<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
--------------
OR
/ / TRANSITION REPORT PURSUANT OT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------------- ----------------------
Commission File No. 0-11772
-------
NU-TECH BIO-MED, INC.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 25-1411971
-------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation of organization)
55 Access Road, Warwick, Rhode Island 02886
- ------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (401) 732-6520
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Check whether the Issuer (1) 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.
Yes X No
--- ---
As of May 9, 1996, there were issued and outstanding 1,992,155 shares
of common stock of the registrant.
Page 1 of 12
<PAGE> 2
Nu-Tech Bio-Med, Inc. and Subsidiary
(A Development Stage Enterprise)
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
---------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,081,902 $ 2,538,002
Accounts receivable - (net of allowance for uncollectible claims
of approximately $19,800 and $16,700 at March 31,
1996 and at December 31, 1995, respectively) 44,377 67,480
Prepaid expenses 96,307 82,737
Other current assets 44,179 78,581
---------------------------------
Total current assets 2,266,765 2,766,800
Equipment and leasehold improvements (net of accumulated 458,241 471,517
depreciation of approximately $235,700 and $215,000 at
March 31, 1996 and December 31, 1995, respectively)
Acquisition Costs 236,658 129,846
Patents (net of accumulated amortization of approximately
$77,000 and $73,700 at March 31, 1996 and
December 31, 1995, respectively) 142,425 141,596
Goodwill (net of accumulated amortization of approximately
$460,000 and $441,200 at March 31, 1996 and
December 31, 1995, respectively) 290,066 308,816
---------------------------------
Total Assets $ 3,394,155 $ 3,818,575
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 206,472 $ 109,815
Accrued expenses 526,168 445,950
Contract payable 80,572 105,571
Current portion of long term debt 199,922 197,246
Current portion of capitalized lease obligations 14,626 13,050
---------------------------------
Total current liabilities 1,027,760 871,632
Debt 268,524 319,521
Capitalized lease obligations 30,007 33,624
Deferred income 5,540 5,540
---------------------------------
Total liabilities 1,331,831 1,230,317
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; none outstanding
Common stock, $.01 par value; 12,000,000 shares
authorized; 1,742,148 shares issued and
outstanding 17,422 17,422
Capital in excess of par value 17,550,700 17,544,715
Deferred consulting expense (137,501) (151,250)
Unvested common stock grant (743,593) (946,107)
Deficit accumulated during the development stage (14,624,704) (13,876,522)
---------------------------------
Total stockholders' equity 2,062,324 2,588,258
---------------------------------
Total liabilities and stockholders' equity $ 3,394,155 $ 3,818,575
=================================
</TABLE>
Page 2 of 12
<PAGE> 3
Nu-Tech Bio-Med, Inc. and Subsidiary
(A Development Stage Enterprise)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE
AMOUNT FROM
FEBRUARY 1
1982
FOR THE THREE MONTHS ENDED (INCEPTION) TO
MARCH 31 March 31 MARCH 31,
1996 1995 1996
----------------------------- ------------
<S> <C> <C> <C>
Revenues:
Assay sales $ 23,730 $ 53,772 $ 1,195,837
Contract revenues - 2,100 730,511
Investment and interest income 30,047 28,033 2,444,233
Fee income - - 100,000
Other - - 473,517
----------------------------- ------------
Total revenues 53,777 83,905 4,944,098
Expenses:
General and administrative 452,886 295,984 10,533,183
Lab expense 35,143 57,561 1,158,400
Research and development 20,768 15,121 4,670,007
Loss on sale of investments - - 577,423
Interest 8,038 9,277 210,373
Rent 20,155 6,090 466,360
Depreciation and amortization 264,969 25,562 1,780,760
Loss (gain) on disposal of equipment,
furniture and fixtures - - 34,100
----------------------------- ------------
Total expenses 801,959 409,595 19,430,606
----------------------------- ------------
Loss from continuing operations (748,182) (325,690) (14,486,508)
Discontinued operations:
Loss on disposition - - (112,010)
Loss from discontinued operations - - (172,530)
----------------------------- ------------
Loss from discontinued operations - - (284,540)
----------------------------- ------------
Loss before extraordinary item (748,182) (325,690) (14,771,048)
Extraordinary item:
Gain on forgiveness of debt - - 146,344
----------------------------- ------------
Net loss $ (748,182) $ (325,690) $(14,624,704)
============================= ============
Net loss per common share $ (0.43) $ (0.23)
=============================
Weighted average common
shares outstanding 1,728,069 1,429,128
=============================
</TABLE>
Page 3 of 12
<PAGE> 4
Nu-Tech Bio-Med, Inc. and Subsidiary
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE
AMOUNT FROM
FOR THE THREE MONTHS ENDED FEBRUARY 1, 1982
MARCH 31 MARCH 31 (INCEPTION) TO
1996 1995 MARCH 31, 1996
--------------------------- ----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(748,182) $(325,690) $(14,624,704)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 264,969 25,562 2,071,915
Loss (gain) on disposal of equipment - - 34,100
Loss on investments - - 349,224
Loss on sale of subsidiary - - 112,010
Losses of affiliated company - - 365,614
Changes in assets and liabilities:
Accounts receivable, prepaids and
other current assets 43,935 (47,283) (165,252)
Investment in and advances to affiliate - - (431,802)
Accounts payable and accrued expenses 20,900 (204,782) 93,997
Accrued compensation 155,974 - 366,247
Other liabilities - - (76,840)
Deferred income - (2,100) 5,540
--------------------------- ------------
Net cash used in operating activities (262,404) (554,292) (11,899,951)
INVESTING ACTIVITIES
Proceeds from sale of equipment - - 10,407
Capital expenditures (11,523) (41,780) (773,588)
Organization Costs - - (19,778)
Purchase of long-term investments and
other assets - - (95,974)
Proceeds from loan receivable from officer - - (20,000)
Cash acquired in purchase of company, net - - (820,390)
Sale of company, net of cash sold - - 413,000
--------------------------- ------------
Net cash used in investing activities (11,523) (41,780) (1,306,323)
FINANCING ACTIVITIES
Proceeds from issuance of notes payable - - 1,116,000
Repayment of contract payable (24,999) - (24,999)
Repayment of notes payable (48,321) (22,770) (431,210)
Repayment of capitalized lease obligations (2,041) - (2,041)
Proceeds from 7% promissory notes - - 400,000
Repayment of 7% promissory notes - - (400,000)
Advances from officer - - 100,000
Repayment of advances from officer - - (100,000)
Proceeds from sale of common stock - - 15,115,537
Repayment of note payable to stockholder - - (266,601)
Capitalization of interest on note -
payable to stockholder - - 18,148
Acquisition Costs (106,812) - (236,658)
--------------------------- ------------
Net cash provided by (used in)
financing activities (182,173) (22,770) 15,288,176
--------------------------- ------------
</TABLE>
Page 4 of 12
<PAGE> 5
Nu-Tech Bio-Med, Inc. and Subsidiary
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE
AMOUNT FROM
FOR THE THREE MONTHS ENDED FEBRUARY 1, 1982
MARCH 31 MARCH 31 (INCEPTION) TO
1996 1995 MARCH 31, 1996
------------------------------- ----------------
<S> <C> <C> <C>
Net increase (decrease) in cash and
cash equivalents $ (456,100) $ (618,842) $2,081,902
Cash and cash equivalents at beginning of period 2,538,002 3,803,189 -
------------------------------- ----------
Cash and cash equivalents at end of period $ 2,081,902 $ 3,184,347 $2,081,902
=============================== ==========
Noncash transactions:
During 1989, the Company extinguished a
liability via the issuance of common
stock at a value of $20,000 $ - $ - $ 20,000
During 1990, the Company acquired the
remaining 50% interest in Analytical
Biosystems Corporation with the
issuance of 34,286 shares of common
stock - - 750,000
During 1991, the Company capitalized
$49,869 of accrued interest from 1990
into the note payable to stockholder - - 49,869
During 1991, the Company extinguished
liabilities via the issuance of common
stock at a value of $30,400 - - 30,400
</TABLE>
Page 5 of 12
<PAGE> 6
Nu-Tech Bio-Med, Inc. and Subsidiary
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1996
(Unaudited)
A. Basis of Presentation
In the opinion of management of Nu-Tech Bio-Med, Inc. (the "Company" or
"Nu-Tech") the accompanying unaudited financial statements contain all
adjustments necessary to present fairly the financial position of the
Company at March 31, 1996, and the results of operations and cash flows
for the three months ended March 31, 1996.
The consolidated financial statements have been prepared in accordance
with the provisions of Statement of Financial Accounting Standards No.
7, "Accounting and Reporting by Development Stage Enterprises" since
the Company's planned principal operations have commenced, but there
has been no significant revenue therefrom. Successful completion of the
Company's development program and its transition to ultimately
attaining profitable operations is dependent upon achieving a level of
sales adequate to support the Company's cost structure.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-QSB and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March
31, 1996, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1995.
B. Adoption of New Accounting Pronouncements
The Company has adopted Statement of Financial Accounting Standards No.
121 ("SFAS 121"), Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of, which requires impairment
losses to be recorded on the long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived
assets that are expected to be
Page 6 of 12
<PAGE> 7
disposed of. The adoption of SFAS 121 has no impact on the financial
position or results of operations of the Company as no indicators of
impairment currently exist.
The Company has adopted the disclosure provisions of Financial
Accounting Standards No. 123 ("SFAS 123"), Accounting and Disclosure of
Stock-Based Compensation. The Company will continue to account for its
stock-based compensation arrangements under the provisions of APB 25,
Accounting for Stock Issued to Employees.
C. Subsequent Event
The Company, during April 1996, completed a private sale of 250,000
shares of its Common Stock at $11.50 per share for an aggregate of
$2,875,000, with expenses of approximately $245,000, for net proceeds
of approximately $2,630,000. Additionally, the placement agent received
Warrants to purchase 75,000 shares of the Company's Common Stock at an
exercise price of $14.50 per share.
The following table sets forth information of the Company as of March
31, 1996, on an actual and pro forma basis taking into consideration
the April 1996 private placement offering.
<TABLE>
<CAPTION>
March 31, 1996
--------------
Actual Pro Forma
------ ---------
<S> <C> <C>
Cash and Cash Equivalents $2,081,902 $4,711,902
Working Capital $1,239,005 $3,869,005
Total Assets $3,394,155 $6,024,155
Total Stockholders' Equity $2,062,324 $4,692,324
</TABLE>
Page 7 of 12
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended March 31, 1996, compared with three months ended
March 31, 1995
The Company is classified as a development stage company for financial
accounting purposes by reason of the fact that it has not generated significant
revenues from operations to date. Total revenues for the three months ended
March 31, 1996, were $53,777 compared to $83,905 for the three months ended
March 31, 1995. The decrease in total revenues is due to a reduced number of
assays received for processing.
Assay sales, net of billing adjustments, from the processing of ABC's
assay, the Fluorescent Cytoprint Assay, were $23,730 and $53,772 for the three
months ended March 31, 1996 and 1995, respectively.
The Company reported no contract revenues for the three months ended
March 31, 1996, as compared to $2,100 for the three months ended March 31, 1995.
Contract revenues represent revenues from various pharmaceutical and drug
development organizations to test new chemotherapy compounds using the FCA.
Payments received are recorded as deferred income and are recongized as other
revenue according to the percent or work completed.
General and administrative expenses for the three months ended March
31, 1996, increased to $452,886 compared to $295,984 for the three months ended
March 31, 1995. The increase is primarily due to accrued tax compensation
related to the grant of 100,000 restricted shares granted to an executive
officer on June 8, 1995. Additionally, a reduction in sales and marketing costs
has occured, but was partially offset by a one time non-recurring charge of
approximately $50,000 associated with the severance package of a former officer
of the Company.
Laboratory expenses for the three months ended March 31, 1996 and 1995
were $35,143 and $57,561, respectively. The decrease is primarily due to reduced
requirements of laboratory supplies as well as a decrease in costs associated
with laboratory personnel.
Research and development expenses for the three months ended March 31,
1996 and 1995, were $20,768 and $15,121, respectively. The increase is primarily
due to costs associated with the clinical trial as well as costs incurred to
expand testing services.
Depreciation and amortization expenses for the three months ended March
31, 1996, were $264,969 as compared to $25,562 for the three months ended March
31, 1995. This increase was primarily due to the incurrance of an additional
$208,500 of amortization directly related to the grant of 100,000 restricted
shares granted to an executive officer on June 8, 1995.
Page 8 of 12
<PAGE> 9
Interest expense for the three months ended March 31, 1996 and 1995,
were $8,038 and $9,277, respectively. This decrease was due to the reduction of
principal outstanding for loans from the State of Rhode Island's Small Business
Loan Fund Corporation.
Rent expense for the three months ended March 31, 1996, was $20,155 as
compared to $6,090 for the three months ended March 31, 1995. This increase was
primarily due to the commencement of rent for administrative offices located in
New York.
For the three months ended March 31, 1996, the Company incurred a net
loss of $748,182 ($0.43 per share) compared to a net loss of $325,690 ($0.23 per
share) for the three months ended March 31, 1995. The increase of $422,492 is
primarily due to increases in depreciation and amortization expense of $208,500
as well as general and administrative expenses of approximately $158,000. The
increase in the net loss per common share was primarily due to an increase in
depreciation and amortization expense as well as general and administrative
expenses. Weighted average shares were 1,728,069 and 1,429,128 for the three
months ended March 31, 1996 and 1995, respectively. This increase is primarily
due to the issuance of shares associated with the Company's April and July 1995
private sales of securities.
Balance Sheet
Total assets amounted to $3,394,155 at March 31, 1996, versus
$3,818,575 at December 31, 1995. The period to period decrease of $424,420 was
principally due to a reduction in cash and cash equivalents of $456,100, but was
partially offset by an increase in costs relating to pending acquisitions.
Total current liabilities, inclusive of the current portion of long
term debt, amounted to $1,027,760 at March 31, 1996, versus $871,632 at December
31, 1995. The period to period increase of $156,128 was primarily due to an
increase in accrued tax compensation.
Liquidity and Capital Resources
At March 31, 1996, the Company's working capital was $1,239,005
compared to $1,895,168 at December 31, 1995. The decrease in working capital of
$656,163 was primarily due to the utilization of net cash of $456,100 during the
period to support operating activities and the payment and reduction of current
liabilities.
Weighted average shares were 1,728,069 and 1,429,128 for the three
months ended March 31, 1996 and 1995, respectively. This increase is primarily
due to the issuance of shares associated with the Company's April and July 1995
private sales of securities.
Subsequent to the quarter ended March 31, 1996, the Company completed
the sale of 250,000 shares of its Common Stock for an aggregate of $2,875,000.
The net proceeds of $2,630,000 realized by the Company from this transaction
have been added to the Company's working capital.
Page 9 of 12
<PAGE> 10
The primary source of the Company's liquidity is its cash on hand
provided by the proceeds received from its December 20, 1994, public offering
and its April 1995, July 1995 and April 1996 private sales of its securities.
Plan of Operations
The Company is classified as a development stage company for financial
reporting purposes and its financial statements are prepared in accordance with
the provision of Statement of Financial Accounting Standards No. 7, "Accounting
and Reporting by Development Stage Enterprises", since the Company's planned
principal operations have commenced, but there has been no significant revenues
therefrom.
The Company believes that its current cash position is adequate and
sufficient for the Company's anticipated needs for the forseeable future. The
Company may require additional funds to accomplish strategic acquisitions. No
assurance may be given that such additional capital, if required, will be
available to the Company in the future and, if not available, may have an
adverse effect on the ability to accomplish any aquisitions.
Effects of Inflation
Management does not believe that inflationary effects will have a
material impact on the Company. Management does believe, however, that current
governmental proposals for comprehensive health care reform, including mandated
basic health care benefits, controls on health care spending, price controls,
and proposed fundamental changes in the health care delivery system may have an
impact upon the Company. Although the Company believes its FCA to be cost
effective in overall chemotherapy treatment, changes in the level of support by
federal and state governments of health care services, the methods by which such
services may be delivered and the prices for such services may all have a
materially adverse impact on the Company's ability to achieve and sustain a
profit. Health care reform could also reduce the profitability of certain
medical institutions and, in turn, adversely impact the fees the Company is able
to charge for its FCA. The Company cannot predict which, if any, health care
reform plan may be adopted or, if adopted, the effect on its business.
(This space intentionally left blank)
Page 10 of 12
<PAGE> 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K/A
During the quarter ended March 31, 1996, the following report
on Form 8-K/A was filed by the Registrant:
<TABLE>
<CAPTION>
Date of the Report Item Reported Description of Item
- ------------------ ------------- -------------------
<S> <C> <C>
January 11, 1996 Item 5. Other Events Listing of Common Stock on the
Boston Stock Exchange
Clinical Trials Agreement
</TABLE>
SIGNATURES
In accordance with requirements of the Securities Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NU-TECH BIO-MED, INC.
(Registrant)
Dated: May 9, 1996 by: /s/ J. Marvin Feigenbaum
------------------------
J. Marvin Feigenbaum
President, Chief Executive
and Chief Financial Officer
Page 11 of 12
<PAGE> 12
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000716778
<NAME> NU-TECH BIO-MED. INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 2,081,902
<SECURITIES> 0
<RECEIVABLES> 44,377
<ALLOWANCES> 19,830
<INVENTORY> 14,098
<CURRENT-ASSETS> 2,266,765
<PP&E> 693,961
<DEPRECIATION> 235,700
<TOTAL-ASSETS> 3,394,155
<CURRENT-LIABILITIES> 1,027,760
<BONDS> 513,079
0
0
<COMMON> 17,422
<OTHER-SE> 2,044,902
<TOTAL-LIABILITY-AND-EQUITY> 3,394,155
<SALES> 23,730
<TOTAL-REVENUES> 53,777
<CGS> 0
<TOTAL-COSTS> 801,959
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7,795
<INTEREST-EXPENSE> 8,038
<INCOME-PRETAX> (748,182)
<INCOME-TAX> 0
<INCOME-CONTINUING> (748,182)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (748,182)
<EPS-PRIMARY> (.43)
<EPS-DILUTED> (.43)
</TABLE>
