<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-Q
MARK ONE
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-14416
------------------------
BIGMAR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 31-1445779
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9711 SPORTSMAN CLUB ROAD 43031
JOHNSTOWN, OHIO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (740) 966-5800
Indicate by checkmark 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 / /
As of August 14, 1998, 4,185,000 shares of common stock of the registrant were
outstanding.
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BIGMAR, INC. AND SUBSIDIARIES
INDEX
Part I FINANCIAL INFORMATION:
<TABLE>
<S> <C> <C>
Item 1 Financial Statements
Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997
(Unaudited) 3
Consolidated Condensed Statements of Operations for the quarters
and six month periods ended June 30, 1998 and 1997 (Unaudited) 4
Consolidated Condensed Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 (Unaudited) 5
Consolidated Statements of Comprehensive Income (Loss) for the quarters
and six month periods ended June 30, 1998 and 1997 (Unaudited) 6
Notes to the Consolidated Condensed Financial Statements (Unaudited) 7
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Part II OTHER INFORMATION:
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 6 Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
2
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BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30
1998 1997
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 136,412 $ 643,232
Accounts receivable, net of allowance of $0 at
June 30, 1998 and December 31, 1997 617,333 847,899
Inventories (Note 2) 1,326,122 890,249
Prepaid expenses and other current assets 363,119 432,234
----------- -----------
Total current assets 2,442,986 2,813,614
Property, plant and equipment, net 17,002,200 17,164,158
Intangible and other assets, net 477,075 539,318
----------- -----------
Total $19,922,261 $20,517,090
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,534,574 1,766,992
Notes payable 5,413,180 2,318,644
Current portion of long-term debt 565,529 581,674
Due to related parties 154,903 -
Accrued expenses and other current liabilities 835,510 630,713
----------- -----------
Total current liabilities 8,503,696 5,298,023
Long-term debt 10,026,014 10,090,467
----------- -----------
Total liabilities 18,529,710 15,388,490
----------- -----------
Stockholders' equity:
Preferred stock ($.001 par value; 5,000,000 shares
authorized; none issued)
Common stock ($.001 par value; 20,000,000 shares
authorized and 4,185,000 shares issued and
outstanding at June 30, 1998 and 15,000,000
shares authorized and 4,185,000 shares
issued and outstanding at December 31, 1997) 4,185 4,185
Additional paid-in capital 16,021,166 15,063,166
Retained earnings (deficit) (13,609,991) (9,012,630)
Accumulated other comprehensive income:
Foreign currency translation adjustments (1,022,809) (926,121)
----------- -----------
Total stockholders' equity 1,392,551 5,128,600
----------- -----------
Total $19,922,261 $20,517,090
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
3
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BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
SECOND QUARTER ENDING JUNE 30
(Unaudited)
<TABLE>
<CAPTION>
Second Quarter Six Months
-------------------------- -------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 1,450,661 $ 1,486,673 $ 2,886,828 $ 3,216,772
Cost of goods sold 1,025,837 1,235,534 2,104,279 2,608,826
----------- ----------- ----------- -----------
Gross margin 424,824 251,139 782,549 607,946
----------- ----------- ----------- -----------
Operating expenses:
Research and development 747,995 201,790 1,491,521 419,964
Selling, general and administrative 1,002,894 829,275 2,202,352 1,761,547
----------- ----------- ----------- -----------
Total operating expenses 1,750,889 1,031,065 3,693,873 2,181,511
----------- ----------- ----------- -----------
Operating income (loss) (1,326,065) (779,926) (2,911,324) (1,573,565)
Other income (expense) 80,698 72,831 68,082 213,002
Interest income (expense) (263,994) (82,548) (500,391) (173,900)
Issuance of preferred stock warrants for
loan guarantee (Note 3) (958,000) (958,000)
Gain (loss) on foreign currency transactions (14,696) - (295,728) -
----------- ----------- ----------- -----------
Income (loss) before income taxes (2,482,057) (789,643) (4,597,361) (1,534,463)
Income taxes (benefit): - 2,332 - 2,332
----------- ----------- ----------- -----------
Net income (loss) $(2,482,057) $ (791,975) $(4,597,361) $(1,536,795)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Basic earnings (loss) per share $ (0.59) $ (0.20) $ (1.10) $ (0.39)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average shares outstanding 4,185,000 3,985,000 4,185,000 3,985,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
4
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BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(4,597,361) $(1,536,795)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Issue preferred stock warrants 958,000 -
Depreciation and amortization 793,767 207,764
Unrealized foreign exchange losses 295,154 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 200,691 (41,302)
(Increase) decrease in inventories (477,238) (309,422)
(Increase) decrease in prepaid expenses and
other current assets 51,800 112,352
Increase (decrease) in accounts payable (171,630) (734,124)
Increase in due to related parties 157,952 -
Increase (decrease) in accrued expenses and
other current liabilities 223,546 36,972
----------- -----------
Net cash provide by (used in) operating
activities (2,565,319) (2,264,555)
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (1,220,117) (1,867,857)
----------- -----------
Net cash (used in) investing activities (1,220,117) (1,867,857)
----------- -----------
Cash flows from financing activities:
Short-term borrowings 3,154,646 5,574
Long-term borrowings 175,875 -
----------- -----------
Net cash provided by financing activities 3,330,521 5,574
----------- -----------
Effect of exchange rates on cash (51,905) 451,643
----------- -----------
Net increase (decrease) in cash and cash equivalents (506,820) (3,675,195)
Cash and cash equivalents, beginning of period 643,232 4,362,938
----------- -----------
Cash and cash equivalents, end of period $ 136,412 $ 687,743
----------- -----------
----------- -----------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 445,000 $ 458,754
Income taxes $ - $ 150
</TABLE>
See accompanying notes to consolidated financial statements.
5
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BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
SECOND QUARTER ENDING JUNE 30
(Unaudited)
<TABLE>
<CAPTION>
Second Quarter Six Months
------------------------ --------------------------
1998 1997 1998 1997
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net income (loss) $(2,482,057) $(791,975) $(4,597,361) $(1,536,795)
Other comprehensive income, net of tax:
Foreign currency translation
adjustments, net of income
taxes of $0 in 1998 and 1997 10,043 (81,506) (96,688) (381,042)
----------- --------- ----------- -----------
Comprehensive income (loss) $(2,472,014) $(873,481) $(4,694,049) $(1,917,837)
----------- --------- ----------- -----------
----------- --------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
6
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BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
Bigmar, Inc. is a Delaware Corporation that owns 100% of the capital stock of
two Swiss Corporations, Bioren, SA and Bigmar Pharmaceuticals, SA, and 100% of
the capital stock of a Delaware corporation, Bigmar Therapeutics, Inc.
In the opinion of management, the accompanying unaudited financial statements
include all adjustments necessary to present fairly the Company's financial
position at June 30, 1998 and 1997, and the results of operations and the cash
flows and the comprehensive income for all periods presented. Certain amounts
in the accompanying financial statements have been restated to conform to the
June 30, 1998 presentation. The results of the interim periods are not
necessarily indicative of the results to be obtained for the entire year.
For a summary of significant accounting policies (which have not changed from
December 31, 1997) and additional financial information, see Bigmar Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1997. The 10-K
should be read in conjunction with these financial statements.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company recently constructed a
pharmaceutical manufacturing plant in Barbengo, Switzerland. The Company has
obtained a general approval to manufacture pharmaceutical products from the
Intercantonal Office for the Control of Medications ("IKS") in Switzerland
and is still in the process of validating the plant's equipment and processes
for approval by the United States Food and Drug Administration ("FDA"). These
activities have consumed a substantial amount of the Company's resources,
including proceeds from its initial public offering, proceeds from an
offshore placement of equity securities and issuance of convertible notes in
August 1997, and proceeds from its line of credit. In addition, sales of the
Company's oncology product are dependent upon the successful outcome of these
compliance activities, which are expected to continue into at least the
fourth quarter of 1998. Based upon the foregoing management anticipates that
current operations plus the line of credit will generate sufficient cash to
fund the Company's operations through December 1998. As a result, the
Company anticipates that it will require additional financing in order to
complete the validation process and to continue to fund its operations.
Management is discussing additional financing with a number of third parties,
however, there is no assurance that such financing will be available on terms
acceptable to the Company, if at all. In addition, there are no assurances
that the Company will be able to manufacture its proposed products or that
the Company's targeted customers will accept such products. These factors
raise substantial doubt about the Company's ability to continue as a going
7
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concern. No adjustments have been made to reflect the recoverability or
classification of recorded asset amounts or the classification of liabilities
should the Company be unable to continue as a going concern.
(2) INVENTORIES
The components of inventory at June 30, 1998 and December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Raw Materials $ 576,220 $572,276
Finished Goods 749,902 317,973
------------- -----------------
Total $1,326,122 $890,249
------------- -----------------
</TABLE>
(3) PREFERRED STOCK WARRANTS
On May 28, 1998, the Company, in consideration of a guarantee for a $6.0
million line of credit from a commercial institution, delivered warrants to
Jericho II L.L.C. ("Jericho") to purchase 1,000,000 shares of convertible
preferred stock ("the Preferred Stock") at a price equal to $2.5625 and
having a term of 10 years ("the Warrants"). The Preferred Stock is
convertible to Common Stock on a one-to-one basis, with such conversion rate
to adjust to reflect dilutive issuances of equity securities by the Company
and also to adjust for stock splits, dividends, combinations and similar
events. The Preferred Stock shall be entitled to five votes per share and
shall vote together with the Common Stock in addition to having certain
special approval rights. The Preferred Stock has a liquidation preference
equal to the purchase price per share. The Warrants include a net exercise
clause and the shares issuable on exercise shall be entitled to piggyback
registration rights, subject to standard underwriter's cutback. John G.
Tramontana, Chairman of the Board, President and Chief Executive Officer of
the Company, has a 50% ownership interest in Jericho.
The line of credit is in the form of a demand note payable. Accordingly, the
fair value of the Warrants of $958,000, determined using the Black-Scholes
model, has been recognized in the accompanying consolidated condensed
statement of operations for second quarter and the six months ended June 30,
1998.
(4) RECENTLY ISSUED ACCOUNTING PROUNCEMENTS
The Company has adopted Financial Accounting Standards Board Statement No. 130,
"Reporting Comprehensive Income". FASB Concepts Statement No. 6 defines
comprehensive income as "the change in equity of a business enterprise during a
period from transactions and other events and circumstances from non-owner
sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners."
Comprehensive income is comprised of net income plus other comprehensive
income. Other comprehensive income includes items
8
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previously recorded directly in equity under FASB Statement No. 52, "Foreign
Currency Translation", FASB Statement No. 80, "Accounting for Future
Contracts", FASB Statement No. 87, "Employers' Accounting for Pensions", and
FASB Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities".
The Consolidated Balance Sheet has been restated to conform to the requirements
of this Statement by replacing "Cumulative translation adjustment" with
"Accumulated other comprehensive income" in the equity section. In addition,
"Consolidated Statements of Comprehensive Income (Loss)" have been added to
this quarterly report for the quarters and six months ended June 30, 1998 and
1997.
The Company has adopted Financial Accounting Standards Board Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information", issued
in June 1997. Since this is the initial year of application, the Company has
elected not to provide the interim period disclosures, as permitted by the
Statement.
In February 1998, the Financial Accounting Standards Board issued Statement No.
132, "Employers' Disclosures About Pensions and Other Postretirement Benefits".
This Statement, which is effective for fiscal years beginning after December
15, 1997, amends the disclosure requirements of Statements 87, 88, and 106.
Adoption of this standard is not expected to have a material impact on the
Company's financial statements or results of operations.
On June 16, 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which is effective for fiscal
years beginning after June 15, 1999. The Statement establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. Adoption of this Statement is not expected to have
a material impact on the Company's financial statements or results of
operations.
9
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Bigmar, Inc. and subsidiaries, (the "Company") is engaged in manufacturing
and marketing various pharmaceutical products in Europe. Its strategy is to
supply world markets with a full line of high quality, affordably priced,
generic pharmaceutical products, focusing on oncology products. The Company
intends to manufacture, in its state of the art facilities in Switzerland,
off-patent generic oncology drugs and additional oncology drugs as their
patents expire. It will then market these products through pharmaceutical
company partners in Europe and the United States. Bigmar currently has
distribution rights to more than 20 generic oncology products.
Bigmar was incorporated in Delaware in September 1995 and has three wholly
owned subsidiaries: Bigmar Pharmaceuticals, SA, Bioren, SA and Bigmar
Therapeutics, Inc. Bigmar Pharmaceuticals and Bioren are both Swiss
corporations and Bigmar Therapeutics is a Delaware corporation.
Certain statements under this caption constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
including, without limitation, statements regarding future cash requirements.
Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied in such forward-looking statements. Such factors and
risks include, but are not limited to, delays in product development,
problems with clinical testing, failure to receive regulatory approvals, lack
of proprietary rights, or changes in business strategy, as well as other
risks described from time to time in the Company's filings with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS
Second quarter 1998 net sales amounted to $1.5 million, a 2% decrease from
second quarter 1997. Sales of IV Solutions increased approximately $60,000
over the prior year, while sales of Oncology Products decreased by
approximately $43,000. Net sales were also negatively impacted by
unfavorable foreign currency impacts of approximately $53,000.
Net sales for the six months ended June 30, 1998 amounted to $2.9 million, a
10% decrease from the same period in 1997. Sales of IV Solutions increased
approximately $217,000 versus the previous year and sales of Raw Materials
and Oncology Products decreased by approximately $400,000 and $43,000,
respectively. Unfavorable foreign currency impacts negatively impacted net
sales by approximately $104,000.
10
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Gross margin amounted to $.4 million or 29% for the second quarter of 1998
versus $.3 million or 17% for the same period in 1997. Gross margin for the
six months ended June 30, 1998 was $.8 million or 27% of net sales, compared
to $.6 million or 19% for the same period last year. The improvement relates
primarily to discontinuing the Raw Materials product line, which had low
margins.
Operating expenses increased approximately $.7 million from second quarter
1997 to second quarter 1998. Research and development expenses increased by
approximately $.5 million, due to increased personnel costs and increased
activities surrounding the Company's continuing efforts to obtain FDA
approval of its Swiss manufacturing facility and to develop new drug product
formulations. Selling, general and administrative expenses increased by
approximately $.2 million, due to increased personnel costs.
Six month operating expenses increased $1.5 million from 1997 to 1998.
Research and development costs increased by $1.1 million and selling, general
and administrative costs increased by approximately $.1 million. The R&D
increase relates to increased personnel costs and increased activities with
respect to the Company's efforts to obtain FDA approval of its manufacturing
facility and its efforts to develop new drug products. The SG&A increase is
due to increased personnel costs.
Other income/(expense) for the six months ended June 30, 1998 decreased by
approximately $145,000 from the 1997 amount, due primarily to sales of
machinery and equipment in the first six months of 1997.
Interest expense increased $.2 million and $.3 million from the second
quarter and six months, respectively, of 1997 to 1998, due to interest on
convertible notes and interest on
11
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a line of credit and partly due to the fact that a portion of interest
expense was capitalized in 1997, but not in 1998. Also during the second
quarter of 1998, the Company recorded expense of $958,000 in conjunction with
the issuance of preferred stock warrants to Jericho II L.L.C. ("Jericho") in
exchange for Jericho's guarantee of a $6 million credit line with a
commercial institution.
Foreign exchange losses amounted to approximately $15,000 in the second
quarter of this year compared to zero in the prior year. Foreign exchange
losses for the six months ended June 30, 1998 were approximately $.3 million
compared to zero for the same period during 1997. The expense represents
losses due to exchange rate fluctuations on certain intercompany accounts
receivable denominated in Swiss francs. The full year 1997 exchange rate
fluctuations on these accounts receivable were accounted for by the Company
in the fourth quarter, as the impact on the results of operations for the
individual quarters of 1997 was not material.
As a result of all of the foregoing, the Company's net loss for the second
quarter 1998 amounted to approximately $2.5 million or $0.59 per share,
compared to $.8 million or $0.20 per share for the second quarter 1997. Net
loss for the six months ended June 30, 1998 was $4.6 million or $1.10 per
share versus $1.5 million or $0.39 per share during the first six months of
1997.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998 and December 31, 1997, the Company had cash and cash
equivalents of $136,412 and $643,232, respectively. The Company's working
capital amounted to ($6.1) million and ($2.5) million at June 30, 1998 and
December 31, 1997, respectively. The Company has incurred and will continue
to incur substantial expenditures for research and development activities
related to bringing its products to commercial market. The Company intends
to devote significant additional funds to product development, formulation,
clinical testing, manufacturing validation, product registration, and other
activities required for regulatory review of generic oncological products.
The amount required to complete such activities depends upon the outcome of
regulatory reviews. The regulatory bodies may require more testing than is
currently planned by the Company. There can be no assurance that the FDA or
any foreign government agency will approve the Company's generic oncological
products for sale or that these products will achieve market success.
Property, plant and equipment totaled approximately $17.0 million at June 30,
1998 and $17.2 million at December 31, 1997. Additions of approximately $1.3
million were offset by depreciation ($.7 million) and foreign currency
translation effects ($.8 million).
As of June 30, 1998, the Company had various notes, bonds, mortgages and
other borrowings totaling approximately $16.2 million including $6.1 million
that is short term in nature. These monies were used to partially fund the
acquisition of Bioren, to acquire, construct, and equip the manufacturing
facility and to fund ongoing research and development and product
registration activities.
12
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On May 28, 1998, the Company, in exchange for the issuance of warrants to
purchase convertible preferred stock, received a guarantee from Jericho II
L.L.C. ("Jericho"), which allowed it to increase its existing $3.5 million
line of credit with Citizens Bank of Saginaw, Michigan to $6.0 million.
Jericho is a private investment company, 50% owned by the Company's principal
shareholder and CEO, John Tramontana. The line of credit is being used for
ongoing research and development and general working capital purposes.
At this time the Company does not anticipate the Bigmar manufacturing
facility in Barbengo, Switzerland will produce sales in sufficient volume to
generate positive cash flow during 1998. However, the Company anticipates
that the line of credit, together with cash flow from operations, will be
sufficient to fund its operations through the end of 1998. As a result, the
Company will be required to supplement its cash position through additional
financing (debt or equity) or by entering into development, marketing, or
other collaborative arrangements. The Company anticipates supplementing its
cash position during the third or fourth quarter of 1998 with additional
financing through third party arrangements, although there can be no
assurance that the Company will be able to obtain such additional financing
or that such financing, if available, will be on acceptable terms.
The Swiss Federal Code of Obligation provides that at least 5% of a Swiss
company's net income each year must be appropriated to a legal reserve until
such time as this reserve is equal to 20% of the company's paid-in share
capital. In addition, 10% of any distribution made by a company in excess of
a 5% dividend must also be appropriated to the legal reserve. The reserve of
up to 5% of share capital is not available for distribution to stockholders.
Changes in exchange rates between currencies may negatively impact the
Company's results of operations, specifically, net sales and gross profit
margins from international operations. In addition, the dollar-value
equivalent of anticipated cash flows could also be adversely affected. When
the Company determines that this risk has become significant, the Company may
attempt to manage that risk by using hedging techniques.
YEAR 2000 ISSUE
Many computer systems currently record years in a two-digit format. Such
systems, if not modified, will be unable to recognize and properly process
information with dates beyond the year 1999. The potential problems arising
out of this inability are commonly referred to as the "Year 2000 Issue" or
"Y2K" and will affect virtually all companies, government agencies and other
organizations to some degree.
During 1997, the Company performed an assessment of its computer systems to
determine whether or not they were in compliance with Year 2000 requirements.
The Swiss operations' computer systems were found to be in compliance with
such requirements. The U.S. operations computer applications include an
accounting package and a document management system. Although these systems
do not yet comply with Y2K requirements, it has been determined to the best
of management's knowledge and belief that the costs to bring them into
compliance will not be material to the Company's business, operations, and
financial condition.
The Company continues to evaluate the risks and costs associated with Y2K and
does not believe that these costs will have a material adverse impact on its
business, operations and financial condition. However, the impact of Y2K on
the Company is not fully determinable and there can be no assurances that
there will not be increased costs resulting therefrom or that such costs will
not have a material impact on the Company's business, operations, and
financial condition.
13
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BIGMAR, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on June 30, 1998. The
results of the voting were as follows:
Proposal 1: Election of the Board of Directors of the Company
Nominee Votes For Votes Withheld
------- --------- --------------
Massimo Pedrani 3,610,810 43,900
Fabio A. Giovannini 3,610,810 43,900
Bernard Kramer 3,610,810 43,900
Michael K. Medors 3,610,710 44,000
John R. Morris 3,610,710 44,000
John G. Tramontana 3,610,810 43,900
Proposal 2: Amendment of Certificate of Incorporation to increase number
of authorized Common Shares of the Corporation from 15,000,000
to 20,000,000.
Votes For: 3,552,157
Votes Against: 78,553
Votes Abstaining: 24,000
Proposal 3: Adoption of the 1997 Stock Option Plan
Votes For: 2,362,469
Votes Against: 122,933
Votes Abstaining: 12,075
Proposal 4: Amendment to the 1997 Stock Option Plan increasing to
900,000 the number of Common Shares for which options may be
granted.
Votes For: 2,629,769
Votes Against: 126,833
Votes Abstaining: 10,875
Proposal 5: Ratification of KPMG Peat Marwick LLP as the Company's
independent public accountants for fiscal year 1998.
Votes For: 3,644,210
Votes Against: 3,650
Votes Abstaining: 6,850
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 27.1 Financial Data Schedule
(b) 10.58 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Bigmar, Inc.
(c) Reports on Form 8-K.
10.57 Issuance of Warrants to Purchase Convertible Preferred Stock in
Exchange for $6.0 Million Credit Line Guarantee
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 14, 1998
BIGMAR, INC.
------------
REGISTRANT
By: /s/ William R. Ash, III
-------------------------
William R. Ash, III
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
15
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CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
BIGMAR, INC.
Bigmar, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. That the name of the corporation (hereinafter called the "Corporation")
is Bigmar, Inc.
2. That the Amended and Restated Certificate of Incorporation of the
Corporation is hereby amended by striking out Article Fourth thereof
and by substituting in lieu of said Article the following new Article:
FOURTH: The total number of shares of all classes of stock to which the
Corporation shall have authority to issue is twenty-five million
(25,000,000) consisting of the following classes: (i) twenty million
(20,000,000) shares of common stock, par value $.001; (ii) five million
(5,000,000) shares of preferred stock, par value $.001.
3. That the amendment herein certified was duly adopted in accordance with
the provisions of section 242 of the General Corporation Law of the State
of Delaware.
4. That the effective time of the amendment herein certified shall be upon
the filing date of this Certificate of Amendment.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by John G. Tramontana, its President and Chief Executive Officer,
this 5th day of June, 1998.
BIGMAR, INC.
By: /s/ John G. Tramontana
--------------------------
John G. Tramontana
President and CEO
ATTEST:
/s/ Michael K. Medors
----------------------
Michael K. Medors
Secretary
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<NAME> BIGMAR, INC.
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