<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-QSB
MARK ONE
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
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 small business issuer 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)
Issuer's telephone number, including area code: (740) 966-5800
Indicate by checkmark whether the issuer (1) has 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 |_|
As of May 10, 2000, 9,493,973 shares of common stock of the issuer were
outstanding.
1
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BIGMAR, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I FINANCIAL INFORMATION:
<S> <C>
Item 1 Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999 (Unaudited) 3
Consolidated Condensed Statements of Operations for the quarters ended March
31, 2000 and 1999 (Unaudited) 4
Consolidated Condensed Statements of Cash Flows for the quarters ended March
31, 2000 and 1999 (Unaudited) 5
Consolidated Statements of Comprehensive Loss for the quarters ended March
31, 2000 and 1999 (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 2 (c) Changes in Securities - Recent Sales of Unregistered Securities 17
Item 6 Exhibits and Reports on Form 8-K 17
Signatures 18
</TABLE>
2
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 197,932 $ 155,854
Accounts receivable 1,591,560 2,138,115
Inventories 2,428,279 2,470,234
Prepaid expenses and other current assets 170,633 248,504
------------------ -----------------
Total current assets 4,388,404 5,012,707
Property, plant and equipment, net 13,538,546 14,380,877
Intangible and other assets, net 370,718 405,168
------------------ -----------------
Total $ 18,297,668 $ 19,798,752
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 2,271,849 2,320,411
Notes payable 1,477,288 3,362,038
Current portion of long-term debt 609,535 632,436
Due to related party 1,025,951 -
Accrued expenses and other current liabilities 974,674 985,386
------------------ -----------------
Total current liabilities 6,359,297 7,300,271
Long-term debt 10,095,353 10,762,680
------------------ -----------------
Total liabilities 16,454,650 18,062,951
------------------ -----------------
Stockholders' equity:
Preferred stock ($.001 par value; 5,000,000 shares authorized;
none issued)
Common stock ($.001 par value; 20,000,000 shares authorized; 9,493,973
shares and 8,993,973 issued and outstanding at
March 31, 2000 and December 31, 1999 respectively) 9,494 8,994
Additional paid-in capital 26,686,967 25,312,467
Accumulated deficit (23,508,964) (22,558,611)
Foreign currency translation adjustments (1,344,479) (1,027,049)
------------------ -----------------
Total stockholders' equity 1,843,018 1,735,801
------------------ -----------------
Total $ 18,297,668 $ 19,798,752
================== =================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
------------------------------------------
2000 1999
----------------- -----------------
<S> <C> <C>
Net sales $ 1,779,721 $ 1,735,311
Cost of goods sold 1,280,165 1,242,128
----------------- -----------------
Gross margin 499,556 493,183
----------------- -----------------
Operating expenses:
Research and development 920,174 634,075
Selling, general and administrative 725,345 1,038,733
----------------- -----------------
Total operating expenses 1,645,519 1,672,808
----------------- -----------------
Operating loss (1,145,963) (1,179,625)
Other expense, net (3,775) (6,244)
Interest expense (230,862) (187,466)
Gain (loss) on foreign currency transactions 68,410 (401,721)
----------------- -----------------
Loss before income taxes and extraordinary item (1,312,190) (1,775,056)
Income taxes (benefit) - -
----------------- -----------------
Loss before extraordinary item (1,312,190) (1,775,056)
Extraordinary item-Gain on extinguishment of debt,
net of income taxes of $0 361,837 -
----------------- -----------------
Net loss $ (950,353) $ (1,775,056)
================= =================
Basic and diluted loss per share from continuing operations $ (0.15) $ (0.22)
================= =================
Basic and diluted extraordinary gain per share $ 0.04 $ -
================= =================
Basic and diluted net loss per share $ (0.11) $ (0.22)
================= =================
Weighted average shares outstanding 9,005,084 8,175,000
================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------
2000 1999
------------------ ------------------
<S> <C> <C>
Net cash used in operating activities (67,127) (1,370,763)
------------------ ------------------
Cash flows from investing activities :
Purchase of property, plant and equipment (36,683) (133,747)
------------------ ------------------
Net cash used in investing activities (36,683) (133,747)
------------------ ------------------
Cash flows from financing activities :
Short-term borrowings 815,020 93,000
Long-term borrowings 2,641,278 -
Proceeds from borrowing from related party 1,044,226 -
Repayment of short term debt (1,839,697) (2,645)
Repayment of long-term borrowings (3,901,004) (7,013)
Proceeds from issuance of common stock and warrants 1,375,000 1,449,961
------------------ ------------------
Net cash provided by financing activities 134,823 1,533,303
------------------ ------------------
Effect of exchange rates on cash 11,064 (169,238)
------------------ ------------------
Net increase (decrease) in cash and cash equivalents 42,077 (140,445)
Cash and cash equivalents, beginning of period 155,854 140,445
------------------ ------------------
Cash and cash equivalents, end of period $ 197,931 $ -
================== ==================
Supplemental disclosure of cash flow information :
Cash paid during the period for :
Interest $ 289,806 $ 287,884
Income taxes $ - $ -
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
--------------------------------------------
2000 1999
------------------- ------------------
<S> <C> <C>
Net loss $ (950,353) $ (1,775,056)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of
income taxes of $ 0 in both
2000 and 1999, respectively (317,430) (83,230)
------------------- ------------------
Comprehensive loss $ (1,267,783) $ (1,858,286)
=================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
Bigmar, Inc. (the "Company") is a Delaware corporation that owns 100% of the
outstanding common stock of two Swiss corporations, Bioren, SA and Bigmar
Pharmaceuticals, SA, and 100% of the outstanding common 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 March 31, 2000 and December 31, 1999, the results of operations, the
cash flows and the comprehensive income for all periods presented. The results
of the interim periods are not necessarily indicative of the results to be
obtained for the entire fiscal year.
For a summary of significant accounting policies (which have not changed from
December 31, 1999) and additional financial information, see Bigmar, Inc.'s
Annual Report on Form 10-KSB, as amended, for the year ended December 31, 1999.
The 10-KSB should be read in conjunction with these financial statements.
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly owned. The three wholly-owned
subsidiaries are as follows: Bioren S.A. ("Bioren"), Bigmar Pharmaceuticals S.A.
("Pharmaceuticals") and Bigmar Therapeutics Inc. ("Therapeutics"). All
significant intercompany accounts and transactions have been eliminated.
The financial statements of subsidiaries outside the United States are stated
using the local currency as the functional currency. Assets and liabilities of
these companies are translated at the rates of exchange at the balance sheet
date. The resulting translation adjustments are included in accumulated and
other comprehensive loss. Income and expenses are translated at average rates of
exchange for the period. Effective January 1, 2000, $7.7 million of intercompany
debt due from Bigmar Pharmaceuticals SA to Bigmar Inc. is no longer considered
short-term as repayment is not expected in the foreseeable future. Accordingly,
the gain or loss on translating such debt has been included in the cumulative
translation adjustment as a separate component of stockholders' equity.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The construction of the Company's
pharmaceutical manufacturing plant in Barbengo, Switzerland and the process of
obtaining regulatory approvals has consumed a substantial amount of the
Company's resources. The manufacturing plant received regulatory approval in
February 1999 from the United States Food and Drug Administration ("FDA") and
the Intercantonal Office for the Control of Medications ("IKS") in Switzerland
to manufacture and sell certain injectible
7
<PAGE>
pharmaceutical products in the United States and Switzerland. As a result, the
Company anticipates that these operations will begin to generate cash to help
fund its expansion and further planned research and development activities.
During the first quarter 2000, the Company received $1,375,000 in proceeds from
a private placement of common stock and warrants. The Company anticipates
raising additional funds during 2000 through private stock offerings and through
additional bank borrowings. However, there can be no assurance that the Company
will be successful in these efforts. These factors raise substantial doubt about
the Company's ability to continue as a going 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 March 31, 2000 and December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
---------------------- --------------------------
<S> <C> <C>
Raw Materials $ 1,176,955 $ 1,362,439
Finished Goods 1,251,324 1,107,795
---------------- ----------------
Total $ 2,428,279 $ 2,470,234
---------------- ----------------
</TABLE>
(3) LONG-TERM DEBT
As of March 31, 2000, the Company had various notes, bonds, mortgages and other
borrowings totaling approximately $13.2 million, including $3.1 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.
During March 2000, the Company extinguished $4.3 million of its long-term debt.
The Company paid $3.9 million and the bank forgave $0.4 million. This amount has
been recognized as an extraordinary item in the accompanying statement of
operations. The amount that was repaid was financed by variable rate loans of
$2.7 million from Credit Suisse, a $1.1 million 5% loan from a stockholder and
officer and cash of $0.1 million.
(4) COMMON STOCK ISSUED
In March 2000, the Company issued 500,000 shares of common stock to Banca del
Gottardo via private placement offering. The Company also issued 2-year warrants
to purchase 150,000 shares of common stock at $4.00 per share. Proceeds from the
sale of shares and warrants totaled $1,375,000 and were applied to working
capital and general corporate purposes.
8
<PAGE>
(5) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1999, Statement of Financial Accounting Standards No. 137 ("SFAS No.
137"), "Accounting for Derivative Instruments and Hedging Activities - Deferral
of Effective Date of FASB Statement No. 133 was issued. Statement No. 137
deferred the effective date of Statement No. 133 to all fiscal quarters of
fiscal years beginning after June 15, 2000. Statement No. 133 requires that all
derivatives be recorded in the balance sheet as either assets or liabilities and
be measured at fair value. Management is in the process of evaluating this
standard and does not expect this statement to have a material impact on the
Company's financial position or result of operations.
(6) SEGMENT DATA
The Company manages its business segments primarily on a geographic basis with
each location representing a distinct segment. The Company's reportable segments
are comprised of Bioren, located in Couvet, Switzerland; Pharmaceuticals,
located in Barbengo, Switzerland; and the Company's Corporate Headquarters,
located in Johnstown, Ohio, U.S.A.
The Company evaluates the performance of its segments based on segment
profit/(loss). Segment profit/(loss) for each segment includes sales and
marketing, certain research and development, and overhead charges directly
attributable to the segment and excludes certain expenses which are managed
outside the reportable segments. Costs excluded from segment profit primarily
consist of corporate expenses, as well as other research and development charges
for testing of products targeted for U.S. markets, and other general and
administrative expenses which are separately managed. The Company does not
include intercompany transfers between segments for management reporting
purposes.
9
<PAGE>
Summary information by segment for the three months ended March 31, 2000 and
1999 is as follows:
THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
BIOREN PHARMACEUTICALS CORPORATE TOTAL
------ --------------- --------- -----
<S> <C> <C> <C> <C>
Sales - International $ 1,462,912 316,809 - 1,779,721
Gross Margin 382,399 117,156 - 499,555
Operating expenses and other
expense (458,333) (524,448) (467,127) (1,449,908)
------------ --------- --------- -----------
Segment Loss (75,934) (407,292)* (467,127) (950,353)
</TABLE>
* Pharmaceuticals' loss includes a $361,837 extrordinary gain from
extinguishment of debt.
THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
BIOREN PHARMACEUTICALS CORPORATE TOTAL
------ --------------- --------- -----
<S> <C> <C> <C> <C>
Sales - International $ 1,573,720 161,591 - 1,735,311
Gross Margin 376,526 116,656 - 493,183
Operating expenses and other
expense (402,850) (518,527) (1,346,861) (2,268,239)
------------ --------- ----------- -----------
Segment Loss (26,324) (401,871) (1,346,861) (1,775,056)
</TABLE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Bigmar, Inc. (together with its subsidiaries, the "Company") is engaged in
manufacturing various pharmaceutical products in Europe and marketing them in
Europe and the United States. 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, the United States
and Canada. Bigmar currently has distribution rights to more than 20 generic
oncology products.
Bigmar, Inc. was incorporated in Delaware in September, 1995 and has three
wholly owned subsidiaries: Bigmar Pharmaceuticals SA - "Pharmaceuticals", Bioren
SA -
10
<PAGE>
"Bioren" and Bigmar Therapeutics, Inc.- "Therapeutics". Pharmaceuticals and
Bioren are both Swiss corporations and Therapeutics is a Delaware corporation.
The Company manages its business segments primarily on a geographic basis with
each location representing a distinct segment.
THE COMPANY
The Company's corporate headquarters located in Johnstown, Ohio, include a
research and development laboratory used for the testing of generic oncology and
related products ("Oncology Products") to be marketed in the United States.
The Company finalized a distribution arrangement with American Pharmaceutical
Partners ("APP") as the exclusive distributor of certain generic oncology
products in North America and Canada. The five year exclusive arrangement covers
three of the market-ready generic oncology products on an exclusive basis along
with several generic oncology products on a non-exclusive basis. The products
involved under this arrangement are produced at Pharmaceuticals' FDA-inspected
Barbengo manufacturing facility that utilizes barrier isolation technology to
manufacture FDA-approved parenteral drug products. By using this technology for
the first time in the production of generic oncology drugs, the Company
increases the assurance of the sterility of oncology drugs resulting in a higher
quality product with reduced manufacturing costs.
The Company entered into an exclusive, five-year distribution and supply
agreement with Indena S.p.A., a world leader in processing capacity of
pharmaceutical extracts, to develop, manufacture and distribute a generic
version of Taxol-Registered Trademark-, one of the leading oncology drugs on
the market with annual sales of approximately $2 billion worldwide.
Taxol-Registered Trademark- is currently unavailable in generic form and
widely used in the treatment of ovarian and breast cancer, as well as some
forms of leukemia. During 2000, the Company plans to apply for regulatory
approvals in each of the countries in which it intends to sell the generic
version of Taxol-Registered Trademark-.
BIOREN
Bioren is engaged in manufacturing and marketing various pharmaceutical products
in Switzerland. Current products include 18 types of intravenous infusion
solutions and other related products ("IV Solutions"). Bioren's strategy is to
expand its current IV Solutions product line and its market penetration.
Bioren's manufacturing facility (the "Bioren Facility") is located in Couvet,
Switzerland.
PHARMACEUTICALS
Pharmaceuticals manufactures and markets Oncology Products, such as Leucovorin
Calcium, Methotrexate, and Cisplatin. The Oncology Products are currently
marketed in Germany and Spain. Pharmaceuticals' primary strategy is to supply
world markets with a full range of high-quality, affordably priced generic
pharmaceutical products focusing on oncology. The products are manufactured in
its state-of-the-art facilities in Switzerland and marketed through
pharmaceutical company partners in Europe and shortly in the
11
<PAGE>
United States. Pharmaceuticals has received regulatory approval to manufacture
and market certain Oncology Products from the United States Food and Drug
Administration ("FDA") and Switzerland's Intercantonal Office for the Control of
Medications ("IKS"). Pharmaceuticals' manufacturing facility (the "Bigmar
Facility") is located in Barbengo, Switzerland.
THERAPEUTICS
Therapeutics is essentially a shell company and has had no significant business
operations as of March 31, 2000.
Certain statements in this report 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, which are discussed in greater detail in the Company's Form 10-KSB for
the 1999 fiscal year. Many of the factors that will determine results and values
are beyond the Company's ability to control or predict. For those statements,
the Company claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
RESULTS OF OPERATIONS
First quarter 2000 net sales amounted to approximately $1.8 million,
representing an increase of $44,410 or 2.6% over first quarter 1999 sales. This
increase was primarily the result of sales to new customers in the first quarter
of 2000. Without exchange rate increase, sales levels increased by 17.1% or
$296,700.
Bioren's sales of IV solutions decreased $110,800 or 7% from first quarter of
1999 sales from $1,574,000 to $1,463,000. This decrease is primarily the result
of the increase of the U.S. Dollar exchange rate against the Swiss Franc. The
average exchange ratio of Swiss Franc to U.S. Dollar during the first quarter
2000 was .614 as compared to .701 in 1999. Without exchange rate increase, sales
levels increased by 6.3% or $86,000. Selling prices are almost stable versus
1999.
Pharmaceuticals' sales of oncology products increased $155,000 from first
quarter of 1999 due to deliveries to APP. Sales were $317,000 in 2000 and were
$162,000 in 1999. First quarter of 2000 has been essentially devoted to research
and development activities and primarily to ANDA batches.
12
<PAGE>
Bioren's cost of goods sold decreased by $143,000 to $1.1 million in 2000 as
compared to $1.2 million in the comparable period of 1999. Without exchange rate
increases, cost of goods sold decreased by $272,000. This decrease is primarily
the result of lower production cost due to the increase of manufacturing levels
and lower prices of packaging material.
Pharmaceuticals' cost of goods sold increased by $155,000 from the three months
ended March 31, 1999 to the same period in 2000. This increase is related to
higher production costs at Pharmaceuticals.
Gross margin amounted to $500,000 for the first quarter of 2000, compared with
$493,000 from the prior year. Gross margin percent amounted to approximately
28.1% for the first quarter of 2000, compared to approximately 28.4% for the
prior year. The decrease in the gross margin percent was due to higher
production costs at Pharmaceuticals.
Operating expenses decreased from first quarter 1999 to first quarter 2000 by
$27,000. Research and development expenses increased by $286,000 due to
activities surrounding the Company's efforts in the current year to develop new
drug product formulations. Selling, general and administrative expenses
decreased by $313,000, primarily due to a decrease in the number of personnel
from first quarter 1999 to first quarter 2000.
Interest expense increased $43,000 from 1999 to 2000, due to an increase of
total debt by $1.3 million in the first quarter of 2000 as compared to the first
quarter of 1999.
Foreign exchange gains amounted to $68,000 in the first quarter of the current
year compared to a loss of $402,000 in the prior year. Effective January 1,
2000, $7.7 million of intercompany debt due from Bigmar Pharmaceuticals SA to
Bigmar Inc. is no longer considered short-term as repayment is not expected in
the foreseeable future. Accordingly, the gain or loss on translating such debt
has been included in the cumulative translation adjustment as a separate
component of stockholders' equity.
The Company recorded an extraordinary gain in the first quarter 2000 due to the
forgiveness of $362,000 in long-term debt from a Swiss bank.
As a result of all of the foregoing, the Company's net loss for the first
quarter 2000 amounted to $950,000 versus $1,775,000 during the first quarter of
1999.
Net loss at Bioren SA was $76,000 in the first quarter of 2000 compared to a net
loss of $48,000 in the first quarter of 1999 due to decreased sales.
Net loss at Pharmaceuticals was $402,000 in the first quarter of 1999 compared
to a net loss of $407,000 in the first quarter of 2000.
13
<PAGE>
The net loss at Corporate decreased from a net loss of $1,347,000 in the first
quarter of 1999 to a net loss of $467,000 in the first quarter of 2000 due to a
reduction of operating expenses, primarily personnel reductions.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000 and December 31, 1999, the Company had cash and cash
equivalents of $198,000 and $156,000, respectively. The Company's working
capital was a $2.0 million deficit and $1.9 million deficit at March 31, 2000
and December 31, 1999, respectively.
The Company has incurred and will continue to incur substantial expenditures for
research and development activities related to bringing its products to the
commercial market. The Company intends to devote significant additional funds to
product development, formulation, clinical testing, 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 and the number of new products the Company plans to add
during the year. The regulatory bodies may require more testing than is
currently planned by the Company. There can be no assurance that the Company's
generic oncological products will be approved for marketing by the FDA or any
foreign government agency, or that any such products will be successfully
introduced or achieve market acceptance.
Property, plant and equipment totaled $13.5 million and $14.4 million at March
31, 2000 and at December 31, 1999, respectively. Additions were approximately
$36,700 whereas depreciation expense was $415,000. The translation of Swiss
property, plant and equipment into U.S. dollar was adversely affected by
approximately $0.6 million by exchange rate fluctuations.
As of March 31, 2000, the Company had various notes, bonds, mortgages and other
borrowings totaling approximately $13.2 million including $3.1 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.
During the first quarter of 2000, pursuant to private placement transactions
with Banca del Gottardo, the Company raised $1,375,000 which was applied to
working capital and general corporate purposes.
The Company anticipates that additional capital funding together with cash from
operations will be required to sustain operations through December 2000.
However, there can be no assurance that events affecting the Company's
operations will not result in the Company depleting its funds before that time.
Management is currently discussing additional financing with a number of
financial institutions and investors, but there are no
14
<PAGE>
assurances that the Company will be able to obtain additional financing or that
such financing, if available, will be available 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
On January 1, 1999, 11 member countries of the European Union (Switzerland
excluded) established fixed conversion rates between their existing sovereign
currencies, and adopted the Euro as their own common legal currency. The Euro is
currently trading on currency exchanges and the legacy currencies will remain
legal tender in the participating countries for a transition period between
January 1, 1999 and December 31, 2001. Between January 1, 2002 and July 1, 2002,
the participating countries will introduce Euro notes and coins and withdraw all
legacy currencies so that they will no longer be available. Based on current
information and management's current assessment, the Company does not expect
that Euro conversion will have a material adverse effect on its business or
financial condition.
In the normal course of business, operations of the Company are exposed to
fluctuations in currency values. These fluctuations can vary the costs of
financing, investing, and operating activities. The Company does not have any
programs in place to control these risks.
The Company's foreign currency risk exposure results from fluctuating currency
exchange rates, primarily the fluctuation of the U.S. dollar against the Swiss
Franc ("Sfr"). The Company faces transactional currency exposures that arise
when its foreign subsidiaries (or the Company itself) enter into transactions
denominated in currencies other than their local currency. The Company also
faces currency exposure that arises from translating the results of its Swiss
operations to the U.S. dollar at exchange rates that have fluctuated from the
beginning of the period. The Company does not have any programs in place to
control these risks.
15
<PAGE>
The table below provides information about the Company's financial instruments
by functional currency and presents such information in U.S. dollar equivalents:
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
----------------------
2000 2001 2002 2003 2004 THEREAFTER
---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
(US$ Equivalent)
except average interest rate
Liabilities
Long-Term Debt:
Fixed Rate ($US) $ -- -- 4,000,000 -- -- --
Average interest rate -- -- 8.0% -- -- --
Fixed Rate (Sfr) $ 1,025,951 -- -- 1,810,501 -- --
Average interest rate 5.0% -- -- 4.0% -- --
Variable Rate (Sfr) $ 609,535 609,535 549,185 368,135 247,435 2,510,561
Average interest rate 4.6% 4.6% 4.7% 5.0% 4.7% 3.8%
</TABLE>
16
<PAGE>
BIGMAR, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 2 (c) CHANGES IN SECURITIES - RECENT SALES OF UNREGISTERED SECURITIES
On March 20, 2000, the Company issued 500,000 shares of common stock at a price
of $2.75 per share to Banca del Gottardo through a private placement of stock in
reliance on Regulation S of the Securities Act of 1933. In connection with that
offering the Company also issued warrants to purchase 150,000 shares of common
stock at $4.00 per share, which become exercisable immediately and terminate on
March 20, 2002.
All of the share transactions summarized above were made directly by the Company
without use of an underwriter or placement agent and without payment of
commissions or other remuneration. Proceeds of 1,375,000 from the sale, after
payment of offering expenses in immaterial amounts, were applied to the working
capital of the Company and other general corporate purposes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 27.1 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the first
quarter, 2000.
17
<PAGE>
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.
May 12, 2000
BIGMAR, INC.
------------
REGISTRANT
By: /s/ Philippe Rohrer
-------------------
Philippe Rohrer
CHIEF FINANCIAL OFFICER; SECRETARY
AND TREASURER
18
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 197,932
<SECURITIES> 0
<RECEIVABLES> 1,591,560
<ALLOWANCES> 0
<INVENTORY> 2,428,279
<CURRENT-ASSETS> 4,388,404
<PP&E> 18,238,580
<DEPRECIATION> 4,700,034
<TOTAL-ASSETS> 18,297,668
<CURRENT-LIABILITIES> 6,359,397
<BONDS> 10,095,353
0
0
<COMMON> 9,494
<OTHER-SE> 1,833,524
<TOTAL-LIABILITY-AND-EQUITY> 18,297,768
<SALES> 1,779,721
<TOTAL-REVENUES> 1,779,721
<CGS> 1,280,165
<TOTAL-COSTS> 1,280,165
<OTHER-EXPENSES> 1,710,154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 230,862
<INCOME-PRETAX> (1,312,190)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,312,190)
<DISCONTINUED> 0
<EXTRAORDINARY> 361,837
<CHANGES> 0
<NET-INCOME> (950,353)
<EPS-BASIC> (0.11)
<EPS-DILUTED> (0.11)
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