<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[x] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 1999
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from ________ to ________
Commission File Number: 0-22413
UNIVEC, INC.
(Name of Small Business Issuer in its charter)
Delaware 11-3163455
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) (Identification No.)
22 Dubon Court, Farmingdale, New York 11735
(Address of Principal Executive Offices)
(516) 777-2000
(Issuers Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address, and Former Fiscal Year,
If Changed Since Last Report)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes __X__ No _____
As of April 30, 1999 , the Issuer had 3,734,209 shares of Common Stock,
$0.001 par value, outstanding.
Transitional Small Business Disclosure Format:
Yes _____ No __X__
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1: Consolidated Financial Information
UNIVEC, Inc. and Subsidiary
Consolidated Balance Sheet (Unaudited)
March 31, 1999
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ASSETS:
Current assets:
Cash and cash equivalents $ 136,232
Accounts receivable 220,906
Inventory 958,586
Other current assets 144,874
-----------
Total current assets 1,460,598
Fixed assets, net 2,579,417
Other assets 14,525
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Total assets $ 4,054,540
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LIABILITIES AND STOCKHOLDERS EQUITY:
Accounts payable and accrued expenses 934,094
Current portion of capitalized lease obligation 45,537
Loans payable (including $136,000 to a shareholder/officer) 268,000
-----------
Total current liabilities 1,247,631
Loan payable 47,000
Capitalized lease obligation 37,903
------------
Total liabilites 1,332,534
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STOCKHOLDERS' EQUITY:
Preferred stock $.001 par value; 4,995,500 authorized;
none issued and outstanding
Series A 8% Cumulative Convertible Preferred Stock,
$.001 par value; authorized: 2,500 shares; issued
and outstanding: 2,072 shares (aggregate liquidation
value: $2,304,580) 2
Series B 5% cumulative convertible preferred stock,
$.001 par value; authorized: 1,000 shares, issued and
outstanding: 630 shares (aggregate liquidation value
$654,063) 1
Series C 5% cumulative convertible preferred stock,
$.001 par value; authorized: 1,000 shares, issued and
outstanding: 250 shares (aggregate liquidation
value $251,563) 1
Common stock $.001 par value; authorized: 25,000,000 shares;
issued and outstanding: 3,734,209 3,735
Additional paid-in capital 7,152,398
Accumulated deficit (4,434,131)
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Total stockholders' equity 2,722,006
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Total liabilities and stockholders' equity $ 4,054,540
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See accompanying notes to consolidated financial statements.
<PAGE>
UNIVEC, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Product sales $ 349,166 $ 362,998
----------- -----------
Expenses:
Cost of product sales 307,737 328,246
Marketing 179,341 145,122
Product development 45,210 119,468
General and administrative 255,354 315,503
Interest expense, net 5,805 (4,023)
----------- -----------
Total expenses, net 793,447 904,316
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Net loss (444,281) (541,318)
Dividends attributable preferred stock (51,503) ( 41,440)
Dividend attributable preferred stock resulting
from discount for beneficial conversion ( 18,260)
----------- -----------
Loss attributable to common stockholders $ (514,044) $ (582,758)
=========== ===========
Share information
Basic and diluted earnings per share
Net loss per share $ (.15) $ (.20)
=========== ===========
Weighted average common stock outstanding 3,525,422 2,981,769
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
UNIVEC, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (444,281) $ (541,318)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, amortization, and other
non-cash charges 106,588 40,015
Changes in assets and liabilities:
Accounts receivable (78,113) (279,738)
Inventory 130,751 (372,086)
Other current assets 9,238 (11,451)
Accounts payable and accrued expenses (221,779) 449,161
----------- -----------
Net cash used in operating activities (497,596) (715,417)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets (11,783) (380,550)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of preferred stock, net of expenses 209,990
Proceeds from loans payable 315,000
Payments of capitalized lease obligation (10,560)
----------- -----------
Net cash provided by financing activities: 514,430
----------- -----------
Net decrease in cash and cash equivalents 5,051 (1,095,967)
Cash and cash equivalents, beginning of year 131,181 1,209,481
----------- -----------
Cash and cash equivalents, end of year $ 136,232 $ 113,514
=========== ===========
Supplemental disclosures:
Cash paid during the year for:
Interest $ 2,715 None
Income taxes $ 2,062 $ 3,585
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
UNIVEC, Inc. and Subsidiary
Notes to Consolidated Condensed Financial Statements (Unaudited)
1. General:
The unaudited consolidated financial statements included herein and
supplementary financial information included herein, if any, and has been
prepared in accordance with Item 310(b) of Regulation S-B and, therefore, omit
or condense certain footnotes and other information normally included in
financial statements prepared in accordance with generally accepted accounting
principles. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the consolidated
financial information for the interim periods reported have been made. The
consolidated financial statements should be read in conjunction with the
consolidated financial statements of Univec, Inc. together with Management's
Discussion and Analysis contained in the Company's Form 10-KSB for the year
ended December 31, 1998. The results of operations for the three months ended
March 31, 1999 are not necessarily indicative of the results for the entire year
ending December 31, 1999.
2. Basic and Diluted Loss Per Share:
Loss per share was computed based on the weighted average number of shares
outstanding during the three months ended March 31, 1999.
3. Sales:
As of March 31, 1999, the Company had contracts for approximately $4,000,000
of which approximately $440,000 was shipped subsequent to March 31, 1999.
4. Subsequent Event:
In May, 1999, the Company borrowed $25,000 from a director/shareholder
without specific repayment or interest terms.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Three Months Ended March 31, 1999 and 1998
Product Sales. Product sales for the three months ended March 31, 1999
decreased by $13,832 as compared to product sales for the three months ended
March 31, 1998. Product sales consisted primarily of the 1cc locking clip
syringe, a difficult-to-reuse syringe. All syringes were either produced in the
Company's own production facility in New York or in its Portuguese contract
manufacturer. As of March 31, 1999, there were open sales orders of
approximately $108,000 which were shipped April 5, 1999 due to air space
limitations in March, 1999. Had these orders been shipped in March, 1999, sales
would have increased approximately $94,000 or 26%.
In February, 1999, the Company entered into an agreement with one of its
customers to supply approximately 36 million syringes at $.0895 per syringe
during the year ending December 31, 1999.
Cost of Product Sales. Cost of product sales for the 1999 three-month period
decreased by $20,509 as compared to cost of product sales for the 1998
three-month period. Gross profit was approximately the same for both periods.
The decrease was primarily related to a decrease in product sales.
Marketing. Marketing expense for the 1999 three-month period increased by
$34,219 as compared to the 1998 three-month period due to increased marketing
efforts.
Product Development. Product development expenses for the 1999 three-month
period decreased by $74,258 as compared to the 1998 three-month period. This
decrease is due primarily to the management's decision in 1998 to utilize its
resources in the development of its production facility and in 1999 to utilize
its resources for marketing.
General and Administrative. General and administrative expenses for the 1999
three-month period decreased by $60,149 as compared to the 1998 three-month
period. This decrease is due primarily to a reduction in salaries, offset in
part by an increase in securities maintenance expense and a continuing effort by
management to reduce costs.
Interest Expense, Net. Interest expense increased for the 1999 three month
period by $9,828 as compared to the 1998 three-month period. This difference is
due principally to the fact that during the 1998 three month period the Company
had cash and cash equivalents earning interest income of approximately $6,656,
whereas, in the 1999 three month period there were no such investments. In
addition, interest expense was incurred during the 1999-three month period for
the capital lease obligation.
<PAGE>
Net Loss. The net loss for the 1999 three-month period decreased by $97,037
as compared to the 1998 three-month period. This decrease is due primarily to
the reductions in product development expenses and general and administrative
expenses.
Liquidity and Capital Resources
Net cash used in operating activities decreased by $217,821 primarily from a
lower operating loss and decreases in inventory and accounts payable partially
offset by increases in accounts receivable. Net cash from financing activities
increased in 1999 by approximately $514,430, primarily from net proceeds from
the sale of Series C Preferred Stock and loans from a stockholder and others.
The Company is pursuing financing to provide additional working capital, which
could involve dilution to existing stockholders.
Except for the historical information contained herein, the matters discussed
in this report are forward-looking statements that involve risks and
uncertainties, including need for additional financing and other risks detailed
from time to time in the Company's Securities and Exchange Commission (SEC)
reports.
<PAGE>
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
(c) Recent Sales of Unregistered Securities.
On February 8, 1999, the Registrant issued and sold to The Shaar Fund,
Ltd. for an aggregate price of $250,000, 250 shares of the Registrant's Series C
5% Convertible Preferred Stock, and Warrants expiring in three years to purchase
for $1.93 per share 37,500 shares of its Common Stock. The securities were
issued without registration in reliance on the exemption afforded by Section
4(2) under the Securities Act of 1933, as amended. The Registrant incurred
commissions of $24,000 in connection with the transaction.
Each share of Series C Preferred Stock is convertible into the number of
shares of Common Stock having the value of $1,000, on the basis of the lower of
(i) $1.10 per share and (ii) a price equal to to 80 to 85% of a price related to
the market price for the Common Stock at the time of conversion, as provided in
and subject to the terms and conditions of the Certificate of Designation
defining the Series C Preferred Stock (the "conversion rate"), at the option of
the holder thereof. The conversion rate is subject to adjustment in the event of
a stock split, stock dividend, recapitalization, merger, consolidation or
certain other events. If the Registrant's Common Stock is delisted from trading
on NASDAQ for any reason, the remaining Series C Preferred Stock may be
converted into Common Stock at a price related to 75% of the market price of the
Common Stock at the time of conversion. The right of conversion with respect to
the shares of the Series C Preferred Stock called for redemption will terminate
at the close of business on the business day preceding the date fixed for
redemption. Upon conversion, no payment or allowance will be made in respect of
any accrued but unpaid dividends on the Series C Preferred Stock. All the Series
C Preferred Stock must be converted no later than February 8, 2001.
In connection with the issuance of the Series C Preferred Stock, the
Registrant modified the terms and conditions of preferred stock and warrants
purchased by The Shaar Fund, Ltd. in 1998 to conform to the terms and conditions
of the Series C Preferred Stock and related warrants described in the preceding
paragraph.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27.1 Financial Data Schedule
(b) The Company filed 8-K reports on March 22, 1999 and on April 6, 1999
reporting a change of independent auditor from Richard A Eisner &
Company, LLP. to Most Horowitz & Company, LLP.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNIVEC, INC.
Dated: May 21, 1999 By: /s/ Joel Schoenfeld
----------------------------------
Joel Schoenfeld
Chief Executive Officer
Dated: May 21, 1999 By: /s/ Marla Manowitz
----------------------------------
Marla Manowitz
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 136,232
<SECURITIES> 0
<RECEIVABLES> 220,907
<ALLOWANCES> 0
<INVENTORY> 958,586
<CURRENT-ASSETS> 1,460,598
<PP&E> 2,579,417
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,054,540
<CURRENT-LIABILITIES> 1,247,631
<BONDS> 0
0
4
<COMMON> 3,735
<OTHER-SE> 7,152,398
<TOTAL-LIABILITY-AND-EQUITY> 4,054,540
<SALES> 349,166
<TOTAL-REVENUES> 349,166
<CGS> 307,737
<TOTAL-COSTS> 307,737
<OTHER-EXPENSES> 479,905
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,805
<INCOME-PRETAX> (444,281)
<INCOME-TAX> 0
<INCOME-CONTINUING> (444,281)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (444,281)
<EPS-BASIC> (.15)
<EPS-DILUTED> (.15)
</TABLE>
