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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange Act of
1934
For Quarter Ended APRIL 30, 1997
Commission File Number 0-22011
BIONUTRICS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 86-0760991
(State or other jurisdiction of I.R.S. Employer
Incorporation of organization) Identification Number
2425 E. CAMELBACK RD., SUITE 650 PHOENIX, ARIZONA 85016
(Address of principal executive offices) (Zip code)
602-508-0112
(Registrant's telephone number, including area code)
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.
YES_____ NO X
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, at the latest practical date.
CLASS OUTSTANDING AS OF APRIL 30, 1997
- ----- --------------------------------
COMMON 16,097,713
PAR VALUE $.001 PER SHARE
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BIONUTRICS, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
Part I. Financial Statements Page
Item 1. Condensed Consolidated Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 7
Part II. Other Information
Item 2(c)Changes in Securities 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
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[LOGO]BIONUTRICS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30 OCTOBER 31,
1997 1996
(UNAUDITED)
--------------------------------------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $8,055,533 $5,676,360
Trade receivables $149,794
Inventory 328,881
Prepaid expenses 176,546
Other receivable 19,309
--------------------------------------------
Total Current Assets 8,730,063 5,676,360
--------------------------------------------
PROPERTY, PLANT and EQUIPMENT 1,182,084 91,900
Less-Accumulated depreciation (55,487) (21,701)
--------------------------------------------
Net Property, Plant and Equipment 1,126,597 70,199
--------------------------------------------
OTHER ASSETS:
Notes Receivable 16,665
Accrued interest 1,333
Patent applications and other related costs 448,352 452,791
Investment in Joint Venture 400,000
--------------------------------------------
Total Other Assets 848,352 470,789
--------------------------------------------
TOTAL $10,705,012 $6,217,348
============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $857,587 $565,823
Accrued Liabilities 864,863 370,655
--------------------------------------------
Total Current Liabilities 1,722,450 936,478
--------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock 16,167 15,068
Additional Paid in Capital 17,843,073 10,406,996
Deficit accumulated during the development stage (8,875,475) (5,139,991)
Common stock in treasury (1,203) (1,203)
--------------------------------------------
Total stockholders' equity 8,982,562 5,280,870
--------------------------------------------
TOTAL $10,705,012 $6,217,348
============================================
</TABLE>
The accompanying notes are an integral part of these consolidated balance sheets
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[LOGO]BIONUTRICS
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended April 30 Ended April 30
------------------------------------------------------------------------------------------
1997 1996 1997 1996
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $145,294 $0 $145,294
COST OF SALES 661,672 661,672
------------------------------------------------------------------------------------------
GROSS PROFIT (516,378) 0 (516,378) 0
------------------------------------------------------------------------------------------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES: 2,038,797 276,297 3,346,034 860,131
------------------------------------------------------------------------------------------
OTHER (EXPENSE) INCOME: 71,173 (4,539) 126,928 (19,645)
------------------------------------------------------------------------------------------
LOSS BEFORE PROVISION FOR
INCOME TAXES (2,484,002) (280,836) (3,735,484) (879,776)
------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES 0 0
NET LOSS ($2,484,002) ($280,836) ($3,735,484) ($879,776)
==========================================================================================
LOSS PER COMMON SHARE ($0.16) ($0.03) ($0.24) ($0.08)
==========================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 15,927,321 10,956,269 15,574,887 10,956,269
==========================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated statements of
operation
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[LOGO]BIONUTRICS
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months
Ended April 30
-----------------------------------------------
OPERATING ACTIVITIES: 1997 1996
-----------------------------------------------
<S> <C> <C>
Net Loss ($3,735,484) ($879,776)
Adjustments to reconcile net loss to cash used in operations
Depreciation and amortization 38,225 9,831
Expenses incurred in exchange for common stock 25,000
Non-employee stock based compensation 428,500
Changes in operating assets and liabilities
Receivables (151,106) 213,700
Inventory (328,881)
Prepaids (176,546)
Accounts payable and accrued liabilities 785,973 263,392
-----------------------------------------------
Net cash used in operating activities (3,114,319) (392,853)
-----------------------------------------------
INVESTING ACTIVITIES:
Capital expenditures (1,090,184) (48,109)
Investment in Joint Venture (400,000)
-----------------------------------------------
Net cash (used in) provided by investing activities (1,490,184) (48,109)
-----------------------------------------------
FINANCING ACTIVITIES:
Net proceeds from issuance of stock 6,983,676
-----------------------------------------------
Net cash provided by financing activities 6,983,676 0
-----------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS 2,379,173 (440,962)
CASH AND CASH EQUIVALENTS, BEG OF PERIOD 5,676,360 427,200
-----------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $8,055,533 ($13,762)
===============================================
</TABLE>
The accompanying notes are an integral part of these consolidated stmts of cash
flow
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BIONUTRICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - The accompanying unaudited condensed Consolidated Financial Statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to
form 10-Q. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and
cash flows for all periods presented have been made. The results of
operations for the three and six month periods ended April 30, 1997 are
not necessarily indicative of the operating results that may be
expected for the entire year ending October 31, 1997. These financial
statements should be read in conjunction with the Company's October 31,
1996 financial statements and accompanying notes thereto.
NOTE B - Net Loss per share is computed by dividing net loss by the weighted
average number of common shares assumed outstanding during the
six-month periods. Options and warrants are excluded from the net loss
per share calculation as they are anti-dilutive.
NOTE C - The company raised $6,983,676 in capital through issuance of common
stock during the six months ended April 30, 1997. This capital stock
was issued at $5.00 to $7.00 per share.
NOTE D - The company invested $400,000 in NuRx, a joint venture with InCon
Technologies during the quarter ended January 31, 1997. On July 31,
1996, the Company entered into an agreement with InCon Technologies,
L.L.C. to form a limited liability company ("joint venture") to
undertake the further research and development of certain
non-proprietary dietary supplements and other non-proprietary
nutritional and health promoting products and to manufacture, market
and sell existing, as well as newly developed supplements and products.
The two companies will share equally in the capital contribution,
profits and losses derived, and management of the joint venture. No
revenues were earned or costs incurred prior to April 30, 1997. The
investment is accounted for under the equity method. The Company
believes that the investment will be recovered through the sale of
products which the joint venture will produce.
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BIONUTRICS, INC.
MANAGEMENTS DISCUSSION AND ANALYSIS
Three months ended April 30, 1997 compared with three months ended April 30,
1996.
RESULTS OF OPERATIONS
Results of operations for the second quarter of 1997 as compared to 1996 reflect
the activities of Bionutrics, Inc. in transition from a research and development
mode to production and sales.
The company recorded its first sales during the quarter with the product launch
of evolvE(TM). Net Revenues for the quarter ended April 30, 1997 were, $145,294
versus $0 for the same quarter in 1996. These sales represent the first phase of
product introduction and national rollout.
Cost of Goods Sold for the quarter ended April 30, 1997 was $661,672 versus $0
for the same quarter in 1996. Cost of Goods Sold for the second quarter ended
April 30, 1997 resulted in negative gross margins as the company has not
achieved operating level efficiency due to low volume activity with initial
product introduction.
Selling General and Administrative expenses for the quarter ended April 30, 1997
of $2,038,797 were $1,762,500 higher than that recognized for the same quarter
1996 of $276,297. This increase in expenses directly reflects preparation for
product launch and infrastructure development during 1997. Significant increases
are noted in salaries, advertising, legal, consulting fees and stock option
expense.
Other Income (expense) for the quarter ended April 30, 1997 of $71,173 is
$75,712 higher than the same quarter for the prior year. The increased income is
attributable to increased interest earnings from higher balances of cash.
Net loss increased to $(2,484,002), or $(0.16) per share for the quarter ended
April 30, 1997 from $ (280,836), or $ (0.03) per share for the quarter ended
April 30, 1996 due primarily to the increased levels of expenses as outlined
above offset somewhat by the introduction of sales.
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Six months ended April 30, 1997 compared with six months ended April 30, 1996.
RESULTS OF OPERATIONS
Trends and comments as noted for the second quarter hold constant for the six
month year to date comparisons as well. Results of operations for the first six
months of 1997 as compared to 1996 reflect the activities of Bionutrics, Inc. in
transition from a research and development mode to production and sales.
The company recorded its first sales during the 2nd quarter with the product
launch of evolvE(TM). Net Revenues for the six months ended April 30, 1997 were,
$145,294 versus $0 for the same six months in 1996. These sales represent the
first phase of product introduction and national rollout.
Cost of Goods Sold for the six months ended April 30, 1997 was $661,672 versus
$0 for the same quarter in 1996. Cost of Goods Sold for the second quarter ended
April 30, 1997 resulted in negative gross margins as the company has not
achieved operating level efficiency due to low volume activity with initial
product introduction.
Selling General and Administrative expenses for the six months ended April 30,
1997 of $3,346,034 were $2,485,903 higher than that recognized for the same six
months in 1996 of $860,131. This increase in expenses directly reflects
preparation for product launch and infrastructure development during 1997.
Significant increases are noted in salaries, advertising, legal, consulting fees
and stock option expense.
Other Income (expense) for the six months ended April 30, 1997 of $126,928 is
$146,573 higher than the same quarter for the prior year. The increased income
is attributable to increased interest earnings from higher balances of cash.
Net loss increased to $(3,735,484), or $(0.24) per share for the six months
ended April 30, 1997 from $ (879,776), or $ (0.08) per share for the quarter
ended April 30, 1996 due primarily to the increased levels of expenses as
outlined above offset somewhat by the introduction of sales.
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LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities during the six months ended April 30, 1997
was $3,114,319 as compared to $392,853 during the same period in 1996. The
increase in cash used is primarily due to increased expenses incurred in
preparation for the launch of the company's product in the second quarter along
with investment in inventory and incurrance of accounts receivable from sales
made.
Net cash used in investing activities during the six months ended April 30, 1997
was $1,490,184 as compared to $48,109 during the same period in 1996. This
increase is attributable to a $400,000 investment in NuRx as set forth in Note D
and capital expenditures primarily for manufacturing operations.
The company received net proceeds from issuance of its common stock in the six
months ended April 30, 1997 of $6,983,676 versus $0 from the same period in
1996.
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BIONUTRICS, INC.
PART II - OTHER INFORMATION
Item 2(c). Changes in Securities:
Pursuant to a private placement under
section 4(2) of the Securities Act of 1933,
in March, the Registrant issued 8,000 shares
to an existing shareholder who gifted the
shares to related parties.
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits - none
(b). Reports on Form 8-K - none
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BIONUTRICS, INC.
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.
Bionutrics, Inc.
(Registrant)
Dated: May 28, 1997 By: /s/George E. Duck, Jr.
----------------------
Its: Vice President and
Principal Financial Officer
