<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 June 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 incorporation (I.R.S. Employer
or organization) Identification No.)
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 June 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 June 30, 1998
Index
<TABLE>
<CAPTION>
Part I. Financial Information Page No.
Item 1. Financial Statements (Unaudited)
<S> <C>
Statements of Operations for the three-month and
six-month periods ended June 30, 1998 and 1997..................................................... 3
Balance Sheets as of June 30, 1998 and December 31, 1997.......................................... 4
Statements of Cash Flows for the six-month
periods ended June 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 4. Submission of Matters to a Vote of Security Holders................................................ 10
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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenue
Contract revenue $ 5,502,110 $ 3,632,423 $ 9,030,033 $ 7,152,197
Licensing fee revenue -- -- -- 750,000
------------ ------------ ------------ ------------
Total revenue 5,502,110 3,632,423 9,030,033 7,902,197
------------ ------------ ------------ ------------
Operating expense
Direct contract and operating costs 3,700,142 2,495,505 6,159,116 5,028,348
Selling, general and administrative expense 877,793 827,005 1,769,335 1,650,495
Research and development expense 125,022 129,404 189,206 223,296
Depreciation and amortization expense 312,795 116,777 514,673 301,089
------------ ------------ ------------ ------------
Total operating expense 5,015,752 3,568,691 8,632,330 7,203,228
------------ ------------ ------------ ------------
Income from operations 486,358 63,732 397,703 698,969
------------ ------------ ------------ ------------
Other (expense) income
Interest, net (43,542) 23,271 (32,888) 25,489
Other, net -- -- -- 200
------------ ------------ ------------ ------------
Income before taxes
442,816 87,003 364,815 724,658
Income tax expense
166,661 30,451 137,671 253,630
------------ ------------ ------------ ------------
Net income $ 276,155 $ 56,552 $ 227,144 $ 471,028
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per share, basic $ 0.03 $ 0.01 $ 0.03 $ 0.06
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per share, diluted $ 0.02 $ 0.01 $ 0.02 $ 0.05
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares outstanding, basic 8,788,584 7,973,352 8,788,584 7,973,598
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares outstanding, diluted 11,151,005 9,840,660 10,840,394 9,840,906
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompany notes to financial statements.
3
<PAGE>
Biospherics Incorporated
------------
Balance Sheets
<TABLE>
<CAPTION>
ASSETS June 30, 1998 December 31,
------------- ------------
(Unaudited) 1997
<S> <C> <C>
Current assets
Cash and cash equivalents $ 3,778,212 $ 5,228,773
Trade accounts receivable, net of allowance for doubtful
accounts of $70,000 and $85,000
3,093,946 1,436,347
Other receivables
278,731 110,313
Deferred income taxes
98,620 107,996
Prepaid expenses and other assets
672,642 426,529
Prepaid income taxes
43,604 --
------------ ------------
Total current assets
7,965,755 7,309,958
Property and equipment, net of accumulated
depreciation of $2,133,046 and $1,668,189 5,767,732 3,417,173
Deferred income taxes 225,405 367,530
Patents, net of accumulated amortization of $78,966 and $72,435 130,475 137,006
Restricted cash - security deposit -- 27,408
------------ ------------
Total assets $ 14,089,367 $ 11,259,075
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
liabilities
Bank line of credit $ 1,076,184 $ 10,000
Accounts payable and accrued expenses 2,209,207 1,486,035
Accrued salaries and benefits 709,666 579,668
Notes payable 511,036 353,442
Capital lease obligations 278,083 131,743
Income taxes payable -- 215,226
Deferred rent 107,460 117,259
Deferred revenue 309,932 175,275
------------ ------------
Total current liabilities 5,201,568 3,068,648
Notes payable 832,308 628,878
Capital lease obligations 699,883 403,891
Deferred compensation 19,391 18,869
Deferred revenue 1,000,000 1,000,000
------------ ------------
Total liabilities 7,753,150 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 4,373,488 4,403,204
Treasury stock, 40,606 shares at cost (267,369) (267,369)
Retained earnings 1,876,310 1,649,166
------------ ------------
Total stockholders' equity 6,010,507 5,813,079
------------ ------------
Total liabilities and stockholders' equity $ 14,089,367 $ 11,259,075
------------ ------------
------------ ------------
</TABLE>
See accompany notes to financial statements.
4
<PAGE>
Biospherics Incorporated
------------
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
------ -----
<S> <C> <C>
Cash flows from operating activities
Net income $ 227,144 $ 471,028
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 514,674 301,089
Loss on sales or write down of assets 56,464 126,224
Provision for uncollectible accounts receivable (15,000) 18,000
Changes in assets and liabilities:
Trade accounts receivable (1,642,599) (318,526)
Other receivables (168,418) 22,464
Prepaid expenses and other assets (246,113) (57,268)
Prepaid income taxes (43,604) --
Restricted cash, security deposit 27,408 --
Deferred income taxes 151,501 --
Accounts payables and accrued expenses (174,940) 27,228
Accrued salaries and benefits 129,998 43,621
Income taxes payable (215,226) 211,130
Deferred rent (9,799) (34,441)
Deferred compensation 522 2,034
Deferred revenue 134,657 1,148,101
----------- -----------
Net cash provided by operating activities (1,273,331) 1,960,684
----------- -----------
Cash flow from investing activities
Purchases of property and equipment (2,411,895) (196,648)
Additions to patent costs -- (1,445)
----------- -----------
Net cash used in investing activities (2,411,895) (198,093)
----------- -----------
Cash flow from financing activities
Net change on bank line of credit 1,066,184 55,000
Net change in book overdraft 942,475 (24,630)
Proceeds from notes payable 580,812 --
Payments on notes payable (219,788) --
Payments on capital lease obligations (105,302) (53,029)
Proceeds from issuance of common stock -- 437,863
Cost of issuance of common stock (29,716) (159,249)
----------- -----------
Net cash provided by financing activities 2,234,665 255,955
----------- -----------
Net (decrease) increase in cash and cash equivalents (1,450,561) 2,018,546
Cash and cash equivalents, beginning of period 5,228,773 796,113
----------- -----------
Cash and cash equivalents, end of period $ 3,778,212 $ 2,814,659
----------- -----------
----------- -----------
</TABLE>
See accompany 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
June 30, 1998, and the results of its operations for the three-month and
six-month periods ended June 30, 1998 and 1997 and its cash flows for the
six-month periods ended June 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
In 1997, the Company adopted SFAS No. 128, Earnings 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 when 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. Earnings per share for all other periods
presented have been restated to conform to SFAS No. 128.
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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Weighted average shares outstanding for basic
earnings per share 8,788,584 7,973,352 8,788,584 7,973,598
Weighted average dilutive common stock
equivalents 2,362,421 1,867,308 2,051,810 1,867,308
---------- --------- --------- ---------
Weighted average shares and common stock
equivalents outstanding for dilutive
earnings per share 11,151,005 9,840,660 10,840,394 9,840,906
---------- --------- --------- ---------
</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 $192,143 and $338,393 and a corresponding decrease in direct contract
and operating costs for the three-month and six-month periods ended June 30,
1997.
6
<PAGE>
Biospherics Incorporated
------------
Notes to Financial Statements
(Unaudited)
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 Ended June 30, 1998 and 1997
In 1998, the Company formed a new division, CQHealth, to expand the
Company's existing healthcare information call center operations into demand
management information services ("Demand Management"). The Information
Services Division is focusing its efforts on providing call center services
in the areas of reservation/tourism and non-health related information
services, including services for government entities. As a result, the
Company's results of operations have been modified to reflect these
organizational changes. The Company has restated prior period results
consistent with these organizational changes.
The Company reported net income of $276,200 ($0.02 per share, diluted)
on sales of $5.5 million for the second quarter of 1998, compared with net
income of $56,600 ($0.01 per share, diluted) on sales of $3.6 million in the
same period of 1997. Second quarter sales increased $1.9 million (51 percent)
resulting from new contracts in both the CQHealth and the Information
Services Divisions.
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
CQHealth 1998 1997
--------------------- ----------- -----------
<S> <C> <C>
Revenue $ 1,611,569 $ 917,800
Operating expense 1,290,218 901,838
----------- -----------
Operating profit $ 321,351 $ 15,962
----------- -----------
----------- -----------
Information Services
---------------------
Revenue $ 3,822,403 $ 2,662,671
Operating expense 3,602,002 2,528,402
----------- -----------
Operating profit $ 220,401 $ 134,269
----------- -----------
----------- -----------
BioTech
---------------------
Revenue $ 68,138 $ 51,952
Operating expense 123,532 138,451
----------- -----------
Operating loss $ (55,394) $ (86,499)
----------- -----------
----------- -----------
</TABLE>
CQHealth revenue increased $694,000 (76 percent) during the second quarter of
1998 when compared with the same period in 1997 and increased $862,000 over
sales levels realized in the first quarter of 1998. Increased sales efforts
directed toward the new Demand Management services and the healthcare
information call center operations resulted in six new contracts during the
current year. Two of the contracts experienced high call volume in the
initial months due to the nature of the contracts.
Information Services revenue increased $1.2 million (44 percent) during
the second quarter of 1998 as compared to the second quarter of 1997. The
increase is primarily due to the addition of the National Park Service contract,
with the Department of the Interior, which commenced on March 15, 1998. The
increase in revenue of $1.1 million between the second and first quarter of 1998
is related to the addition of the National Park Service contract coupled with
seasonal increases in revenue from other campground reservation services
provided by the Company on behalf of the Department of Agriculture (U.S. Forest
Service). The U.S. Forest Service contract will continue through September 1998.
BioTech revenue for the second quarter of 1998 was consistent with the
same period in 1997. The Company continues to provide technical support to MD
Foods Ingredients amba of Denmark ("MD Foods") to effect
7
<PAGE>
Biospherics Incorporated
------------
the commercialization of D-tagatose. MD Foods' plan for the commercialization
of D-tagatose remains on schedule. Pending a favorable determination from the
Generally Recognized As Safe (GRAS) expert committee, MD Foods has informed
the Company that the product could be targeted for initial marketing in the
year 2000.
Direct contract and operating costs in the second quarter decreased
from 69 percent of sales in 1997 to 67 percent of sales in the current year.
The Company continues to invest in new telecommunication and computer systems
designed to enhance operating efficiencies and expand services to its
customers. Many of these systems and applications have reduced call time and
opened new information channels (access through remote sites and the
internet) whereby call center efficiencies are greatly improved. As a result
of increased investments in new technology, depreciation and amortization
expense has increased sharply in 1998, up $196,000 (168 percent) in the
second quarter and up $213,600 (71 percent) in the first six months of the
current year when compared with the corresponding periods in 1997.
As reflected in the accompanying statement of operations, selling,
general and administrative expense for the second quarter increased $50,800
(6 percent) from $827,000 in 1997 to $877,800 in 1998. Increased sales and
marketing efforts coupled with start-up costs associated with establishing
and expanding CQHealth were the primary factors contributing to these higher
costs. Additionally, as a result of system improvements, previously used
software which has become obsolete has been written off, resulting in a net
loss of $56,000.
Results of Operations for the Six Months Ended June 30, 1998 and 1997
The Company reported net income of $227,100 ($0.02 per share, diluted) on
sales of $9 million for the six-months ended June 30, 1998, compared with net
income of $471,000 ($0.05 per share, diluted) on sales of $7.9 million in the
same six-month period of 1997. Exclusive of the $750,000 licensing payment
received from MD Foods in 1997, income from operations increased $448,700 during
the first half of 1998 compared to the first half of 1997. The increase in
revenue was related to new contracts in both the CQHealth Division and the
Information Services Division.
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------
CQHealth 1998 1997
--------------------- ------------ -----------
<S> <C> <C>
Revenue $ 2,361,052 $ 2,152,562
Operating expense 2,306,069 2,232,544
----------- -----------
Operating profit (loss) $ 54,983 $ (79,982)
----------- -----------
----------- -----------
Information Services
---------------------
Revenue $ 6,554,062 $ 4,908,023
Operating expense 6,128,517 4,732,972
----------- -----------
Operating profit $ 425,545 $ 175,051
----------- -----------
----------- -----------
BioTech
---------------------
Revenue $ 114,919 $ 841,612
Operating expense 197,744 237,712
------------ -----------
Operating (loss) profit $ (82,825) $ 603,900
----------- -----------
----------- -----------
</TABLE>
CQHealth revenue increased 10 percent during the first half of 1998
when compared with the same period in 1997.
Information Services revenue increased $1.6 million (34 percent) in
the first half of 1998 as compared to the same period in 1997. The increase
in revenue is primarily the result of the National Park Service Contract
discussed in more detail above. Operating profit between years increased
$250,500 in the first half of 1998 from that of the first half of 1997.
Efficiencies gained through the upgrading of information and
telecommunication systems contributed to the increase.
BioTech revenue decreased $727,000 in the first half of 1998 from that
of 1997. Results for 1997 included the second of two $750,000 payments from
MD Foods under the terms of the Licensing Agreement. The Company continues to
provide technical support to MD Foods to help commercialize D-tagatose. The
Company also received an additional payment aggregating $1,000,000 in the
first quarter of 1997 under the Licensing Agreement representing a
8
<PAGE>
non-refundable advance against future royalties. This payment is classified
as noncurrent deferred revenue in the balance sheet. Research and development
costs for the first half of 1998 decreased from those of the prior year as a
result of lower levels of development costs and expenditures associated with
D-tagatose. All costs associated with the FDA approval for commercialization
of D-tagatose will be borne by MD Foods.
Direct contract and operating costs decreased from 70 percent of sales
(exclusive of the $750,000 licensing payment received from MD Foods) in the
first half of 1997 to 68 percent of sales in the first half of 1998.
As reflected in the accompanying Statements of Operations, selling,
general and administrative expense increased by $118,800 (7 percent) from
$1,650,500 in 1997 to $1,769,300 in 1998. Increased sales and marketing
efforts coupled with start-up costs associated with establishing and
expanding CQHealth were the primary factors contributing to these higher
costs. Additionally, as a result of system improvements, previously used
software which has become obsolete has been written off, resulting in a net
loss of $56,000.
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 $1,076,184 at June 30,
1998, and is collateralized by the Company's accounts receivable. The
interest rate is the Bank's prime rate plus .75% per annum.
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 borrowing
under this commitment aggregated $921,239 at June 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 $422,105 at June 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.
Cash flow for the six-month period ended June 30, 1998, reflects a net
cash outflow of $1.5 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 $3.2 million 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 three new contracts in the CQHealth division.
Investment in property and equipment aggregated $2.4 million, 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 June 30, 1998, was $2.8 million, which
represents a $1.4 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 its traditional information services business and the new
CQHealth business. 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. 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.
9
<PAGE>
Biospherics Incorporated
------------
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on May 15,
1998, where the following actions were taken:
(1) On May 15, 1998, Gilbert V. Levin, Lionel V. Baldwin, David A. Blake,
Jeffrey W. Church, A. Bruce Cleveland, Rita R. Colwell, George S. Jenkins, M.
Karen Levin, and Anne S. MacLeod were elected as directors to serve until the
next Annual Meeting pursuant to the following vote tabulation:
<TABLE>
<CAPTION>
Shares Shares Shares Shares
Name Votes For Votes Against Votes Abstained Unvoted
- --------------------------- ------------------ ------------------ ------------------ -------------
<S> <C> <C> <C> <C>
Gilbert V. Levin 8,221,605 63,657 0 0
Lionel V. Baldwin 8,211,551 73,711 0 0
David A. Blake 8,223,721 61,541 0 0
Jeffrey W. Church 8,224,601 60,661 0 0
A. Bruce Cleveland 8,225,201 60,061 0 0
Rita R. Colwell 8,223,721 61,541 0 0
George S. Jenkins 8,224,201 61,061 0 0
M. Karen Levin 8,220,605 64,657 0 0
Anne S. MacLeod 8,223,721 61,541 0 0
</TABLE>
(2) The Biospherics Incorporated Stock Option Plan as approved by the Board
of Directors in 1997 was approved with 7,554,957 shares voted in favor,
506,568 shares voted against, 64,932 shares abstaining, and 158,805 shares
unvoted.
(3) The selection of Coopers & Lybrand L.L.P as auditors of the Company for
the year ending December 31, 1998, was ratified, with 8,228,470 shares voted
in favor, 31,236 shares voted against, 25,556 shares abstaining, and no
shares unvoted. On July 1, 1998, Coopers & Lybrand and Price Waterhouse
L.L.P. merged to form Price Waterhouse Coopers.
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 June 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: August 14, 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 6-MOS 6-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> JUN-30-1998 JUN-30-1997 JUN-30-1998 JUN-30-1997
<CASH> 3,778,212 0 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 3,422,677 0 0 0
<ALLOWANCES> (70,000) 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 7,965,755 0 0 0
<PP&E> 7,900,778 0 0 0
<DEPRECIATION> (2,133,046) 0 0 0
<TOTAL-ASSETS> 14,089,367 0 0 0
<CURRENT-LIABILITIES> 7,753,150 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> 14,089,367 0 0 0
<SALES> 5,502,110 3,632,423 9,030,033 7,152,197
<TOTAL-REVENUES> 5,502,110 3,632,423 9,030,033 7,902,197
<CGS> 3,700,142 2,495,505 6,159,116 5,028,348
<TOTAL-COSTS> 5,015,752 3,568,691 8,632,330 7,203,228
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 95,960 29,733 150,445 54,905
<INCOME-PRETAX> 442,816 87,003 364,815 724,658
<INCOME-TAX> 166,661 30,451 137,671 253,630
<INCOME-CONTINUING> 276,155 56,552 227,144 471,028
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 276,155 56,552 227,144 471,028
<EPS-PRIMARY> .03 .01 .03 .06
<EPS-DILUTED> .02 .01 .02 .05
</TABLE>
