<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 September 30, 1998.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-5576
BIOSPHERICS(R) INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 52-0849320
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12051 Indian Creek Court, Beltsville, Maryland 20705
- --------------------------------------------------------------------------------
(Address of principal executive offices)
301-419-3900
- --------------------------------------------------------------------------------
(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 Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practicable date.
Class Outstanding as of October 30, 1998
- -------------------------------------- --------------------------------------
Common Stock, $0.005 par value 8,788,584 shares
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
- --------------------------------------------------------------------------------
1
<PAGE>
Biospherics Incorporated
----------
Form 10-QSB
For the Quarter Ended September 30, 1998
Index
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
--------
<S> <C>
Item 1. Financial Statements (Unaudited)
Statements of Operations for the three-month and
nine-month periods ended September 30, 1998 and 1997............................................... 3
Balance Sheets as of September 30, 1998 and December 31, 1997...................................... 4
Statements of Cash Flows for the nine-month periods
ended September 30, 1998 and 1997.................................................................. 5
Notes to Financial Statements...................................................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................................ 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K................................................................... 10
Signatures ................................................................................................... 11
</TABLE>
2
<PAGE>
Biospherics Incorporated
-----------------
Part I. Financial Information
Item 1. Financial Statements
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Contract revenue ...................................... $4,718,123 $3,246,752 $13,748,156 $10,398,949
Licensing fee revenue ................................. - - - 750,000
---------- ---------- ----------- -----------
Total revenue ......................................... 4,718,123 3,246,752 13,748,156 11,148,949
---------- ---------- ----------- -----------
Operating expense
Direct contract and operating costs ................... 3,782,815 2,466,887 9,941,931 7,495,235
Selling, general and administrative expense ........... 939,155 793,621 2,708,490 2,444,116
Research and development expense ...................... 129,473 113,121 318,679 336,417
Depreciation and amortization expense ................. 384,153 127,893 898,826 428,982
---------- ---------- ----------- -----------
Total operating expense ............................... 5,235,596 3,501,522 13,867,926 10,704,750
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Income from operations ........................................ (517,473) (254,770) (119,770) 444,199
---------- ---------- ----------- -----------
Other (expense) income
Interest, net ......................................... (48,513) 32,721 (81,401) 58,210
Other, net ............................................ - - - 200
---------- ---------- ----------- -----------
(Loss) income before taxes .................................... (565,986) (222,049) (201,171) 502,609
Income tax (benefit) expense .................................. (211,962) (77,101) (74,291) 176,529
---------- ---------- ----------- -----------
Net (loss) income ............................................. $(354,024) $(144,948) $(126,880) $326,080
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net (loss) income per share, basic ............................ $(0.04) $(0.02) $(0.01) $0.04
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net (loss) income per share, diluted .......................... $(0.04) $(0.02) $(0.01) $0.03
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Weighted average shares outstanding, basic .................... 8,788,584 8,008,019 8,788,584 7,980,542
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Weighted average shares outstanding, diluted .................. 8,788,584 8,008,019 8,788,584 9,886,030
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Biospherics Incorporated
-----------------
Balance Sheets
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ............................................. $3,069,928 $5,228,773
Trade accounts receivable, net of allowance for doubtful
accounts of $79,000 and $85,000 .................................. 2,415,289 1,436,347
Other receivables ..................................................... 565,204 110,313
Deferred income taxes ................................................. 113,732 107,996
Prepaid expenses and other assets ..................................... 717,759 426,529
Prepaid income taxes .................................................. 100,000 -
------------ ------------
Total current assets .......................................... 6,981,912 7,309,958
Property and equipment, net of accumulated
depreciation of $2,513,934 and $1,668,189 .......................... 6,266,385 3,417,173
Deferred income taxes ................................................. 244,410 367,530
Patents, net of accumulated amortization of $82,230 and $72,435 ....... 127,211 137,006
Restricted cash, security deposit - 27,408
------------ ------------
Total assets ................................................ $13,619,918 $11,259,075
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank line of credit ................................................... $1,776,184 $10,000
Accounts payable and accrued expenses ................................. 1,494,649 1,486,035
Accrued salaries and benefits ......................................... 683,074 579,668
Notes payable ......................................................... 486,778 353,442
Capital lease obligations ............................................. 382,225 131,743
Income taxes payable .................................................. 92,159 215,226
Deferred rent ......................................................... 93,077 117,259
Deferred revenue ...................................................... 153,909 175,275
------------ ------------
Total current liabilities ..................................... 5,162,055 3,068,648
Notes payable ................................................................. 731,183 628,878
Capital lease obligations ..................................................... 740,871 403,891
Deferred compensation ......................................................... 19,391 18,869
Deferred revenue .............................................................. 1,000,000 1,000,000
------------ ------------
Total liabilities ............................................. 7,653,500 5,120,286
------------ ------------
Commitments and contingencies
Redeemable common stock ....................................................... 325,710 325,710
------------ ------------
Stockholders' equity
Preferred stock, $0.01 par value, 2,000,000 shares authorized;
none issued and outstanding .................................... - -
Common stock, $.005 par value, 18,000,000 shares authorized; 8,829,190
issued, 8,788,584 shares outstanding, of which
3,213,506 shares are classified as redeemable common stock ..... 28,078 28,078
Paid-in capital in excess of par value ................................ 4,357,713 4,403,204
Treasury stock, 40,606 shares at cost ................................. (267,369) (267,369)
Retained earnings ..................................................... 1,522,286 1,649,166
------------ ------------
Total stockholders' equity .................................... 5,640,708 5,813,079
------------ ------------
Total liabilities and stockholders' equity ....................$13,619,918 $11,259,075
------------ ------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Biospherics Incorporated
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Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities
Net (loss) income ......................................................... $(126,880) $326,080
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ..................................... 898,826 428,982
Loss on sales or write down of assets ............................. 56,464 126,224
Provision for uncollectible accounts receivable ................... (6,000) 27,000
Changes in assets and liabilities:
Trade accounts receivable ..................................... (972,942) (37,221)
Other receivables ............................................. (454,891) 17,578
Prepaid expenses and other assets ............................. (291,230) (45,612)
Prepaid income taxes .......................................... (100,000) -
Restricted cash, security deposit ............................. 27,408 -
Deferred income taxes ......................................... 117,384 (939)
Accounts payable and accrued expenses ......................... (62,722) 243,878
Accrued salaries and benefits ................................. 103,406 34,497
Income taxes payable .......................................... (123,067) 119,022
Deferred rent ................................................. (24,182) 3,967
Deferred compensation ......................................... 522 3,051
Deferred revenue .............................................. (21,366) 1,148,101
---------- ----------
Net cash (used in) provided by operating activities ....................... (979,270) 2,394,608
---------- ----------
Cash flow from investing activities
Purchases of property and equipment ............................... (3,056,060) (726,602)
Additions to patent costs ......................................... - (1,445)
---------- ----------
Net cash used in investing activities ..................................... (3,056,060) (728,047)
---------- ----------
Cash flow from financing activities
Net change on bank line of credit ................................. 1,766,184 35,000
Net change in book overdraft ...................................... 115,699 (226,883)
Proceeds from notes payable ....................................... 580,812 112,724
Payments on notes payable ......................................... (345,171) (80,072)
Payments on capital lease obligations ............................. (195,548) -
Proceeds from issuance of common stock ............................ - 522,177
Purchase of treasury stock ........................................ - (159,250)
Cost of issuance of common stock .................................. (45,491) -
---------- ----------
Net cash provided by financing activities ................................. 1,876,485 203,696
---------- ----------
Net (decrease) increase in cash and cash equivalents ...................... (2,158,845) 1,870,257
Cash and cash equivalents, beginning of period ............................ 5,228,773 796,113
---------- ----------
Cash and cash equivalents, end of period .................................. $3,069,928 $2,666,370
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
Biospherics Incorporated
-----------------
Notes to Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying interim financial statements of Biospherics
Incorporated (the "Company") do not include all of the information and
disclosures generally required for annual financial statements and are
unaudited. In the opinion of management, the accompanying unaudited financial
statements contain all material adjustments (consisting of normal recurring
accruals) necessary to present fairly the Company's financial position as of
September 30, 1998, and the results of its operations for the three-month and
nine-month periods ended September 30, 1998 and 1997 and its cash flows for the
nine-month periods ended September 30, 1998 and 1997. This report should be read
in conjunction with the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1997.
2. Net Income Per Share
Basic earnings per common share have been computed by dividing net
income by the weighted-average number of common shares outstanding during the
year. Diluted earnings per common share have been computed by dividing net
income by the weighted-average number of common shares outstanding plus an
assumed increase in common shares outstanding for dilutive securities. Common
stock equivalents are omitted from the calculation in periods when the
Company reported a net loss because their inclusion would have an
anti-dilutive effect. Dilutive securities consist of options and warrants to
acquire common stock for a specified price and their dilutive effect is
measured using the treasury method.
The following table reconciles the weighted average number of common
shares outstanding during each period for basic earnings per share with the
comparable amount for diluted earnings per share.
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------- --------------------------------
1998 1997 1998 1997
---------------- ------------ ------------- ----- ------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding for basic
earnings per share ........................ 8,788,584 8,008,019 8,788,584 7,980,542
Weighted average dilutive common stock
equivalents ............................... -- -- -- 1,905,488
---------------- ------------ ------------- ------------
Weighted average shares and common stock
equivalents outstanding for dilutive
earnings per share ........................ 8,788,584 8,008,019 8,788,584 9,886,030
---------------- ------------ ------------- ------------
</TABLE>
3. Deferred Revenue
Deferred revenue includes a $1,000,000 non-refundable advance against
future royalties from the D-tagatose licensing agreement with MD Foods
Ingredients amba of Denmark ("MD Foods"). The advance will be recoverable at 50%
of such annual royalties. As commercialization of D-tagatose is not anticipated
prior to the year 2000, the deferred revenue has accordingly been classified as
noncurrent.
4. Reclassification
Certain costs of sales, previously reported as direct contract and
operating costs, have been reclassified to selling, general and administrative
expense in order to conform with the current year presentation. The effect of
this reclassification was an increase in selling, general and administrative
expense of $118,946 and $457,339 and a corresponding decrease in direct contract
and operating costs for the three-month and nine-month periods ended September
30, 1997.
6
<PAGE>
Biospherics Incorporated
-----------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Certain statements in this Quarterly Report on Form 10-QSB may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are
identified by the use of forward-looking words or phrases such as "believes,"
"expects," is or are "expected," "anticipates," "anticipated," "should" and
words of similar impact. These forward-looking statements are based on the
Company's current expectations. Because forward looking statements involve risk
and uncertainties, the Company's actual results could differ materially.
Results of Operations for the Three Months and Nine Months Ended September 30,
1998 and 1997
The Company reported a net loss of $354,024 ($0.04 per share) and
$126,880 ($0.01 per share) on sales of $4.7 million and $13.7 million,
respectively, for the three months and nine months ended September 30, 1998,
compared with net loss of $144,948 ($0.02 per share) and net income of
$326,080 ($0.03 per share) on sales of $3.2 million and $11.1 million,
respectively, in the same periods of 1997.
The Company's three operating units are designated CQHealth (which
includes the Company's traditional healthcare information call center operations
and its new Demand Management information services); Information Services (which
includes the Company's reservation/tourism and non-health-related information
services, including services for government entities); and BioTech (which
consists of the Company's attempts to commercialize various products developed
by the Company). The results for each of CQHealth, Information Services, and
BioTech for the three months and nine months periods ended September 30, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
CQHealth 1998 1997 1998 1997
- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue ........................... $1,122,379 $ 892,841 $ 3,483,431 $3,045,403
Operating expense ................. 1,122,291 951,061 3,428,360 3,183,605
---------- --------- ---------- ----------
Operating profit .............. $ 88 $ (58,220) $ 55,071 $ (138,202)
---------- --------- ---------- ----------
---------- --------- ---------- ----------
Information Services
Revenue ........................... $3,497,951 $2,308,130 $10,052,013 $7,216,153
Operating expense ................. 3,983,276 2,434,676 10,111,793 7,167,648
---------- --------- ---------- ----------
Operating profit .............. $ (485,325) $ (126,546) $ (59,780) $ 48,505
---------- --------- ---------- ----------
---------- --------- ---------- ----------
BioTech
Revenue ........................... $ 97,793 $ 45,781 $ 212,712 $ 887,393
Operating expense ................. 130,029 115,785 327,773 353,497
---------- --------- ---------- ----------
Operating loss ................ $ (32,236) $ (70,004) $ (115,061) $ 533,896
---------- --------- ---------- ----------
---------- --------- ---------- ----------
</TABLE>
CQHealth revenue increased $229,538 (26 percent) and $438,028 (14
percent) during the three months and nine months ended September 30, 1998,
respectively, over those of the corresponding prior year periods. Operating
expenses increased $171,230 (18 percent) and $244,755 (8 percent) during the
three months and nine months ended September 30, 1998, respectively, over
those of the corresponding prior year periods. The increase is related to new
contracts in both the new Nurse Triage/Demand Management services and the
traditional healthcare information call center operations.
The increase in Information Services revenue of $1,189,821 (52
percent) and $2,835,860 (39 percent) for the three months and nine months
ended September 30, 1998, over the corresponding prior year periods was the
result of the addition of the National Park Service contract with the
Department of the Interior, which commenced on March 15, 1998. Increased
operating expenses are related to costs incurred in the initial start-up of
the National Park Service contract. On October 14, the State of Maryland
awarded the Company a $2.5 million contract to provide the public with a call
center to handle the new single 800 number for all State government
information services. The two-year contract includes three additional option
years. The State of Maryland contract will help offset the September 30, 1998
expiration of the Company's contract with the U.S. Forest Service.
7
<PAGE>
Biospherics Incorporated
-----------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Bio Tech revenue decreased $674,681 (76 percent) and increased
$52,012 (114 percent) for the three months and nine months ended September
30, 1998, over the corresponding prior year periods. Prior year revenue
included a $750,000 license fee payment from MD Foods Ingredients amba of
Denmark ("MD FOODS") under the terms of the September 1996 Licensing
Agreement. Operating expenses were consistent between comparable periods. The
Company continues to provide technical support to MD Foods to effect the
commercialization of D-tagatose. MD Foods' plan for the commercialization of
D-tagatose remains on schedule. MD Foods has confirmed that the process of
self-affirming tagatose as GRAS (Generally Recognized As Safe) for the United
States market is going forward as planned, and that a conclusion is expected
before the end of the year. Pending a favorable determination from the GRAS
expert committee, MD Foods has informed the Company that the product could be
targeted for initial marketing in the year 2000. The Japanese patent office
has awarded the Company a patent on the use of its low calorie, full bulk
sweetener, tagatose, in foods, beverages, and drugs. Under the terms of its
exclusive, worldwide licensing agreement with MD Foods, Biospherics will
convey the food and beverage rights to the Danish firm.
Direct contract and operating costs for the three months and nine
months ended September 30, 1998, increased $1.3 million (53 percent) and $2.4
million (33 percent) from those for the corresponding periods in 1997. The
increase is principally related to costs incurred in the initial start-up of the
National Park Service contract.
As reflected in the accompanying statement of operations, selling,
general and administrative expense for the three months and nine months ended
September 30, 1998, increased $145,534 (18 percent) and $264,374 (11 percent)
from those of the corresponding periods in 1997. Increased sales and marketing
efforts coupled with start-up costs associated with establishing and expanding
CQHealth were the primary factors contributing to those higher costs.
Depreciation expense increased $256,260 and $469,844 for the three
months and nine months ended September 30, 1998 in comparison to the same
periods of 1997. The increase is directly related to the Company's investment in
its information and telecommunication systems. These systems are core
infrastructure components that are industry state-of-the-art, resulting in a
technological competitive advantage. The Company invested $700,000 in the
development of the Nurse Triage/Demand Management software, and $1.3 million in
the development of the state-of-the-art computer telephony integration (CTI)
systems. The Company has also invested $760,000 in the development of another
state-of-the-art system, the reservation system, which uses the Company's CTI
technology. The reservation system is currently being used on the National Park
Service contract and is being actively marketed as a stand-alone and turn-key
product solution suite.
Liquidity and Capital Resources
The Company renewed its Loan Agreement (the "Agreement") with
NationsBank N.A. (the "Bank") on May 18, 1998, which provides for borrowing up
to $2 million, subject to advance rates as defined in the Agreement. Outstanding
borrowings under the Agreement aggregated $1,776,184 at September 30, 1998, and
are collateralized by the Company's accounts receivable. The interest rate is
the Bank's prime rate plus .75% per annum. The Loan Agreement contains covenants
that require the Company to meet certain tangible net worth and cash flow
coverage ratios.
The Company also secured an additional commitment from the Bank to
assist in financing equipment purchases related to potential new contracts. This
arrangement consists of a series of loans for the acquisition of computer
systems and related telecommunication equipment not to exceed a maximum
aggregate of $1 million. Additional terms include repayment of each loan in
thirty-six (36) equal monthly installments at a fixed interest rate equal to the
Treasury Index plus 275 basis points. Outstanding borrowings under this
commitment aggregated $826,565 at September 30, 1998, and is collateralized by
the equipment purchased.
In October 1997, the Company signed a $500,000 Promissory Note (the
"Note") with ORIX USA Corporation ("ORIX") to finance the acquisition of
telecommunication software to be used in the Company's call center operations.
Repayment of the Note will consist of thirty-five (35) equal monthly principal
and interest payments of $14,012 with a final payment of $114,012 due on October
15, 2000. Outstanding borrowings under this Note aggregated $391,396 at
September 30, 1998. The Note is collateralized by certain telemanagement
software licensed to the Company by Genesys Telecommunications Laboratories,
Inc. and has an interest rate of 11% per annum.
8
<PAGE>
Biospherics Incorporated
-----------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Cash flow for the nine-month period ended September 30, 1998,
reflects a net cash outflow of $2.2 million. A substantial portion of this
outflow is attributable to expenditures made in connection with entry into
the Demand Management business and in upgrading the Company's information and
telecommunications systems. Cash flow from operating activities in 1998
decreased $3,373,878 due in large part to the one-time payments of $750,000
and $1,000,000 received from MD Foods in the first half of 1997 under the
Licensing Agreement for D-tagatose and the increases in trade accounts
receivable related to new contracts. Investment in property and equipment
aggregated $3,056,060 for the nine months ended September 30, 1998, which was
financed in part through the private placement of common stock in 1997 and
borrowings under the Bank's operating and equipment lines of credit.
Working capital as of September 30, 1998, was $1.8 million, which
represents a $2.4 million decrease from working capital of $4.2 million at
December 31, 1997. This decrease was the result of continued investment in
telecommunication and computer systems, the development of computer software
products to improve the Company's long-term competitive position, and the
Company's entry into the Demand Management business.
The Company will have continuing capital needs over the next several
years to fund Information Services and CQHealth. In order to effectively compete
for new contracts and maintain and expand existing programs, the Company must
continuously upgrade its information and telecommunication systems. The Company
will finance these expenditures by utilizing cash proceeds from license fees
received from MD Foods in 1996 and 1997 and from the 1997 private equity
offering. It is also anticipated that royalties on sales by MD Foods will begin
in 2000. The Company will continue to seek additional intermediate and long-term
financing alternatives to underwrite the capital expenditures needed to keep
pace with its long-range business plan. There can be no assurances that the
Company will obtain any or all such necessary funding. No dividends were paid in
1997 and none are anticipated in 1998.
Year 2000
Biospherics Incorporated utilizes software, information systems and
infrastructure components that may be affected by Year 2000 issues. During
fiscal year 1998, the Company began to implement plans to ensure that those
systems continue to meet its internal and external requirements. During fiscal
year 1998, the Company's largest division, Information Services Division,
completed modifications and testing of its primary information systems. These
systems modifications included a complete modernization of the Company's Federal
Information Center system, testing and modification to the National Park
Reservation Service system, testing and modification to the Maryland Tourism
system, and testing and modification to internal administrative information
systems, such as email systems and network operating systems.
The Company is in the process of developing questionnaires and
obtaining determination documentation from vendors for Year 2000 impact. The
Company will monitor its vendors, suppliers, and clients to evaluate progress
and impact. The Company has started to evaluate its non-information systems
components, such as facility systems, telephone services, and the like. To
date, evaluations have yielded marked progress in all third party areas with
no evidence of critical issue or impact. Based on the progress the Company
has made in addressing its Year 2000 issues and the Company's planned
development and timeline to complete its compliance program, the Company does
not foresee significant risks associated with its Year 2000 compliance at
this time. As the Company's plan is to address its significant Year 2000
issues prior to being affected by them, it has developed a contingency plan
consisting only of a budgetary set-aside. However, if the Company identifies
significant risks related to its Year 2000 compliance or its progress
deviates from the anticipated timeline, the Company will develop more
in-depth contingency plans as deemed necessary at that time.
9
<PAGE>
Biospherics Incorporated
-----------------
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant during the
three months ended September 30, 1998.
10
<PAGE>
Biospherics Incorporated
-----------------
Signatures
Pursuant to the requirements of the Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Biospherics Incorporated
(Registrant)
Date: November 13, 1998 By: /s/ Gilbert V. Levin
------------------------ --------------------
Gilbert V. Levin
Chairman of the Board,
President, and Treasurer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997 JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1998 SEP-30-1997 SEP-30-1998 SEP-30-1997
<CASH> 3,069,928 0 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 3,059,493 0 0 0
<ALLOWANCES> (79,000) 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 6,981,912 0 0 0
<PP&E> 8,780,319 0 0 0
<DEPRECIATION> (2,513,934) 0 0 0
<TOTAL-ASSETS> 13,619,918 0 0 0
<CURRENT-LIABILITIES> 5,162,055 0 0 0
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 28,078 0 0 0
<OTHER-SE> 0 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 13,619,918 0 0 0
<SALES> 4,718,123 3,246,752 13,748,156 10,398,949
<TOTAL-REVENUES> 4,718,123 3,246,752 13,748,156 11,148,949
<CGS> 3,782,815 2,466,887 9,941,931 7,495,235
<TOTAL-COSTS> 5,235,596 3,501,522 13,867,926 10,704,750
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 96,939 20,513 247,384 75,418
<INCOME-PRETAX> (565,986) (222,049) (201,171) 502,609
<INCOME-TAX> (211,962) (77,101) (74,291) 176,529
<INCOME-CONTINUING> (354,024) (144,948) (126,880) 326,080
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (354,024) (144,948) (126,880) 326,080
<EPS-PRIMARY> (0.04) (0.02) (0.01) 0.04
<EPS-DILUTED> (0.04) (0.02) (0.01) 0.03
</TABLE>
