867 10,000 07-31-1996(2) 100,000 1,000 49,000 50,000 07-31-1996(3) 32,000 320 31,680 32,000 07-31-1996(4) 100,000 1,000 99,000 100,000 09-09-1996(3) 18,000 180 17,820 18,000 09-23-1996(5) 1 1,409,999 1,410,000 01-31-1997(6) 697,445 6,975 2,085,211 2,092,186 04-30-1997(7) 229,039 2,290 (2,290) -0- 04-30-1997 Net loss (505,321) (505,321) --------- -------- -- ---------- ----------- --------- 04-30-1997 13,379,507 133,795 $1 $6,499,791 $(2,906,992) $3,726,595 Unaudited 07-31-1997(7) 301,120 3,011 (3,011) 07-31-1997 Net profit 121,988 121,988 ---------- ------- --- --------- ------------ -------- 07-31-1997 13,680,627 $136,806 $1 $6,496,780 $2,785,004 $3,848,583 ========== ======= == ========= ========== ========== 6 AMERICAN BIO MEDICA CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY (1) Common Shares issued for conversion of debt (2) Common Shares issued pursuant to Rule 504 at $.50 per share (3) Common Shares issued upon exercise of "B" Warrants (4) Common Shares issued upon exercise of "A" Warrants (5) Sale of Preferred Shares for $1,500,000 less commissions of $90,000 (6) Common Shares issued upon exercise of warrants (7) Conversion of Preferred Shares into Common Shares 7 AMERICAN BIO MEDICA CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JULY 31, 1997 1. BASIS OF PRESENTATION The accompanying unaudited financial statements of American Bio Medica, Corporation, (the "Company"), reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of the interim periods presented. All such adjustments are of a normal recurring nature. The financial statements should be read in conjunction with the notes to financial statements contained in the Company's Annual Report on Form 10KSB for the year ended April 30, 1997. 2. INVENTORIES. Inventory has been recorded at the lower of cost or market under the first-in-first-out method. Inventory components were as follows: April 31, 1997 July 31, 1997 -------------- ------------- Books held for resale $ 43,528 $48,116 Workplace drug screening tests: Raw materials 292,456 305,102 Work in process 183,500 110,876 Finished Goods 149,239 204,032 --------- --------- Total workplace drug screening tests: $ 625,195 $620,010 --------- --------- Total inventory $668,723 $668,126 3. NET INCOME PER SHARE Primary earnings per share are based on the weighted average number of common and dilutive common equivalent shares outstanding during each quarter. The weighted average shares for computing primary earnings per share were 12,510,894 and 13,680,627 for the quarters ended July 31, 1996 and 1997,respectively 4. ACCOUNTING FOR INCOME TAXES The Company follows Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which requires an asset and liability approach of accounting for income taxes. Deferred tax assets and liabilities are computed annually for differences between financial statement basis and tax basis of assets, liabilities and available general business tax credit carry-forwards. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. 5. MARKETABLE SECURITIES The Company adopted Financial Accounting Standards Board ("FASB") Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities", which requires that investments in equity securities that have readily determinable fair values and investments in debt securities be classified in three categories: held-to-maturity, trading and available-for-sale. Based on the nature of the assets held by the Company and Management's investment strategy, the Company's investments have been classified as available-for-sale. Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Securities classified as available-for-sale are carried at estimated fair value, as determined by quoted market prices, with unrealized gains and losses, net of tax, reported in a separate component of stockholders' equity. At July 31, 1997, the Company had no investments that were classified as trading or held-to-maturity as defined by the Statement. 8 The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at April 30, 1997: Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value ---- ----- ------ ------ Cash $ 99,039 $-0- $-0- $ 99,039 Certificates of deposit 90 days and less 1,663,467 -0- -0- 1,663,467 ----------- ---- ---- ----------- Total cash and cash equivalents $ 1,762,506 $-0- $-0- $1,762,506 ========== === === ========= Marketable Securities Due in one year or less Certificates of Deposit $1,053,000 $-0- $-0- $1,053,000 ========= === === ========= The following is a summary of cash, cash equivalents and available-for-sale securities by balance sheet classification at July 31, 1997: Estimated Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value ---- ----- ------ -------- Cash $ 79,700 $-0- $-0- $ 79,700 Certificates of deposit 90 days and less 2,063,274 -0- -0- 2,063,274 ---------- --- ----- ----------- Total cash and cash equivalents $ 2,142,974 $-0- $-0- $2,142,974 ========== === === ========= 6. SUBSEQUENT EVENTS As of August 28, 1997, the remaining 20 Preferred Series "A" Shares had been converted into 102,914 Common Shares. 9 Item 2. Management's Discussion and Analysis or Plan of Operation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for the three months ended July 31, 1996 and 1997 ------------------------------------------------- Except for the description of historical facts contained herein, this Form 10Q-SB contains certain forward looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company's filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. These factors include, among others, the Company's fluctuations in sales and operating results, risks associated with international operations and regulatory, competitive and contractual risks and product development. Results of operations for the three months ended July 31, 1997 as compared to the three months ended July 31, 1996. - -------------------------------------------------------------------------------- Revenues from the book segment of the business were $110,368 for the three months ended July 31, 1997 as compared to $27,444 for the three months ended July 31, 1996, representing a increase of $82,924 or 302.2%. This increase in book sales is directly attributable to the Company's reorganization of its telemarketing activities and a bulk inventory purchase. Costs of goods sold for the three months ended July 31, 1997, were $27,671 as compared to $6,226 for the three months ended July 31, 1996 representing a cost of goods sold percentage of 25% for the three months ended July 31, 1997 as compared to 22.7% for the three months ended July 31, 1996. The cost of goods sold percentage during the first quarter of fiscal 1998 remains approximately consistent with the percentage during the first quarter of fiscal 1997. Revenues from the sales of drug testing kits were $705,262 for the three months ended July 31, 1997. Costs of goods sold for the three months ended July 31, 1997 was $329,111 or 46.7%. No sales of drug testing kits were made in the first quarter of fiscal 1997. General and administrative costs for the three months ended July 31, 1997 were $413,754, an increase of 60.8% over expenses of $251,605 for the three months ended July 31, 1996. These increased costs are the result of hiring additional employees in sales, marketing, accounting and executive positions. For the three months ended July 31, 1997, office personnel costs were $171,349, legal and professional expenses, $20,808, office expense, $12,782, marketing expense, $186,011, product development, $18,662 and rent, $4,142. Research and development expense was $-0- for the three months ended July 31, 1997 compared to $57,258 during the three months ended July 31, 1996. This decrease in research and development is the result of the completion of development of the existing drug testing delivery system. Liquidity and capital resources as of the end of the three months ended July 31, 1997. - -------------------------------------------------------------------------------- The Company's cash balance was $2,143,974 and working capital was $3,666,404 as at July 31, 1997. Cash generated from financing activities was utilized for the purchase of machinery and equipment for $25,480 and additional patent costs of $2,810. The Company's primary short-term needs for capital, which are subject to change, are for expansion of its manufacturing to adequately deliver new products and an increase in inventory levels to fill larger anticipated orders. 10 Management believes that the present cash balance will pay the ongoing cost of the biomedical business. The Company has established commercial production of its drug testing kits and no longer considers itself to be a development stage company. Income tax: As of July 31, 1997, the Company has a tax loss carry-forward of $2,785,004. The Company's ability to utilize its tax credit carry-forwards in future years will be subject to an annual limitation pursuant to the "Change in Ownership Rules" under Section 382 of the Internal Revenue Code of 1986, as amended. However, any annual limitation is not expected to have a material adverse effect on the Company's ability to utilize its tax credit carry-forwards. The Company currently plans to expend approximately $2.0 million for the expansion and development of its manufacturing, marketing and general administrative capabilities in connection with the fulfillment of the Company's marketing program and the anticipated launch of the Company's products currently under development. Additionally, the Company utilizes cash generated from operating activities to meet its capital requirements. The Company expects its capital requirements to increase over the next several years as it commences new research and development efforts, undertakes new product development, increases sales and administration infrastructure and embarks on developing in-house manufacturing capabilities and facilities. The Company's future liquidity and capital funding requirements will depend on numerous factors, including the extent to which the Company's products under development are successfully developed and gain market acceptance, the timing of regulatory actions regarding the Company's potential products, the costs and timing of expansion of sales, marketing and manufacturing activities, facilities expansion needs, procurement and enforcement of patents important to the Company's business, results of clinical investigations and competition. The Company believes that its available cash and cash from operations will be sufficient to satisfy its funding needs for at least the next 36 months. Thereafter, if cash generated from operations is insufficient to satisfy the Company's working capital and capital expenditure requirements, the Company may be required to sell additional equity or debt securities or obtain additional credit facilities. There can be no assurance that such financing, if required, will be available on satisfactory terms, if at all. 11 PART II OTHER INFORMATION Item 1. Legal Proceedings. In February, 1994, Robert Friedenberg, former stockholder of two medical technology companies, MDI and Gendex, acquired by the Company, filed suit in the name of the two companies to have an agreement whereby the Company purchased those companies (the "Share Exchange Agreement") for its Common Shares rescinded on the grounds of breach of contract. The Company filed a third party claim in July, 1994, against Dr. Friedenberg, seeking enforcement of the Share Exchange Agreement. In November, 1995, after a bifurcated trial, the court dismissed Dr. Friedenberg's (in the name of MDI and Gendex) lawsuit and allowed the Company's third party claim to proceed to trial. In September, 1996, Dr. Friedenberg died. Trial on the third party claim was decided by a jury on May 5, 1997. The verdict determined that Dr. Friedenberg (represented by his estate) breached various contracts by failing to deliver certain technologies to the Company. The jury also found in favor of the Company on two of the three fraud claims against Dr. Friedenberg and awarded the Company approximately $350,000 in damages. The trial judge, who is bound by the jury verdict against Friedenberg, will decide Dr. Friedenberg's estate's pending claim to the Company's Common Shares. The Company has refused to issue any shares to him or to his estate. In June, 1995, the Company filed a lawsuit against Jackson Morris, Esq. for breach of the attorney-client relationship and of his fiduciary duty to the Company for subsequently providing legal services to Dr. Friedenberg in his dispute with the Company. The Company's lawsuit demands damages in the amount of $1,000,000. Mr. Morris has counterclaimed for Common Shares. The court has set a trial date of September 14, 1998. Item 2. Changes in Securities As of July 31, 1997, 130 of 150 Preferred Series "A" Shares had been converted into Common Shares. As of August 28, 1997, all the Preferred Series "A" Shares had been converted into Common Shares. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security-Holders None. 12 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN BIO MEDICA CORPORATION (Registrant) By: s/Stan Cipkowski ------------------ Stan Cipkowski, President and Principal Executive Officer and Principal Financial Officer Dated: August 28, 1997 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from financial statements for the nine month period ended January 31, 1997 and is qualified in its entirety by reference to such financial statements. 3-MOS APR-30-1997 Jul-31-1997 2,143,974 0 961,288 0 668,126 3,880,062 171,200 (41,934) 4,062,241 213,658 0 0 1 136,806 3,711,782 3,848,583 816,917 816,917 356,782 413,754 75,607 0 0 121,988 0 121,988 0 0 0 121,988 .01 .01
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