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FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q SB
[X] QUARTERLY REPORT PER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the period ended JUNE 30, 1997.
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
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BIOSEARCH MEDICAL PRODUCTS, INC.
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(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
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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.
OUTSTANDING AT
CLASS JUNE 30, 1997
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Common Stock,
without par value 2,202,878
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<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
INDEX TO FORM 10-Q SB
JUNE 30, 1997
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Condensed Balance Sheet at June 30, 1997 (unaudited)
and December 31, 1996. 3 - 4
Condensed Statements of Operations (unaudited)
for the three month periods and six month periods ended
June 30, 1997 and June 30, 1996. 5
Condensed Statements of Cash Flows (unaudited)
for the three month periods and six month periods ended
June 30, 1997 and June 30, 1996. 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>
<TABLE>
PART I
ITEM I - FINANCIAL STATEMENTS
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
ASSETS
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996(1)
---------- ----------
UNAUDITED
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 52,692 $ 321,376
Trade receivables 195,946 182,247
Inventories (note 2) 424,377 513,551
Other assets 31,810 30,665
---------- ----------
TOTAL CURRENT ASSETS 704,825 1,047,839
PROPERTY, PLANT AND EQUIPMENT, (NET) 1,378,487 1,451,805
OTHER ASSETS 9,861 13,580
---------- ----------
TOTAL ASSETS $2,093,173 $2,513,224
========== ==========
- ---------------
</TABLE>
(1) - Derived from audited financial statements.
(continued)
3
<PAGE>
<TABLE>
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996(1)
------------- ------------
UNAUDITED
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of L/T debt (note 3) $ 36,788 $ 36,788
Customer deposit 2,098 --
Accounts payable 289,135 185,653
Accrued liabilities 85,571 131,693
------------ ------------
TOTAL CURRENT LIABILITIES 413,592 354,134
LONG-TERM DEBT (NOTE 3) 647,883 662,734
------------- ------------
TOTAL LIABILITIES 1,061,475 1,016,868
------------- ------------
SHAREHOLDERS' EQUITY:
Common stock, no par value; 5,000,000
shares authorized; issued 2,202,878
at June 30, 1997, and at December 31, 1996. 11,129,954 11,129,954
Accumulated deficit (10,067,017) (9,602,359)
Treasury stock, at cost; 7,920 shares
at June 30, 1997 and at December 31, 1996. (31,239) (31,239)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 1,031,698 1,496,356
------------- ------------
$ 2,093,173 $ 2,513,224
============= ============
</TABLE>
- --------------
(1) - Derived from audited financial statements.
See accompanying notes to unaudited
condensed financial statements.
4
<PAGE>
<TABLE>
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- ---------------------------
1997 1996 1997 1996
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues, net $ 402,186 $ 775,254 $ 677,148 $1,367,940
Cost of goods sold 409,109 729,542 676,839 1,286,229
--------- --------- -------- ----------
Gross profit (6,923) 45,712 309 81,711
Selling, general and
administrative costs 197,749 321,631 440,410 619,249
--------- --------- ---------- ----------
Operating loss (204,672) (275,919) (440,101) (537,538)
Other income/(expense):
Interest expense (14,955) (17,996) (34,022) (34,954)
Other, net 9,263 830 9,465 738
(5,692) (17,166) (24,557) (34,216)
--------- --------- ---------- ----------
Pre-tax net income/(loss) (210,364) (293,085) (464,658) (571,754)
Federal income taxes
NET INCOME $(210,364) $(293,085) $ (464,658) $ (571,754)
========= ========= ========== ==========
NET INCOME PER COMMON SHARE $ (.09) $ (.13) $ (.21) $ (.26)
========= ========= ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 2,202,878 2,202,858 2,202,878 2,202,858
========= ========= ========== ==========
</TABLE>
See accompanying notes to
unaudited condensed financial statements
5
<PAGE>
<TABLE>
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------------- ---------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $(210,364) $(293,085) $(464,658) $(571,754)
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 19,616 20,550 41,996 41,100
--------- --------- --------- ---------
Sub total 19,616 20,550 41,996 41,100
--------- --------- --------- ---------
CHANGES IN ASSETS AND LIABILITIES:
(Increase)/decrease in accts receivable (97,170) 182,480 (13,698) (58,208)
Decrease/(increase) in inventory 73,525 88,422 89,174 172,012
Decrease/(increase) in other current assets 3,888 (10,734) (1,145) (37,178)
Increase in other assets 865 110,322 3,719 265,997
(Decrease)/increase in accounts payable 132,632 1,046 103,482 56,658
Decrease in other liabilities
and customer deposits 44,891 (17,781) (44,024) (125,694)
--------- --------- --------- ---------
Sub total 158,631 353,755 137,508 273,587
--------- --------- --------- ---------
Total adjustments 178,247 374,305 179,504 314,687
--------- --------- --------- ---------
Net cash used in operating activities (32,117) 81,220 (285,154) (257,057)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures 44,692 (59,124) 31,321 (103,801)
Net cash provided by investing activities 44,692 (59,124) 31,321 (103,801)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings (6,370) (8,481) (14,851) (16,005)
--------- --------- --------- ---------
Net cash used in financing activities (6,370) (8,481) (14,851) (16,005)
--------- --------- --------- ---------
Net increase/(decrease) in cash & cash equivalents 6,205 13,615 (268,684) (376,873)
Cash & cash equivalents at beginning of period 46,487 177,604 321,376 568,092
--------- --------- --------- ---------
Cash & cash equivalents at end of period $ 52,692 $ 191,219 $ 52,692 $ 191,219
========= ========= ========= =========
</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 1996 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 June 30, 1997
and the results of operations for the three month periods and six month periods
ended June 30, 1997 and June 30, 1996 and the statement of cash flows for the
three month periods and six month periods ended June 30, 1997 and June 30, 1996.
The results of operations for the three month periods and six month periods
ended June 30, 1997 are not necessarily indicative of the results to be expected
for a succeeding quarter or for the full year.
2. INVENTORIES
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
UNAUDITED
Finished Goods $ 47,819 $130,432
Work In Process 131,876 167,897
Raw Materials 244,682 215,222
-------- --------
$424,377 $513,551
======== ========
7
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
UNAUDITED
3. LONG-TERM DEBT
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
UNAUDITED
Note payable - bank (A) 684,671 699,522
Less current maturities 36,788 36,788
---------- ----------
Long-term debt $647,883 $662,734
========== ==========
(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. The Company has not made a
payment since 5/28/97. The Summit Bank, by letter dated 4/18/97, notified the
Company it is in default, but has reserved any remedies at this time, however,
may not continue to do so.
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 $402,186 for the three months ended June 30, 1997, down
$373,068 or 48.1% compared to revenues of $775,254 for the prior year three
month period. The revenues for the six months ended June 30, 1997 were also down
$690,792 or 50.5% compared to last year's $1,367,940.
Gross profit for the second quarter 1997 was down $52,635 or 115.1% from
$45,712 or 5.9% of sales, for the same period in 1996. Six month figures reflect
the same trend, gross profit being down $81,402 or 99.6% from $81,711 or 6.0% of
sales to $309 or 0.0% of sales. The reduction in gross profit is due primarily
to the lower overall sales attained in 1976 versus the total sales volume for
1996 which was insufficient to cover the fixed overhead for the six month
period.
The operating loss for the second quarter 1997 was $210,364 or 52.3% of
sales. This represents a reduction in the loss of $82,721 or 28.2% compared to
the 1996 loss of $293,085 or 37.8% of sales. Year to date 1997, the operating
loss is $464,658 or 68.6% of sales against a loss of $571,754 or 41.8% of sales
for 1996. These losses are largely due to the decrease in sales volumes in 1997
versus 1996 and the insufficient revenues needed to cover the fixed overhead
which caused a loss in gross profit and an increase in operating loss as a
percent of revenues.
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 used $32,117 in cash for the second
quarter 1997 and year to date 1997, it used $285,154. Investing activities
generated $44,692 and $31,321, while financing activities used $6,370 and
$14,851 for the same periods. The overall cash flow decreased by $268,684 for
the six months ended June 30, 1997
For the three month period ended June 30, 1997 the Company used $32,117
from operating activities. This is due primarily to an increase in accounts
payable of $132,632 and a decrease in inventory of $73,525 offset by a decrease
in accounts receivable of $97,170 and an operating loss of $210,364 during the
second quarter . All other assets and liabilities generated $69,260 in cash.
Management believes that the Company's financial condition at June 30,
1997 represents an uncertain base to conduct current operations. There is no
assurance that the Company's operations will generate sufficient cash flow to
meet its obligations. The Company is currently in negotiation to obtain
additional financing. To date, the Company has no available line of credit.
The Company continues to focus all its efforts on its OEM business and
its intermittent urinary catheter product line. The Company received its ISO
9000 certification and is awaiting CE mark certification. The Company feels this
will open the European market to its products and allow additional relationships
with other large medical companies' who have not received their certification
and wish to sell their products in Europe.
There is no assurance that the Company's revenue from its 1997 strategy
will attain the volumes needed to maintain operations.
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: August 12, 1997 /s/ MANFRED F. DYCK
-------------------------
Manfred F. Dyck
President and Principal
Executive Officer and Director
Dated: August 12, 1997 /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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 52,692
<SECURITIES> 0
<RECEIVABLES> 195,946
<ALLOWANCES> 0
<INVENTORY> 424,377
<CURRENT-ASSETS> 704,825
<PP&E> 4,219,734
<DEPRECIATION> 2,841,246
<TOTAL-ASSETS> 2,093,173
<CURRENT-LIABILITIES> 413,592
<BONDS> 0
0
0
<COMMON> 11,129,954
<OTHER-SE> (10,098,256)
<TOTAL-LIABILITY-AND-EQUITY> 2,093,173
<SALES> 402,186
<TOTAL-REVENUES> 402,186
<CGS> 409,109
<TOTAL-COSTS> 409,109
<OTHER-EXPENSES> 197,749
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,955
<INCOME-PRETAX> (210,364)
<INCOME-TAX> 0
<INCOME-CONTINUING> (210,364)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (210,364)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
