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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
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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 MARCH 31, 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
BIOSEARCH MEDICAL PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2090421
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
35 INDUSTRIAL PARKWAY, SOMERVILLE, NEW JERSEY 08876-1276
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(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 MARCH 31, 1997
Common Stock without par value 2,202,878
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<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
INDEX TO FORM 10-Q SB
MARCH 31, 1996
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Condensed Balance Sheet at March 31, 1997 (unaudited)
and December 31, 1996. ........................................... 3-4
Condensed Statements of Operations (unaudited)
for the three month periods ended
March 31, 1997 and March 31, 1996. ............................... 5
Condensed Statements of Cash Flows (unaudited)
for the three month periods ended
March 31, 1997 and March 31, 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>
PART I
ITEM I - FINANCIAL STATEMENTS
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
ASSETS
MARCH 31, DECEMBER 31,
1997 1996(1)
--------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents .................... $ 46,486 $ 321,376
Trade receivables ............................ 98,776 182,247
Inventories (note 2) ......................... 497,902 513,551
Other assets ................................. 35,698 30,665
---------- ----------
TOTAL CURRENT ASSETS ....................... 678,862 1,047,839
PROPERTY, PLANT AND EQUIPMENT, (NET) ........... 1,442,796 1,451,805
OTHER ASSETS ................................... 10,726 13,580
---------- ----------
TOTAL ASSETS ............................... $2,132,385 $2,513,224
========== ==========
- --------
(1) - Derived from audited financial statements.
See accompanying notes to unaudited
condensed financial statements.
3
<PAGE>
PART I
ITEM I - FINANCIAL STATEMENTS
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
ASSETS
MARCH 31, DECEMBER 31,
1997 1996(1)
--------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents .................... $ 46,486 $ 321,376
Trade receivables ............................ 98,776 182,247
Inventories (note 2) ......................... 497,902 513,551
Other assets ................................. 35,698 30,665
---------- ----------
TOTAL CURRENT ASSETS ....................... 678,862 1,047,839
PROPERTY, PLANT AND EQUIPMENT, (NET) ........... 1,442,796 1,451,805
OTHER ASSETS ................................... 10,726 13,580
---------- ----------
TOTAL ASSETS ............................... $2,132,385 $2,513,224
========== ==========
- --------
(1) - Derived from audited financial statements.
See accompanying notes to unaudited
condensed financial statements.
3
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
MARCH 31 DECEMBER 31
1997 1996(1)
--------- -----------
(Unaudited)
CURRENT LIABILITIES:
Current maturities of L/T debt .............. $ 36,788 $ 36,788
Customer deposit ............................ -- --
Accounts payable ............................ 156,503 185,653
Accrued liabilities ......................... 42,778 131,693
----------- -----------
TOTAL CURRENT LIABILITIES ................. 236,069 354,134
LONG-TERM DEBT (NOTE 3) ....................... 654,253 662,734
----------- -----------
TOTAL LIABILITIES ......................... $ 890,322 $ 1,016,868
=========== ===========
SHAREHOLDERS' EQUITY:
Common Stock, no par value; 5,000,000
shares authorized; issued 2,202,878
at March 31, 1997, and
at December 31, 1996. ..................... $11,129,954 $11,129,954
Accumulated deficit ......................... (9,856,652) (9,602,359)
Treasury stock, at cost;
7,940 at March 31, 1997 and
at December 31, 1996. ..................... (31,239) (31,239)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY ................ 1,242,063 1,496,356
----------- -----------
$ 2,132,385 $ 2,513,224
=========== ===========
- --------
(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)
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1997 1996
---------- ----------
Revenues, net .................... $ 274,962 $ 592,686
Cost of goods sold ............... 267,730 556,687
---------- ----------
Gross profit ..................... 7,232 35,999
Selling, general and
administrative costs ........... 242,661 297,617
---------- ----------
Operating loss ................... (235,429) (261,618)
Other income/(expense):
Interest expense ............... (19,067) (16,958)
Other, net ..................... 202 (93)
(18,865) (17,051)
---------- ----------
NET INCOME/(LOSS) ................ $ (254,294) $ (287,669)
========== ==========
INCOME/(LOSS) PER COMMON SHARE:
Net income/(loss) per common share $ (.12) $ (.13)
========== ==========
Weighted average number
of common shares ............... 2,202,878 2,202,808
========== ==========
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
MARCH 31,
--------------------------
1997 1996
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) ....................................... $(254,294) $(278,669)
Adjustments to reconcile net income/(loss)
to net cash provided by/(used in) operating activities:
Depreciation and amortization ....................... 23,380 20,550
Sub total ....................................... 22,380 20,550
--------- ---------
Changes in assets and liabilities:
Decrease/(increase) in accounts receivable ............ 83,472 (240,688)
Decrease/(increase) in inventory ...................... 15,649 83,590
Increase in other current assets ...................... (5,033) (26,444)
Decrease/(increase) in other assets ................... 2,854 155,675
Increase in accounts payable .......................... (29,150) 55,612
Decrease in other liabilities
and customer deposits ............................... (88,915) (107,913)
--------- ---------
Sub total ....................................... (21,123) (80,168)
--------- ---------
Total adjustments ....................................... 1,257 (59,618)
--------- ---------
Net cash provided by/(used in) operating activities ..... (253,037) (338,287)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .................................. (13,371) (44,677)
Net cash used in investing activities ................... (13,371) (44,677)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowing ............. (8,481) (7,524)
--------- ---------
Net cash used in financing activities ................... (8,481) (7,524)
--------- ---------
Net (decrease)/increase in cash
and cash equivalents .................................. (274,889) (390,488)
Cash & equivalents at beginning of period ............... 321,376 568,092
--------- ---------
Cash & equivalents at end of period ..................... $ 46,487 $ 177,604
========= =========
</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 Financial Statements in the 1996 Annual Report on Form 10-K.
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 March 31, 1997
and the results of operations for the three month periods ended March 31, 1997
and March 31, 1996 and the statement of cash flows for the three month periods
ended March 31, 1997 and March 31, 1996.
The results of operations for the three month period ended March 31, 1997
are not necessarily indicative of the results to be expected for a succeeding
quarter or for the full year.
2. INVENTORIES
MARCH 31, 1996 DECEMBER 31, 1996
-------------- -----------------
(Unaudited)
Finished Goods ....................... $126,454 $130,432
Work In Process ...................... 162,776 167,897
Raw Materials ........................ 208,672 215,222
-------- --------
$497,902 $513,551
======== ========
7
<PAGE>
BIOSEARCH MEDICAL PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
3. LONG-TERM DEBT
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
(Unaudited)
Note payable - bank (a) .............. $691,041 $699,522
Less current maturities .............. 36,788 36,788
-------- --------
Long-term debt ....................... $654,253 $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 any
payments since 2/26/97. 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 $274,962 for the three months ended March 31, 1997, down
$317,724, or 54% compared to revenues of $592,686 for the prior year three month
period. OEM products sales were approximately 67% of revenues in the first
quarter 1997 compared to 83% for the same period in 1996. The decline in
revenues is due primarily termination of the Sherwood contract in early 1996,
which resulted in a sales decline of approximately $300,000 versus last year.
Total orders pending shipment at March 31, 1997 is $395,000, primarily OEM
orders, compared to $1,348,000 at December 31, 1996. This difference is also due
to the Sherwood contract as explained above.
Gross profit of $7,232, or 3% was down $28,767, or 80% from the first
quarter 1996 comparable gross profit of $35,999, or 6%. The change in gross
profit is directly due to the low revenues as discussed above.
Operating loss of $235,429 was $26,189, or 10% less than the operating loss
of $261,618 generated during the first quarter of 1996. These results were
mostly attributed to the cost containment procedures implemented and continued
in 1996 and further personnel layoffs in early 1997 offset by the significant
decline in sales.
Net loss of $254,294 is $33,375 less than the loss of $287,669 from
continuing operations generated during the first quarter of 1996. The loss on
approximately $300,000 less in revenues, shows cost containment procedures are
working, however incresed sales volumes are needed to show a profit.
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 $253,037 of cash during the first
quarter 1997 as compared to using $338,287 in 1996. Financing activities used
$8,481 for the three month period ended March 31, 1997 primarily due to
principal payments on debt. Investing activities used $13,371 for capital
expenditures. The net result of first quarter 1997 cash flow was a decrease of
$274,890 in cash and cash equivalents.
For the three month period ended March 31, 1997 all assets and liabilities
used approximately $21,000 in cash.
Management believes that the Company's financial condition at March 31,
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 current obligations. The Company is in the process at this time of
looking into obtaining additional financing. To date, the Company has no
available line of credit.
The Company received its ISO 9000 certification in late 1996 and its CE
mark is pending until the results of an audit by BSI (The Company's notifying
body) in September 1997 is finalized. The Company feels 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. The Company is focusing all its efforts on its OEM business and its
intermittent urinary catheter product line.
There is no assurance that the Company's revenue from its 1997 strategy
will attain the volumes needed to maintain long-term operations.
10
<PAGE>
PART II
SIGNATURES
Pursuantto 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: May 13, 1997 /s/ MANFRED F. DYCK
----------------------------------
Manfred F. Dyck
President and Principal
Executive Officer and Director
Dated: May 13, 1997 /s/ ROBERT C. KELLER
----------------------------------
Robert C. Keller
Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 46,486
<SECURITIES> 0
<RECEIVABLES> 98,776
<ALLOWANCES> 0
<INVENTORY> 497,902
<CURRENT-ASSETS> 678,862
<PP&E> 4,264,426
<DEPRECIATION> 2,821,630
<TOTAL-ASSETS> 2,132,385
<CURRENT-LIABILITIES> 236,069
<BONDS> 0
0
0
<COMMON> 11,129,954
<OTHER-SE> (9,887,891)
<TOTAL-LIABILITY-AND-EQUITY> 2,132,385
<SALES> 274,962
<TOTAL-REVENUES> 274,962
<CGS> 267,730
<TOTAL-COSTS> 267,730
<OTHER-EXPENSES> 242,661
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,865
<INCOME-PRETAX> (254,294)
<INCOME-TAX> 0
<INCOME-CONTINUING> (254,294)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (254,294)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
