<PAGE>
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-11232
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VEREX LABORATORIES, INC.
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(Exact name of Registrant as specified in its charter)
Colorado 84-0850695
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Inverness Drive East, D-100 Englewood, Colorado 80112
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(Address of principal executive offices)
(303) 799-4499
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report.)
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 requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The registrant had 2,327,359 shares of its no par value common stock
outstanding as of September 30, 1997.
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<PAGE>
VEREX LABORATORIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Assets September 30, 1997 June 30, 1997
(Unaudited) (Audited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 37,742 $ 13,915
Prepaid expenses 8,671 9,125
--------- ----------
46,413 23,040
Property and Equipment, at cost
Furniture and equipment 490,663 489,900
Leasehold improvements 1,317 1,317
--------- ----------
491,980 491,217
Less accumulated depreciation
and amortization (467,918) (464,334)
---------- ----------
Property and equipment - net 24,062 26,883
Other Assets
Patents and trademarks, net of
accumulated amortization
of $260,442 and $254,836 158,819 156,541
Total $229,294 $206,464
---------- -----------
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable and other
accruals 206,740 217,329
Accrued salary and benefits
payable 243,204 101,910
Current portion of long-term
debt 42,413 51,913
------------ -----------
492,357 371,152
Long-term liabilities
Accrued salary and benefits
payable, net of current
portion 117,406 117,406
Commitments and contingencies
(Note 4)
Stockholders' Equity
Common Stock, no par value,
100,000,000 shares authorized
2,327,359 and 2,301,359 shares
issued and outstanding 2,304,422 2,304,422
Additional paid in capital 10,332,114 10,332,114
Accumulated deficit (13,017,005) (12,918,570)
----------- -----------
(380,469) (282,034)
----------- -----------
Total $229,294 $206,464
</TABLE>
See notes to consolidated financial statement
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<PAGE>
VEREX LABORATORIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
For The Three For The Three
Months Ending Months Ending
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Revenues
Licensing income 98,000
Miscellaneous 1 350
$ 98,001 $ 350
Cost and Expenses
General and administrative 192,300 234,715
Research and development 3,597 70,433
Marketing 479
Interest 35,146
--------- ----------
196,376 340,294
Net Income (loss) ($98,375) ($339,944)
Net income (loss) per common
share (note 3) ($0.04) ($0.15)
Weighted average shares outstanding 2,327,359 2,312,239
</TABLE>
See notes to consolidated financial statement
-3-
<PAGE>
VEREX LABORATORIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For The Three For The Three
Months Ending Months Ending
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Cash Flows from operating activities
Net income (loss) ($98,375) ($339,944)
Adjustments to reconcile net income
(loss) to net
cash flow provided by (used in)
operating activities
Depreciation and amortization 9,190 11,812
Changes in certain assets &
liabilities:
Patented drug products 32,763
Receivables 7,513
Other assets 454 (3,816)
Accounts payable and other
accruals (10,589) (58,288)
Accrued interest (35,146)
Accrued salary and benefits
payable 141,294 103,172
-------- --------
Net cash provided by (used in)
operating activities $41,974 ($211,642)
Cash flows from financing
activities:
Proceeds from note payable
Payments on note payable (9,500)
-------
Net cash provided by financing
activities (9,500)
Cash flows from investing
activities:
Proceeds from sale of common stock 65,000
Additions to property and equipment (763)
Additions to patents and trademarks (7,884) (6,007)
Net cash provided by (used in)
-------- --------
investing activities (8,647) 58,993
Net increase (decrease) in cash and
cash equivalents 23,827 (152,649)
Cash and cash equivalents-beginning
of period 13,915 155,229
Cash and cash equivalents-end of
period $37,742 $2,580
Supplemental disclosures:
Cash flow information:
Cash paid for interest was
$0 (1997) and $0 (1996)
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE>
VEREX LABORATORIES, INC. and SUBSIDIARIES
Consolidated Notes to Financial Statements
(Unaudited)
1. Financial Statements
--------------------
These unaudited financial statements should be read in conjunction with the
Company's financial statements as of June 30, 1997, included in the Annual
Report on Form 10-K. In the opinion of the Company, the accompanying
consolidated financial statements contain all adjustments (consisting of
normal recurring items) necessary to present fairly the consolidated
financial position and results of operations for the periods presented. The
results of operations for the three-month period ended September 30, 1997,
are not necessarily indicative of the results to be expected for the full
year. The Company's consolidated financial statements include the accounts
of its wholly-owned subsidiary Bear Laboratories, Inc.
2. Commitments
-----------
Office Lease:
- ------------
The Company is obligated under an office lease commencing April 1, 1997 and
ending on March 31, 2000, to pay $6,826.54 in monthly installments for its
general office and research facility, which contains 8,623 sq. ft. of space.
A portion of this space is subleased to others.
3. Net Income Per Common Share
---------------------------
Income (loss) per common share for the three-month periods ended September
30, 1997 and September 30, 1996 has been computed on the basis of the
weighted number of common shares outstanding of 2,327,359 and 2,312,239 at
September 30, 1997 and 1996 respectively.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Operations
----------
The first three months of fiscal year 1998 ending September 30, 1997
resulted in revenue of $98,000 from operations as compared to $350 for the
corresponding fiscal 1997 period. The revenues are from licensing Company
drug formulations. General and administrative expense and research and
development expense are substantially less than in 1997 due to general belt
tightening.
Financial Position
------------------
The Company went from a deficit shareholders' equity of $282,034 to a
negative shareholders' equity of $380,469 as a result of losses for the
quarter of $98,375, which is down by $241,000 compared to the corresponding
quarter for last fiscal year.
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<PAGE>
Liquidity and Capital Resources
-------------------------------
The Company in the past was dependent upon Birklea, Ltd., an Irish
corporation, and other outside sources to provide equity and/or debt
financing to the Company to help fund its research and development and other
administrative costs. It is estimated that an additional $36,000 during the
next three months will be required to fund the Phase III Aztec? clinical
trials. The Company is currently seeking funding from outside sources,
including licensing arrangements. There is no assurance such funding will
be available, or if available, on terms favorable or acceptable to the
Company. The Company has had success in recent years in obtaining capital,
in the form of private placement of common stock, from investors outside the
U.S. These funds were used to pay for clinical trials and general and
administrative expenses.
Except as indicated above, there are no planned expenditures outside the
normal operating costs of the Company which will cause the Company to make
any extraordinary plans for handling any cash requirements within the
foreseeable future.
The Company currently has very limited cash resources and expects no
further funding through Birklea Ltd. It is seeking funding through a variety
of other sources, including private investors, industry partners, licensing
arrangements and possibly other means. The Company is currently deferring
salaries of some of its employees and is unable to pay some other overhead
items. Unless it is able to find funding by March 31, 1998, it may be forced
to either merge with another company or discontinue further operations.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibit 3.1 Restated Articles of Incorporation*
Exhibit 3.2 Restated By-Laws*
Stock Purchase Agreement - Birklea, Ltd. **
Stock Option - James M. Dunn, M.D. **
Stock Option - Jerry R. Dunn **
Exhibit 10 - Agreement - Birklea Ltd. and Dr. James M. Dunn
*Incorporated by reference to SEC File No. 2-82403-D filed September 30,
1983
**Incorporated by reference to SEC File No. 0-11232, Form 8-K January 14,
1993
(b) No reports on Form 8-K were filed during the quarter ended September
30, 1997.
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<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
(Registrant) VEREX LABORATORIES, INC.
(Date) November 17, 1997
By:(Signature) /s/ James M. Dunn, M.D.
(Name and Title) James M. Dunn, M.D.
President, Chief Executive Officer
and Chief Financial Officer
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 37,742
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,413
<PP&E> 491,980
<DEPRECIATION> 467,918
<TOTAL-ASSETS> 229,294
<CURRENT-LIABILITIES> 492,357
<BONDS> 0
0
0
<COMMON> 2,327,359
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 229,294
<SALES> 0
<TOTAL-REVENUES> 98,001
<CGS> 0
<TOTAL-COSTS> 196,376
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (98,357)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (98,375)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
