UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Quarterly period ended February 29, 1996
|_| TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT For
the transition period from _____ to _____
COMMISSION FILE NUMBER 0-11408
BIOSENSOR CORPORATION
------------------------------------------------------------------------------
MINNESOTA 41-1427114
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
13755 First Avenue North,
Plymouth, Minnesota 55441
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (612) 449-9100
Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the 12 months (or for such shorter period
that registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO______
The number of shares outstanding of the registrant's common stock, $.05 par
value, as of April 8, 1996 is 2,805,555.
BIOSENSOR CORPORATION
CONDENSED BALANCE SHEETS
February 29, May 31,
1996 1995
(Unaudited)
- ----------------------------------------------- ----------- -----------
ASSETS
- ----------------------------------------------- ----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 70,663 $ 4,750
Receivables 501,748 395,309
Inventories 367,725 432,486
Prepaid expenses and other 24,111 22,032
- ----------------------------------------------- ----------- -----------
Total Current Assets 964,247 854,577
- ----------------------------------------------- ----------- -----------
DEPOSITS 8,666 9,643
- ----------------------------------------------- ----------- -----------
PROPERTY AND EQUIPMENT at cost, net 78,595 65,334
- ----------------------------------------------- ----------- -----------
$ 1,051,508 $ 929,554
=============================================== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note Payable to bank $ -- $ 20,000
Accounts payable
Trade 118,681 96,120
Other -- 20,000
Accrued expenses
Commissions 27,221 22,350
Compensation 57,893 43,333
Warranty 23,521 22,467
Other 16,225 27,182
- ----------------------------------------------- ----------- -----------
Total Current Liabilities 243,541 251,452
- ----------------------------------------------- ----------- -----------
DEFERRED RENT 672 5,195
- ----------------------------------------------- ----------- -----------
STOCKHOLDERS' EQUITY
Common stock, par value $.05 per share 140,278 140,028
Additional paid-in capital 2,940,260 2,939,947
Accumulated deficit (2,273,243) (2,407,068)
- ----------------------------------------------- ----------- -----------
Total stockholders' equity 807,295 672,907
- ----------------------------------------------- ----------- -----------
$ 1,051,508 $ 929,554
=============================================== =========== ===========
<TABLE>
<CAPTION>
BIOSENSOR CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<S> <C> <C> <C> <C>
For the Three Months Ended For the Nine Months Ended
February 29 and 28, February 29 and 28,
----------------------------- ------------------------------
1996 1995 1996 1995
- ------------------------------------------- ----------- ----------- ----------- -----------
NET SALES $ 613,158 $ 542,525 $ 1,712,087 $ 1,901,433
- ------------------------------------------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES
Cost of products sold 232,541 248,306 631,967 824,893
Research, development and engineering 39,124 58,870 119,063 196,914
Sales and marketing 143,973 220,443 447,007 695,849
General and administrative 130,620 114,746 376,393 366,881
- ------------------------------------------- ----------- ----------- ----------- -----------
546,258 642,365 1,574,430 2,084,537
- ------------------------------------------- ----------- ----------- ----------- -----------
Operating income (loss) 66,900 (99,840) 137,657 (183,104)
Nonoperating Income (Expense), net (535) 5,472 (2,142) 8,783
- ------------------------------------------- ----------- ----------- ----------- -----------
Income (Loss) before income taxes 66,365 (94,368) 135,515 (174,321)
Federal and State Income Taxes -- 842 1,689 3,464
- ------------------------------------------- ----------- ----------- ----------- -----------
Net Income (Loss) $ 66,365 $ (95,210) $ 133,826 $ (177,785)
=========================================== =========== =========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $ .02 $ (.03) $ .05 $ (.06)
=========================================== =========== =========== =========== ===========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 2,805,088 2,800,555 2,802,635 2,797,258
=========================================== =========== =========== =========== ===========
</TABLE>
BIOSENSOR CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended February 29 and 28, 1996 1995
- ---------------------------------------------------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 133,826 $(177,785)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 20,977 16,618
(Gain) loss on sale of property and equipment (73) (73)
Changes in assets and liabilities:
(Increase) decrease in:
Receivables (106,439) 183,793
Inventories 64,761 (46,958)
Other Assets (1,102) (5,869)
Increase (decrease) in:
Accounts payable 22,561 (22,299)
Accrued expenses 5,005 (75,117)
- ---------------------------------------------------- --------- ---------
Net cash provided by (used in) operations 139,516 (127,690)
- ---------------------------------------------------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchase of product line (20,000) (40,000)
Purchase of property and equipment (35,566) (5,926)
Proceeds from sale of property and equipment 1,400 600
- ---------------------------------------------------- --------- ---------
Net cash used in investing activities (54,166) (45,326)
- ---------------------------------------------------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing from note payable to bank 110,000 60,000
Payments on note payable to bank (130,000) --
Net proceeds from issuance of common stock 563 1,500
- ---------------------------------------------------- --------- ---------
Net cash provided by (used in) financing activities (19,437) 61,500
- ---------------------------------------------------- --------- ---------
Increase (decrease) in cash and cash equivalents 65,913 (111,516)
CASH AND CASH EQUIVALENTS
Beginning of period 4,750 125,208
- ---------------------------------------------------- --------- ---------
End of period $ 70,663 $ 13,692
==================================================== ========= =========
BIOSENSOR CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS
The Company is engaged in the development, manufacture and marketing of
diagnostic equipment for physicians' offices, clinics and hospitals. The 24-hour
ambulatory cardiac monitoring, EKG telemetry, pulmonary function, EKG and
ambulatory blood pressure systems operate independently or in unison on an IBM
compatible office computer. The Company also manufactures cardiac monitors for
OEM distributors.
NOTE 2. CONDENSED FINANCIAL STATEMENTS
The accompanying condensed financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations, and changes in cash flows have been
made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Form 10-KSB for the year ended May 31, 1995.
The results of operations for the three months and nine months ended February
29, 1996, are not necessarily indicative of the operating results for the full
year.
NOTE 3. MAJOR CUSTOMER
During the nine months ended February 29, 1996, and February 28, 1995, there
were sales to one unaffiliated customer of $288,000 and $215,000 respectively.
During the third quarter ended February 29, 1996 sales to the same customer
totaled $77,000 and sales to another unaffiliated customer totaled $140,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The Company's sales were $613,000 and $1,712,000 for the third quarter and nine
months ended February 29, 1996, respectively, compared to $542,000 and
$1,901,000 for the third quarter and nine months ended February 28, 1995. The
increase in sales in the third quarter ended February 29, 1996 is due to
increases in international sales. Cost of goods sold as a percentage of sales
were 38% for the third quarter and 37% for the nine months ended February 29,
1996. This is down from 46% and 43% for those same periods in the previous year.
In the second and third quarters of fiscal 1995, the Company reorganized its US
sales force by moving to the use of independent sales representatives and
increasing the emphasis on the profitability versus volume of sales in the
United States. This reorganization has resulted in a lower volume but more
profitable sales in the U.S. market. The decrease in sales was also the result
of decreased OEM equipment sales. The Company believes U.S. healthcare reforms
have resulted in a reduction in purchases of diagnostic equipment sold. These
decreases in sales were slightly offset by increases in international sales.
Research, development and engineering expenditures decreased approximately
$20,000 for the third quarter and $78,000 for the nine months ended February 29,
1996 compared to the previous year. These decreases are due to decreases in
research supplies and personnel expenditures.
Sales and marketing expenses decreased $76,000 for the third quarter and
$249,000 for the nine months ended February 29, 1996. These decreases are a
result of the reorganization of the U.S. sales force to change to sales
representatives who are compensated solely through commission on sales versus
base salaries and expense paid to employee sales representatives in the previous
year.
General and administrative costs increased $16,000 in the third quarter and
$10,000 for the nine month period ended February 29, 1996. The increase is the
result of personnel expenditures which are offset by the decrease in
administrative costs relating to OEM equipment sales.
LIQUIDITY AND CAPITAL RESOURCES
For the nine month period ending February 29, 1996, cash provided by operations
totaled $140,000. The net income of $134,000, decrease in inventory of $65,000,
and increase in liabilities were offset by an increase in receivables. The
Company used cash of $55,000 for payments on the product line purchased in 1994
and for purchases of property and equipment.
At February 29, 1996 the Company had working capital of $721,000 including
$59,000 in investments. The Company also has a bank line of credit available of
$150,000 due October 31, 1996 with interest at 2 percent over prime. The Company
used $20,000 for payments against the bank line of credit in the third quarter
ended February 29, 1996 to reduce the outstanding borrowings to $0 as of
February 29, 1996. Advances are limited to a percentage of receivables and are
secured by substantially all the assets of the Company. The line contains
certain financial and other covenants which include current ratio and tangible
net worth covenants, and prohibit the payment of dividends. Management believes
that these sources, along with cash flows from operations will be sufficient to
fund operations for the next year.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BIOSENSOR CORPORATION
/s/ B. Steven Springrose
B. Steven Springrose
President and Chief Executive Officer
Date April 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 70663
<SECURITIES> 0
<RECEIVABLES> 513,748
<ALLOWANCES> 12,000
<INVENTORY> 367,725
<CURRENT-ASSETS> 964,247
<PP&E> 347,457
<DEPRECIATION> 268,862
<TOTAL-ASSETS> 1,051,508
<CURRENT-LIABILITIES> 243,541
<BONDS> 0
0
0
<COMMON> 140,278
<OTHER-SE> 667,017
<TOTAL-LIABILITY-AND-EQUITY> 1,051,508
<SALES> 613,158
<TOTAL-REVENUES> 613,158
<CGS> 232,541
<TOTAL-COSTS> 183,097
<OTHER-EXPENSES> 131,155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 66,365
<INCOME-TAX> 0
<INCOME-CONTINUING> 66,365
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,365
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
