FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q SB
[X] Quarterly Report Per Section 13 or 15(d) of the Securities Exchange Act of
1934 for the period ended SEPTEMBER 30, 1996.
OR
[ ] 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 0-9860
BIOSEARCH MEDICAL PRODUCTS, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2090421
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
35 Industrial Parkway, Somerville, New Jersey 08876-1276
- --------------------------------------------- -----------------
(Address of principal executive offices) (Zip Code + 4)
Registrant's telephone number, including area code: (908) 722-5000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuers classes of
Common Stock, as of the close of the period covered by this report.
Class Outstanding at
September 30, 1996
Common Stock,
without par value 2,202,858
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
INDEX TO FORM 10-Q SB
SEPTEMBER 30, 1996
Page No.
--------
Part I - FINANCIAL INFORMATION
Condensed Balance Sheet at September 30, 1996 (unaudited)
and December 31, 1995. 3 - 4
Condensed Statements of Operations (unaudited)
for the three month periods and nine month periods ended
September 30, 1996 and September 30, 1995. 5
Condensed Statements of Cash Flows (unaudited)
for the three month periods and nine month periods ended
September 30, 1996 and September 30, 1995. 6
Notes to (unaudited) Condensed
Financial Statements. 7 - 8
Management's Discussion and Analysis of the Financial
Condition and the Results of Operations. 9 - 10
Part II - OTHER INFORMATION
Signatures. 11
2
<PAGE>
Part I
ITEM I - FINANCIAL STATEMENTS
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
ASSETS
September 30 December 31
1996 1995(1)
Unaudited
Current assets:
Cash and cash equivalents $ 267,603 $ 568,092
Trade receivables 378,215 162,500
Inventories (note 2) 387,713 616,091
Other assets 52,124 17,551
---------- ----------
Total current assets 1,085,655 1,364,234
Property, plant and equipment, (net) 1,429,373 1,370,487
Other assets 49,870 729,153
---------- ----------
Total assets $2,564,898 $3,463,874
========== ==========
(1) - Derived from audited financial statements.
(continued)
3
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30 December 31
1996 1995(1)
Unaudited
Current liabilities:
Current maturities of L/T debt
(note 3) $ 32,648 $ 32,648
Customer deposit -- --
Accounts payable 213,914 163,534
Accrued liabilities 107,303 188,328
------------ ------------
Total current liabilities 353,865 384,510
Long-term debt (note 3) 675,036 699,522
------------ ------------
Total liabilities 1,028,901 1,084,032
------------ ------------
Shareholders' equity:
Common stock, no par value;
5,000,000 shares authorized;
issued 2,202,858 at Sept 30,
1996, and at Dec 31, 1995 11,129,948 11,129,948
Accumulated deficit (9,562,636) (8,718,791)
Treasury stock, at cost; 7,940
shares at Sept 30, 1996 and
at Dec 31, 1995 (31,315) (31,315)
------------
Total shareholders' equity 1,535,997 2,379,842
------------ ------------
$ 2,564,898 $ 3,463,874
============ ============
(1) - Derived from audited financial statements.
See accompanying notes to
unaudited condensed financial statements.
4
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues, net $ 642,721 $ 674,943 $ 2,010,661 $ 2,860,434
Cost of goods sold 600,980 672,626 1,887,209 2,549,808
----------- ----------- ----------- -----------
Gross profit 41,741 2,317 123,452 310,626
Selling, general and
administrative costs 296,851 340,190 915,975 1,027,576
----------- ----------- ----------- -----------
Operating loss (255,110) (337,873) (792,523) (716,950)
Other income/(expense):
Interest expense (20,589) (21,964) (62,933) (66,816)
Other, net 3,482 16,784 11,610 68,155
----------- ----------- ----------- -----------
(16,982) (5,180) (51,323) 1,339
----------- ----------- ----------- -----------
Pre-tax net income/(loss) (272,092) (343,053) (843,846) (715,611)
Federal income taxes
Net income $ (272,092) $ (343,053) $ (843,846) $ (715,611)
=========== =========== =========== ===========
Net income per common share $ (.12) $ (.16) $ (.38) $ (.32)
=========== =========== =========== ===========
Weighted average number
of common shares 2,202,858 2,202,753 2,202,858 2,202,753
=========== =========== =========== ===========
</TABLE>
See accompanying notes to
unaudited condensed financial statements
5
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
Increase/(Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $(271,591) $(184,178) $(843,345) $ (715,611)
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 20,550 29,412 61,650 88,236
--------- --------- --------- -----------
Sub total 20,550 29,412 461,650 88,236
--------- --------- --------- -----------
Changes in assets and liabilities:
(Increase)/decrease in accts receivable (157,508) 220,587 (215,716) 301,275
Decrease/(increase) in inventory 56,366 61,874 228,378 164,671
Decr/(incr) in other current assets 2,604 1,271 (34,574) (4,418)
Increase in other assets 413,266 540,818 679,283 607,715
(Decrease)/increase in accounts payable (5,849) (51,256) 50,809 (55,279)
Decrease in other liabilities
and customer deposits 44,242 (8,338) (81,452) (56,090)
--------- --------- --------- -----------
Sub total 353,141 794,956 626,728 957,874
--------- --------- --------- -----------
Total adjustments 373,691 794,368 688,378 1,046,110
--------- --------- --------- -----------
Net cash used in operating activities 102,100 610,190 (154,967) 330,499
--------- --------- --------- -----------
Cash flows from investing activities:
Capital expenditures (16,735) (6,850) (120,536) (24,906)
Net cash provided by investing activities (16,735) (6,950) (120,536) (24,906)
--------- --------- --------- -----------
Cash flows from financing activities:
Principal payments on long-term borrowings (8,481) (7,524) (24,486) (23,374)
--------- --------- --------- -----------
Net cash used in financing activities (8,481) (7,524) (24,486) (23,374)
--------- --------- --------- -----------
Net increase/(decrease) in cash & cash equivalents 76,884 595,716 (299,989) 282,219
Cash & cash equivalents at beginning of period 191,219 356,803 568,092 466,832
--------- --------- --------- -----------
Cash & cash equivalents at end of period $ 268,103 $ 952,519 $ 268,103 $ 749,051
========= ========= ========= ===========
</TABLE>
See accompanying notes to
unaudited condensed financial statements
6
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Unaudited
1. Basis of Presentation
The accounting policies followed by the Company are set forth in Note 1 of
Notes to Condensed Financial Statements in the 1995 Annual Report on Form
10-KSB.
In the opinion of the management of the Company, the accompanying condensed
financial statements contain only normal and recurring adjustments necessary for
the fair presentation of the Company's financial position as of September 30,
1996 and the results of operations for the three month periods and nine month
periods ended September 30, 1996 and September 30, 1995 and the statement of
cash flows for the three month periods and nine month periods ended September
30, 1996 and September 30, 1995.
The results of operations for the three month periods and nine month
periods ended September 30, 1996 are not necessarily indicative of the results
to be expected for a succeeding quarter or for the full year.
2. Inventories
September 30, December 31,
1996 1995
Unaudited
Finished Goods $ 24,425 $ 64,102
Work In Process 139,577 243,751
Raw Materials 223,711 308,238
-------- --------
$387,713 $616,091
======== ========
7
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Unaudited
3. Long-Term Debt
September 30, December 31,
1996 1995
Unaudited
Note payable - bank (a) 707,648 732,170
Less current maturities 32,648 32,648
-------- --------
Long-term debt $675,036 $699,522
======== ========
(a) This note is secured by a first mortgage on the Company's Somerville,
New Jersey facility and miscellaneous equipment, and represents Economic
Development Authority ("EDA") funds. The note bears an interest rate of 75% of
prime with a minimum interest rate of 11.25% and a maximum interest rate of
22.5%. The principal is payable in varying monthly installments of principal and
interest, with the final payment April 1, 2007.
4. Commitments and Contingencies
There are no claims or actions against the Company which will materially
effect its financial statements.
8
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
Item 2. Management Discussion and Analysis of the Financial Condition
and Results of Operations
Results of Operations
Revenues were $642,721 for the three months ended September 30, 1996, down
$32,222 or 4.8% compared to revenues of $674,943 for the prior year three month
period. However, revenues for the nine months ended September 30, 1996 were
$2,010,661,down $849,773 or 29.7% compared to last year's $2,860,434.
Gross profit for the third quarter 1996 was up $39,424 to $41,741 from
$2,317 or 0.3% of sales, for the same period in 1995, showing a change in trend
versus prior periods. Nine month figures however, reflect the same trend as
prior periods, gross profit being down $187,174 or 60.3% from $310,626 or 10.9%
of sales to $123,452 or 6.1% of sales. The reduction in gross profit is due
primarily to the lower overall sales attained in 1996 versus the total sales
volume for 1995.
The operating loss for the third quarter 1996 was $255,110or 39.6% of
sales. This represents a decreased in the loss of $82,763 or 24.5% compared to
the 1995 loss of $337,873 or 50.1% of sales during the same period last year.
Year to date 1996, the operating loss is $792,023 or 39.4% of sales against a
loss of $716,950 or 25.1% of sales for 1995. These losses are largely due to the
decrease in sales volumes in 1996 versus 1995 offset by significant cost
reductions attained in the sales and general administration area during this
period.
The net loss for the third quarter 1996 was $272,092 or 42.3%, which was
less than 1995 third quarter by $70,691 or 20.7%. As of September 30, 1996 the
year to date net loss is $843,846 or 42% of sales, which is greater by $128,235
or 17.9% from last years loss of $715,611. The net loss is significant in that
it is based on less sales and shows significant cost reductions attained.
9
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
Item 2. Management Discussion and Analysis of the Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Company's operating activities generated $102,100 for the third quarter
1996, however year to date 1996, it used $154,967. Investing activities used
$16,735 and $120,536, while financing activities used $8,481 and $24,486 for the
same periods. The overall cash flow decreased by $299,989 for the nine months
ended September 30, 1996
For the three month period ended September 30, 1996 the Company's cash
generation was due primarily to surrendering our keyman life policy and
receiving approximately $413,000. All other assets and liabilities used $310,900
in cash.
Management believes that the Company's financial condition at September 30,
1996 represents an adequate base to conduct current operations. However, the
basis for long term requirements are unknown. At the present time the Company
has no available line of credit.
The Company's marketing emphasis has been to refocus on the manufacturing
and selling of the endoscopic product line through its developing dealer
network. The Company received ISO9000 certification on October 9, 1996. This
certification will open the European market to its products and allow it to
build additional relationships with other large medical products companies, who
for whatever reason, have not received their certification and wish to sell
their products in Europe.
10
<PAGE>
Part II - Other Information
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.
BIOSEARCH MEDICAL PRODUCTS, INC.
Dated: November 12, 1996 /s/ Manfred F. Dyck
-----------------------------------
Manfred F. Dyck
President and Principal
Executive Officer and Director
Dated: November 12, 1996 /s/ Robert C. Keller
-----------------------------------
Robert C. Keller
Treasurer
Chief Financial and Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 267,603
<SECURITIES> 0
<RECEIVABLES> 378,215
<ALLOWANCES> 0
<INVENTORY> 387,713
<CURRENT-ASSETS> 1,085,655
<PP&E> 4,199,411
<DEPRECIATION> 2,770,038
<TOTAL-ASSETS> 2,564,898
<CURRENT-LIABILITIES> 353,865
<BONDS> 0
0
0
<COMMON> 11,129,948
<OTHER-SE> (9,593,951)
<TOTAL-LIABILITY-AND-EQUITY> 2,564,898
<SALES> 642,721
<TOTAL-REVENUES> 642,721
<CGS> 600,980
<TOTAL-COSTS> 600,980
<OTHER-EXPENSES> 296,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,589
<INCOME-PRETAX> (272,092)
<INCOME-TAX> 0
<INCOME-CONTINUING> (272,092)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (272,092)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
