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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - QSB
(X) QUARTERLY REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to .
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Commission file number 0-21781
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SERACARE, INC.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 95-4343492
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1925 CENTURY PARK EAST, SUITE 1970
LOS ANGELES, CALIFORNIA 90067
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (310) 772-7777
--------------
Indicate by check mark 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. ( X ) Yes ( ) No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 13 or 15 (d) of the Securities Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes ( X ) No ( )
As of September 30, 2000, the issuer had 8,663,642 shares of its common stock,
$.001 par value issued and outstanding.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FINANCIAL STATEMENTS ARE PROVIDED AS FOLLOWS:
<TABLE>
<CAPTION>
PAGE
NUMBER
SERACARE, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<S> <C>
Consolidated Statements of Operations - (Unaudited)
For the three and six months ended August 31, 2000 and
For the three and six months ended August 31, 1999 3
Consolidated Balance Sheets -
as of August 31, 2000 (Unaudited) and
as of February 29, 2000 (Audited) 4
Consolidated Statements of Cash Flows - (Unaudited)
For the six months ended August 31, 2000 and
For the six months ended August 31, 1999 5
Notes to Consolidated Financial Statements 6
</TABLE>
2
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SERACARE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN WHOLE DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended For the Three Months Ended
---------------------------- ----------------------------
August 31 August 31 August 31 August 31
2000 1999 2000 1999
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues
Net sales $ 31,758,116 $ 28,941,531 $ 18,874,061 $ 13,041,985
Income from joint venture 0 505,340 0 315,450
------------ ------------ ------------- ------------
31,758,116 29,446,871 18,874,061 13,357,435
Cost of sales 25,575,839 22,507,161 15,654,037 10,751,509
------------ ------------ ------------- ------------
Gross profit 6,182,277 6,939,710 3,220,024 2,605,926
General and administrative expenses 3,343,090 3,367,090 1,714,620 1,843,677
------------ ------------ ------------- ------------
Net income from operations 2,839,187 3,572,620 1,505,404 762,249
Interest expense (including $546,028, $624,096, $273,054
and $312,048 of noncash interest expense) 2,044,218 2,422,178 1,030,846 1,236,382
Other income, net (27,689) (42,086) (13,338) (23,645)
------------ ------------ ------------- ------------
Income (loss) before income tax expense and cumulative
effect of change in accounting method 822,658 1,192,528 487,896 (450,488)
Income tax expense 82,639 19,080 32,355 (82,787)
------------ ------------ ------------- ------------
Income (loss) before cumulative effect of change
in accounting method 740,019 1,173,448 455,541 (367,701)
Cumulative effect of change in accounting method, net 0 (719,903) 0 0
------------ ------------ ------------- ------------
Net income (loss) $ 740,019 $ 453,545 $ 455,541 $ (367,701)
============ ============ ============= ============
Earnings per common share
Basic
Income (loss) before cumulative effect of change in
accounting method $ 0.07 $ 0.15 $ 0.05 $ (0.05)
Cumulative effect of change in accounting method 0.00 (0.09) 0.00 0.00
------------ ------------ ------------- ------------
Net income (loss) $ 0.07 $ 0.06 $ 0.05 $ (0.05)
============ ============ ============= ============
Diluted
Income (loss) before cumulative effect of change in
accounting method $ 0.05 $ 0.10 $ 0.03 $ (0.05)
Cumulative effect of change in accounting method 0.00 (0.06) 0.00 0.00
------------ ------------ ------------- ------------
Net income (loss) $ 0.05 $ 0.04 $ 0.03 $ (0.05)
============ ============ ============= ============
Weighted average shares issued and outstanding
Basic 8,568,015 7,773,585 8,616,612 7,902,752
============ ============ ============= ============
Diluted 11,684,263 12,363,311 11,535,603 12,465,459
============ ============ ============= ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
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SERACARE, INC.
CONSOLIDATED BALANCE SHEET
(IN WHOLE DOLLARS)
<TABLE>
<CAPTION>
8-31-00 2-29-00
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 751,057 $ 1,285,668
Cash held in escrow 1,675,000 5,406,515
Accounts receivable 8,855,651 11,963,823
Inventory 20,070,055 17,283,525
Prepaid expenses and other current assets 726,207 634,668
----------- -----------
Total Current Assets 32,077,970 36,574,199
----------- -----------
PROPERTY AND EQUIPMENT - NET 6,861,830 6,856,167
FDA LICENSES, less accumulated amortization
of $477,774 and $372,015 8,017,617 8,110,229
DONOR BASE AND RECORDS, less accumulated
amortization of $542,306 and $414,496 4,577,165 4,684,367
REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCATED
TO IDENTIFIABLE ASSETS, less accumulated amortization
of $175,055 and $155,771 596,398 615,682
GOODWILL, less accumulated amortization of $911,800
and $716,662 6,431,351 6,626,489
DEFERRED BOND DISCOUNT, less accumulated
amortization of $2,299,161 and $1,807,235 4,427,341 4,919,268
OTHER ASSETS 1,320,522 1,192,514
----------- -----------
TOTAL ASSETS $64,310,194 $69,578,915
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit $13,637,720 $13,184,000
Accounts payable 5,115,770 10,494,088
Accrued payroll and related expenses 650,712 484,281
Accrued expenses 1,870,520 3,487,405
Deferred income 871,059 278,429
Notes payable 0 288,447
Current portion of long-term debt 231,151 231,151
----------- -----------
Total current liabilities 22,376,932 28,447,801
----------- -----------
LONG-TERM DEBT 12,973,741 13,087,563
----------- -----------
STOCKHOLDERS' EQUITY
Series C convertible preferred stock, $.001 par
value, 22,500 shares authorized and outstanding
Liquidation value $100 per share 22 22
Common stock, $.001 par value, 25,000,000 shares
authorized 8,663,642 and 8,519,418 issued and outstanding 8,663 8,519
Additional paid-in capital 26,512,619 26,224,316
Retained earnings 2,438,217 1,810,694
----------- -----------
Total stockholders' equity 28,959,521 28,043,551
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $64,310,194 $69,578,915
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
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SERACARE, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN WHOLE DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended
--------------------------
August 31 August 31
INCREASE (DECREASE) IN CASH 2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 740,019 $ 453,545
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 933,953 924,822
Income from joint venture 0 (505,340)
Non-cash interest expense 546,028 624,096
Non-cash general and administrative expense 10,710 10,710
(Increase) decrease from changes in:
Accounts receivable 3,108,178 144,411
Inventory (2,786,530) (9,961,143)
Prepaid expenses and other current assets (91,539) 18,573
Other assets (192,819) 1,027,451
Accounts payable (5,378,320) 3,519,939
Accrued payroll and related expenses 166,431 144,443
Accrued expenses (1,616,885) 160,383
Deferred income 592,630 (397,353)
----------- -----------
Net cash used in operating activities (3,968,144) (3,835,463)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Funds released from escrow 3,731,515 0
Purchases of property and equipment (491,625) (1,615,979)
Distributions from unconsolidated subsidiary 0 385,000
Additions to FDA licenses (13,147) (448,054)
Additions to other intangible assets 0 (3,284)
Additions to donor base and records (20,608) (238,121)
----------- -----------
Net cash provided by (used in) investing activities 3,206,135 (1,920,438)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances under line of credit 453,720 4,636,000
Repayments of long-term debt (113,822) (617,129)
Repayments of notes payable (288,447) 0
Payments on redemption of preferred stock 0 (60,107)
Issuance of stock for property and equipment 0 1,000,000
Borrowings under notes payable 0 480,000
Cash received from exercise of warrants 288,447
Preferred dividend (112,500) 0
----------- -----------
Net cash provided by financing activities 227,398 5,438,764
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (534,611) (317,137)
CASH AND CASH EQUIVALENTS, beginning of period 1,285,668 843,226
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 751,057 $ 526,089
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
(a) Cash paid for:
Interest $ 1,903,176 $ 1,642,966
State income taxes $ 8,820 $ 76,320
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
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SeraCare, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. STATEMENT OF INFORMATION FURNISHED
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting only of normal and recurring accruals)
necessary to present fairly the financial position of SeraCare, Inc. and
Subsidiaries as of August 31, 2000, and the results of their operations and cash
flows for the three and six month periods ended August 31, 2000 and 1999. These
results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the audited financial statements included in the Company's Annual Report on
Form 10-KSB for the fiscal year ended February 29, 2000.
The results of operations for the three and six months ended August 31, 2000 are
not necessarily indicative of the results to be expected for any other period or
for the entire current fiscal year.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted in accordance with the rules to Form 10-QSB. The
accompanying financial statements should be read in conjunction with the
Company's audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended February 29,
2000.
2. EARNINGS PER SHARE
Basic earnings per common share amounts for the three and six months ended
August 31, 2000 and 1999 have been calculated based upon the weighted average
number of shares actually outstanding during the period. Diluted earnings per
share for the same periods have been calculated by considering common stock
options, purchase warrants and convertible debt instruments which are deemed
common stock equivalents in such calculations.
3. INCOME TAXES
The difference between the reported tax provision and the statutory rate applied
to the pre-tax income for the three months and six months ended August 31, 2000
is primarily the result of the expected realization of deferred tax assets
relating to the utilization of certain loss carryforwards and the application of
available loss carryforwards in the calculation of an effective tax rate which
was based upon annualizing the financial results for the quarter.
4. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING METHOD, NET
Effective March 1, 1999, the Company adopted Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" (SOP 98-5) issued by the
American Institute of Certified Public Accountants. SOP 98-5 requires that the
costs of start-up activities, including organization costs,
6
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be expensed as incurred. Start-up activities are defined broadly as those
one-time activities related to opening a new facility, introducing a new product
or service, conducting business in a new territory, conducting business with a
new class of customer, initiating a new process in an existing facility, or
commencing some new operation.
As of May 31, 1999, the Company wrote off $719,903 (net of a $44,600 tax
benefit) of startup costs that had been previously capitalized and included in
other assets. In accordance with SOP 98-5, the write-off of such costs was
reported as a cumulative effect of a change in accounting method.
5. CASH IN ESCROW
In conjunction with the sale of the operating assets of Consolidated
Technologies, $1,675,000 remains in escrow and is being held pursuant to an
adjustment provision in the Asset Purchase Agreement.
6. EARNINGS PER SHARE CALCULATION
Earnings per share have been calculated for the current year periods by
deducting preferred dividends of $112,500 and $56,250 for the six-month and
three month periods from net income of $740,019 and $455,541, respectively,
to determine net income available to common shareholders of $627,519 and
$399,291. Diluted earnings per share for the three months period ended August
31, 1999 have been calculated without consideration of common stock options,
purchase warrants and convertible debt instruments as their inclusion would
be anti-dilutive.
7. NOTES PAYABLE
In June 2000, the Company repaid $288,447 of notes payable and the note holder
exercised warrants to purchase 144,224 shares of stock at an exercise price of
$2.00 per share.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS IN THIS
REPORT (INCLUDING WITHOUT LIMITATION, STATEMENTS INDICATING THAT THE COMPANY
"EXPECTS," "ESTIMATES," "ANTICIPATES," OR "BELIEVES" AND ALL OTHER STATEMENTS
CONCERNING FUTURE FINANCIAL RESULTS, PRODUCT OFFERINGS OR OTHER EVENTS THAT HAVE
NOT YET OCCURRED) ARE FORWARD-LOOKING STATEMENTS THAT ARE MADE PURSUANT TO THE
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995,
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND SECTION 27A
OF THE SECURITIES ACT OF 1933, AS AMENDED. FORWARD-LOOKING STATEMENTS INVOLVE
KNOWN AND UNKNOWN FACTORS, RISKS AND UNCERTAINTIES, WHICH MAY CAUSE THE
COMPANY'S ACTUAL RESULTS IN FUTURE PERIODS TO DIFFER MATERIALLY FROM FORECASTED
RESULTS. THOSE FACTORS, RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO:
THE POSITIONING OF THE COMPANY'S PRODUCTS IN THE COMPANY'S MARKET SEGMENT; THE
COMPANY'S ABILITY TO EFFECTIVELY MANAGE ITS VARIOUS BUSINESSES IN A RAPIDLY
CHANGING ENVIRONMENT; NEW COMPETITION FOR DONORS AND CUSTOMERS; THE INABILITY OF
THE COMPANY TO OBTAIN FDA APPROVAL OF NEWLY ESTABLISHED CENTERS; AND THE
INTRODUCTION OF SYNTHETIC PRODUCTS WHICH COULD ELIMINATE THE NEED FOR PLASMA
PRODUCTS.
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 2000 VERSUS THE THREE MONTHS ENDED AUGUST 31, 1999
REVENUE
Total revenue of the Company increased by 41% or $5,516,626 to $18,874,061
during the current-year three-month period. This improvement was primarily the
result a higher volume of plasma shipments to customers, which improved revenue
by $4.1 million and a $3.4 million increase in revenue generated by the
Company's distribution operations. Partially offsetting these improvements was
the sale of Consolidated Technologies in February 2000, which generated revenue
of about $2.0 million during the prior year period. Plasma collections were up
by 14% versus the prior year to about 153,000 liters during the three-month
period.
GROSS PROFIT
Gross profit increased by $614,098 or 24% in the current-year three-month period
to $3,220,024. Increased gross profit of $.9 million resulting from the higher
sales generated by the Company's distribution operation was offset by the sale
of Consolidated Technologies, which contributed $.9 million in the prior year
period. The increased revenues relating to the plasma operations discussed above
were substantially offset by the continuing high cost associated with compliance
with FDA and other regulatory requirements and increased payroll, donor fees,
softgoods, testing and other operating costs relating to the increase in the
volume of plasma collected. The profit margin for the current year period was
17.1% compared to 19.5% for the prior year period. The decrease in profit margin
results primarily from increased operating costs related to the plasma
operations, including the increased cost of compliance with FDA and other
regulatory requirements and to certain high dollar, low margin product sales by
the Company's distribution operation.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses in the current quarter were down by $129,057
to $1,714,620, a decrease of 7%, due to the sale of Consolidated Technologies in
February 2000, which reported expenses of $371,659 million during the prior year
period. Expenses were up in the distribution operations as a result of a
restructuring of sales and marketing.
8
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INTEREST EXPENSE
During the current-year period interest expense, including non-cash interest,
decreased by 17% or $205,536 to $1,030,846 due primarily to the pay-down of
long-term debt with the proceeds of the sale of Consolidated Technologies in
February, 2000, and the write-off of related deferred bond discount costs.
INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING METHOD
As a result of the above, income before income tax expense and the cumulative
effect of a change in accounting method for the three months ended August 31,
2000 was $487,896 as compared to a loss of $450,488 for the same prior year
period.
INCOME TAXES
No federal taxes were paid or accrued during either three-month period due to
the availability of various loss carryforwards and deferred tax credits. The
taxes reflected are for the various state income taxes paid.
NET INCOME (LOSS)
As a result of the above, net income for the three months ended August 31, 2000
was $455,541 as compared to a net loss of $367,701 for the same prior year
period.
SIX MONTHS ENDED AUGUST 31, 2000 VERSUS THE SIX MONTHS ENDED AUGUST 31, 1999
REVENUE
Total revenue of the Company increased by 8% or $2,311,245 to $31,758,116 during
the six-month period just ended. This improvement was primarily the result of a
$4.0 million increase in revenue generated by the Company's distribution
operation and a $1.9 million increase in plasma sales, partially offset by the
sale of Consolidated Technologies in February 2000 which generated revenue of
$3.6 million in the prior year period. Plasma collections for the six-month
period were up 3% versus the same prior year period.
GROSS PROFIT Gross profit decreased by $757,433 or 11% in the current-year
six-month period to $6,182,277. An increase of $1.2 million resulting from
the higher sales generated by the Company's distribution operation was more
than offset by the sale of Consolidated Technologies which contributed $1.7
million in the prior year period and higher payroll costs, donor fees,
softgoods, testing, and other operating costs relating to the plasma
operations and due in part to the increase in the volume of plasma collected.
The profit margin for the current year period was 19.5% compared to 23.6% for
the prior year period. The decrease in profit margin results primarily from
increased operating costs related to the plasma operations, including the
increased cost of compliance with FDA and other regulatory requirements and
to certain high dollar, low margin product sales by the Company's
distribution operation.
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for
the current-year six-month period decreased by $24,000 to $3,343,090, a
decrease of 1% due to the sale of Consolidated Technologies in February,
2000, which reported expenses of $612,010 million during the prior year
period. Expenses were up by $402,909 in the plasma operations due to the
increased cost of FDA compliance and by $229,519 in the distribution
operations due to a restructuring of sales and marketing.
INTEREST EXPENSE
During the current-year period, interest expense, including non-cash interest,
decreased by $377,960 to $2,044,218, a decrease of 16%, due primarily to the
pay-down of long-term debt with the proceeds from
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the sale of Consolidated Technologies in February, 2000, and the write-off of
the related deferred bond discount costs.
INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING METHOD
As a result of the above, income before the cumulative effect of a change in
accounting method for the six months ended August 31, 2000 was $822,658 as
compared to $1,192,528 for the same prior year period.
INCOME TAXES
No federal taxes were paid or accrued during either six-month period due to the
availability of various loss carryforwards and deferred tax credits. The taxes
reflected are for the various state income taxes paid.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING METHOD
Effective March 1, 1999, the Company adopted Statement of Position 98-5
"Reporting on the Costs of Start-Up Activities" (SOP 98-5) issued by the
American Institute of Certified Public Accountants. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998, and requires that the costs of
start-up activities be expensed as incurred. Accordingly, the Company wrote off
$719,903 (net of a $44,634 tax benefit) of start-up costs that had been
previously capitalized and was included in other assets as of February 28, 1999.
In accordance with SOP 98-5, the write-off of such costs is being reported as a
cumulative effect of a change in accounting method and prior periods have not
been restated.
NET INCOME (LOSS)
As a result of the above, net income for the six months ended August 31, 2000
increased by 63% to $740,019 compared to a net income of $453,545 for the same
prior year period.
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 2000 the Company's current assets exceeded current
liabilities by $9,701,038 compared to $8,126,398 as of February 29, 2000,
which translates into a current ratio as of August 31, 2000 of 1.4 to 1
compared to 1.3 to 1 as of February 29, 2000. Total liabilities as of August
31, 2000 were $35,350,673 compared to $41,535,364 as of February 29, 2000.
The total debt to equity ratio as of August 31, 2000 was 1.2 compared to 1.5
as of February 29, 2000. In the opinion of Management, the trends reflected
in these ratios and statistics are very positive and show progress in
improving the Company's financial position.
Net cash used in operating activities during the six-month period ended August
31, 2000 was $3,968,144 compared to $3,835,463 during the same prior year
period.
Cash flows provided by investing activities for the six months ended August 31,
2000 was $3,206,135 compared to cash used of $1,920,438 for the comparable prior
year period. The current period increase resulted from the release of funds from
escrow related to the sale of Consolidated Technologies in February 2000.
Cash flow provided by financing activities was $227,398 for the current year
period compared to $5,438,764 for the comparable prior period. The current
period decrease was due mainly to fewer advances under the line of credit.
The use of cash during the quarter was consistent with the Company's strategic
plan for strong growth, and the Company feels that progress has been made during
the period. With a continuation of a strategic focus on growth and optimum
positioning for the expected industry wide shortage of plasma, the short-
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term impact on the Company's earnings and cash flow has been to defer
significant profitability and positive cash flows.
Much of fiscal year 2000 was spent establishing a structure that the Company
believes is necessary in order to insure long-term success in this highly
regulated industry. With the structure and training in place, the first half of
fiscal 2001 represented a period of re-establishing the programs and incentives
the Company believes are required to stimulate increased plasma collections.
Consistent with the Company's strategic plan of growth, recently established
centers in Allentown, PA, Reading, PA and Laredo, TX are continuing to ramp-up
and newly established centers in Danville, VA and Providence, RI opened during
the second quarter. The Company is also continuing to evaluating alternatives
for expansion of the facilities for manufacturing bulk plasma based products and
serums for diagnostic customers.
The Company continues to believe that a rapidly evolving shortage of plasma and
steadily increasing demand for most plasma products will result in significant
upward momentum on plasma pricing as the Company renews contracts with it's
customers during the next two to three years. This shortage is mainly the result
of increased fractionation capacity, increased regulation of donor
qualifications, which disqualified many potential donors, and the increased
demand and uses for products obtained from plasma. The Company further believes
that recent Company-wide efforts directed at quality control, compliance and
increased volumes have positioned the Company to benefit maximally from the
economics of the industry during the coming years.
Management believes that internally generated cash flow will be sufficient to
meet the ongoing working capital requirements of the Company's current
operations for the balance of fiscal 2001. However, any significant expansion or
acquisitions will need to be funded externally by some combination of bridge
financing, private placement(s), and/or other capital infusion. The Company is
also exploring ways of reducing the interest charge to current operations
through refinancing, investment alternatives or some combination of both.
As of August 31, 2000, the Company was in compliance with all covenants
pertaining to the senior credit facility.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
SERACARE, INC.
(Registrant)
Dated: October 12, 2000 By: /s/ BARRY D. PLOST
-------------------------------------
Barry D. Plost, President & CEO
By: /s/ JERRY L. BURDICK
-------------------------------------
Jerry L. Burdick
Principal Accounting and
Finance Officer
12
