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 November 30, 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
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MINNESOTA 41-1427114
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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 December 31, 1996 is 2,823,055.
<TABLE>
<CAPTION>
BIOSENSOR CORPORATION
CONDENSED BALANCE SHEETS
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November 30, May 31,
1996 1996
(Unaudited)
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ASSETS
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<S> <C> <C>
CURRENT ASSETS
Cash $ 67,028 $ 163,422
Receivables 597,121 605,536
Inventories 380,403 308,376
Prepaid expenses and other 21,835 17,163
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Total Current Assets 1,066,387 1,094,497
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DEPOSITS 8,666 11,204
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PROPERTY AND EQUIPMENT AT COST, NET 64,581 74,411
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$ 1,139,634 $ 1,180,112
============================================================================================
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Trade accounts payable 168,824 166,058
Accrued expenses
Commissions 33,957 55,280
Compensation 42,960 55,481
Warranty 28,422 30,657
Litigation (Note 3) 325,000 --
Other 11,367 27,348
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Total Current Liabilities 610,530 334,824
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STOCKHOLDERS' EQUITY
Common stock, par value $.05 per share 141,152 140,403
Additional paid-in capital 2,940,447 2,940,447
Accumulated deficit (2,552,495) (2,235,562)
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Total stockholders' equity 529,104 845,288
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$ 1,139,634 $ 1,180,112
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
BIOSENSOR CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
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For the Three Months Ended For the Six Months Ended
November 30, November 30,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
NET SALES $ 628,301 $ 570,056 $ 1,177,967 $ 1,098,928
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COSTS AND EXPENSES
Cost of products sold 296,149 218,125 536,992 429,426
Research, development and engineering 72,232 40,342 132,935 79,939
Sales and marketing 162,376 150,133 299,077 303,034
General and administrative 93,356 101,594 199,575 215,773
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624,113 510,194 1,168,579 1,028,172
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Operating income 4,188 59,862 9,388 70,756
NONOPERATING INCOME (EXPENSE),
Litigation (Note 3) -- -- (325,000) --
Other , net (203) (951) 933 (1,607)
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(203) (951) (324,067) (1,607)
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Income (Loss) before income taxes 3,985 58,911 (314,679) 69,149
Federal and State Income Taxes 1,020 -- 2,254 1,689
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Net Income (Loss) $ 2,965 $ 58,911 $ (316,933) $ 67,460
========================================================================================================================
EARNINGS (LOSS) PER COMMON SHARE AND COMMON
EQUIVALENT SHARE $ .00 $ .02 ($ .11) $ .02
========================================================================================================================
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES 2,823,055 2,803,055 2,818,710 2,803,055
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
BIOSENSOR CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months Ended November 30, 1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(316,933) $ 67,460
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 17,616 12,313
Loss on sale of property and equipment -- 74
Allowance for doubtful accounts 6,187 --
Changes in assets and liabilities:
(Increase) decrease in:
Receivables 2,228 (101,438)
Inventories (72,027) 40,758
Other assets (2,134) 1,918
Increase (decrease) in :
Accounts payable 2,766 9,729
Accrued expenses (Note 3) 272,940 (2,022)
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Net cash provided by (used in) operations (89,357) 28,792
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CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchase of product line -- (20,000)
Purchase of property and equipment (8,861) (10,238)
Proceeds from sale of property and equipment 1,074 1,000
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Net cash used in investing activities (7,787) (29,238)
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CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing from note payable to bank 100,000 110,000
Payments on note payable to bank (100,000) (110,000)
Net proceeds from issuance of common stock 750 313
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Net cash provided by financing activities 750 313
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Decrease in cash and cash equivalents (96,394) (133)
CASH AND CASH EQUIVALENTS
Beginning of period 163,422 4,750
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End of period $ 67,028 $ 4,617
==========================================================================================
</TABLE>
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 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, 1996.
The results of operations for the three months and six months ended November 30,
1996, are not necessarily indicative of the operating results for the full year.
NOTE 3. LITIGATION
On September 19, 1996, a jury verdict in the amount of $325,000 was awarded to a
former vendor for its claims that the Company owed additional amounts under a
1988 software license agreement. The Company disputes this claim and is planning
to appeal. The Company is working with counsel to evaluate its further legal
options. The amount of the jury verdict was accrued as of August 31, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The Company's sales were $628,000 and $1,178,000 for the second quarter and six
months ended November 30, 1996, respectively. This compares with sales of
$570,000 and $1,098,000 for the second quarter and six months ended November 30,
1995. The increase in sales is as a result of increased sales in the US through
independent sales representatives. Cost of goods sold as a percentage of sales
increased to 47% for the second quarter and 46% for the six months ended
November 30, 1996. This is up from 38% and 39% for those same periods in the
previous year. The decrease in margins are due to lower margins in International
sales as a result of competitive activity and normal sales product mix
variations.
Research, development and engineering expenditures increased approximately
$32,000 or 79% for the second quarter and $53,000 or 66% for the six months
ended November 30, 1996 compared to the previous year. These increases are due
to increases in personnel expenditures.
Sales and marketing expenses increased $12,000 for the second quarter and are
comparable for the six months ended November 30, 1996. The increase in the
second quarter is due to increased commissions paid on increased US sales.
General and administrative costs were comparable with the prior year.
On September 19, 1996, a jury verdict in the amount of $325,000 was awarded to a
former vendor for its claims that the Company owed additional amounts under a
1988 software license agreement. The Company disputes this claim and is planning
to appeal. The Company is working with counsel to evaluate its further legal
options. The amount of the jury verdict had been accrued as of August 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
For the six month period ending November 30, 1996, cash used in operations
totaled $89,000 caused by the net loss of $317,000 and an increase in inventory
of $72,000 partially offset by increased accrued expenses of $272,000.
At November 30, 1996 the Company had working capital of $456,000. Management
believes its current working capital and anticipated cash flows from operations
will be sufficient to fund operating activities for fiscal 1997.
Legal proceedings described above may require the Company to pay a judgment
amount specified by the Court, pursue an appeal, or negotiate a settlement with
the plaintiff. If the Company is required to pay an entire judgment amount of
$325,000, working capital and cash flows from operations may not be sufficient
to pay the judgment amount and/or fund operations. In this event, the Company
may be unable to continue operations, and the Company may be required to seek
legal protection while the dispute is resolved.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 3 to the Financial Statements.
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, Chief Executive Officer and Chief Financial Officer
Date January 13, 1997
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<NAME> BIOSENSOR CORPORATION
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