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 August 31, 1997
|_| 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)
7001 East Fish Lake Road
Maple Grove, Minnesota 55311
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (612) 420-2600
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 October 10, 1997 is 2,823,055.
<PAGE>
BIOSENSOR CORPORATION
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
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August 31, May 31,
1997 1997
(Unaudited)
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<S> <C> <C>
ASSETS
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CURRENT ASSETS
Cash and cash equivalents $ 28,602 $ 4,739
Receivables 375,274 400,262
Inventories 306,149 307,265
Prepaid expenses and other 55,989 54,822
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Total Current Assets 766,014 767,088
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DEPOSITS 18,000 18,000
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PROPERTY AND EQUIPMENT at cost, net 58,742 59,460
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842,756 844,548
================================================================================================
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable 134,440 50,246
Accrued expenses
Commissions 13,423 15,492
Compensation 49,201 48,872
Warranty 23,808 30,618
Litigation (Note 3) 352,000 352,000
Other 3,239 1,221
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Total Current Liabilities 576,111 498,449
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STOCKHOLDERS' EQUITY
Common stock, par value $.05 per share 141,153 141,153
Additional paid-in capital 2,940,447 2,940,447
Accumulated deficit (2,814,955) (2,735,501)
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Total stockholders' equity 266,645 346,099
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$ 842,756 $ 844,548
================================================================================================
</TABLE>
<PAGE>
BIOSENSOR CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
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Three Months Ended August 31 1997 1996
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<S> <C> <C>
NET SALES $ 538,354 $ 549,666
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COSTS AND EXPENSES
Cost of products sold 264,301 240,843
Research, development and engineering 76,118 60,703
Sales and marketing 183,883 136,701
General and administrative 97,095 106,219
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621,397 544,466
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Operating income (loss) (83,043) 5,200
NONOPERATING INCOME (EXPENSE)
Litigation (Note 3) -- (325,000)
Other, net 3,996 1,136
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3,996 (323,864)
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Loss before income taxes (79,047) (318,664)
Federal and State Income Taxes 407 1,234
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Net Loss $ (79,454) $ (319,898)
==============================================================================================
EARNINGS (LOSS) PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $ (.03) $ (.11)
==============================================================================================
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 2,823,055 2,814,413
==============================================================================================
</TABLE>
<PAGE>
BIOSENSOR CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
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Three Months Ended August 31, 1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(79,454) $(319,898)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 7,308 6,121
Allowance for doubtful accounts 16,000
Changes in assets and liabilities:
(Increase) decrease in:
Receivables 24,988 86,137
Inventories 1,116 (72,081)
Other assets (1,167) (7,194)
Increase (decrease) in :
Accounts payable 84,194 917
Accrued expenses (Note 3) (6,532) 260,924
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Net cash provided by (used in) operations 30,453 (29,074)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (6,590) --
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Net cash used in investing activities (6,590) --
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CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock -- 750
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Net cash provided by financing activities -- 750
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Increase (decrease) in cash and cash equivalents 23,863 (28,324)
CASH AND CASH EQUIVALENTS
Beginning of period 4,739 163,422
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End of period $ 28,602 $ 135,098
===========================================================================================
</TABLE>
<PAGE>
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, 1997.
The results of operations for the three months ended August 31, 1997, 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 plus court costs
of approximately $27,000 were awarded to former vendor for its claims that the
Company owed additional amounts under a 1988 software license agreement. The
Company is appealing the verdict at the United States Court of Appeals, where
the appeal is expected to be heard in the third quarter of fiscal 1998. The
Company does not have the resources to pay the jury award, and is attempting to
negotiate a settlement with the vendor.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The Company's sales were $538,000 for the first quarter ended August 31, 1997
compared to sales of $550,000 for the first quarter ended August 31, 1996. In
those same periods, cost of products sold as a percentage of sales were 49% and
44% respectively. The increase in cost of sales is a result of continued
competitive pressures especially in the international market.
Research, development and engineering expenditures increased approximately
$15,000 for the first quarter of fiscal 1998 compared to the first quarter of
fiscal 1997. The increase is due to increases in personnel in the second and
third quarters of fiscal 1997 in an effort to move new product development
forward.
Sales and marketing expenses increased $47,000 for the first quarter of fiscal
1998 compared to the first quarter of 1997. The increase is due to increased
commission paid on increased US sales. In addition, sales personnel were added
in the US and International markets in the first quarter of fiscal 1998.
General and administrative costs in the first quarter of 1998 decreased $9,000
compared to the first quarter of 1997. In the first quarter of 1997, general and
administrative expenses included $16,000 for uncollectable accounts.
On September 19, 1996, a jury verdict in the amount of $325,000 plus court costs
of approximately $27,000 were awarded to former vendor for its claims that the
Company owed additional amounts under a 1988 software license agreement. The
Company is appealing the verdict at the United States Court of Appeals, where
the appeal is expected to be heard in the third quarter of fiscal 1998. The
Company does not have the resources to pay the jury award, and is attempting to
negotiate a settlement with the vendor.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations totaled $26,000. The net loss of $79,000 was offset
by decreases in receivables of $25,000 and increases in payables of $80,000. The
Company used cash of $6,600 for the purchase of property and equipment.
At August 31, 1997 the Company had working capital of $190,000. Legal
proceedings described above may require the Company to pay a judgment amount
specified by the Court or negotiate a settlement with the plaintiff. If the
Company is required to pay the entire judgment amount of $352,000, working
capital and cash flows from operations may not be sufficient to pay the judgment
amount and continue to fund operations. In this event, the Company may be unable
to continue operations, and may be required to seek legal protection under
bankruptcy laws while the dispute is resolved.
<PAGE>
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 and Chief Executive Officer
Date October 10, 1997
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