<PAGE>
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U.S. 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 MARCH 31, 1995
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-11303
SYNBIOTICS CORPORATION
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 95-3737816
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11011 VIA FRONTERA
SAN DIEGO, CALIFORNIA 92127
(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 451-3771
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 April 28, 1995, 5,803,376 shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format: Yes [_] No [X]
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1
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SYNBIOTICS CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
- ---------------------------------------------------------------------------------
<S> <C>
PART I. Condensed Statement of Operations -
Three months ended March 31, 1995 and 1994 3
Condensed Balance Sheet -
March 31, 1995 and December 31, 1994 4
Condensed Statement of Cash Flows -
Three months ended March 31, 1995 and 1994 5
Notes to Condensed Financial Statements 6
Management's Discussion and Analysis or Plan of Operation 7
PART II. Other Information 7
</TABLE>
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
SYNBIOTICS CORPORATION
CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1995 1994
---------- ----------
<S> <C> <C>
Revenues:
Product sales $4,826,000 $5,486,000
License fees and other 50,000 65,000
Interest 9,000 15,000
---------- ----------
4,885,000 5,566,000
---------- ----------
Cost and expenses:
Cost of sales 2,183,000 2,684,000
Research and development 201,000 249,000
Selling and marketing 1,378,000 1,430,000
General and administrative 351,000 784,000
---------- ----------
4,113,000 5,147,000
---------- ----------
Income before income taxes 772,000 419,000
Provision for income taxes 18,000
---------- ----------
Net income $ 754,000 $ 419,000
========== ==========
Net income per share $.13 $.07
========== ==========
Weighted average shares outstanding 5,803,000 5,906,000
========== ==========
</TABLE>
Net (loss) income per share was computed based upon the weighted average
number of shares outstanding, including common stock equivalents.
See accompanying notes to condensed financial statements.
3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
SYNBIOTICS CORPORATION
CONDENSED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- -----------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $1,151,000 $ 447,000
Securities available for sale 507,000 502,000
Accounts receivable 2,023,000 1,444,000
Inventories 2,870,000 2,763,000
Other current assets 854,000 963,000
----------- -----------
Total current assets 7,405,000 6,119,000
Property and equipment, net 1,233,000 1,329,000
Securities available for sale 860,000 942,000
Other assets 1,870,000 1,921,000
----------- -----------
$11,368,000 $10,311,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,041,000 $1,662,000
Other current liabilities 701,000 695,000
----------- -----------
Total current liabilities 2,742,000 2,357,000
----------- -----------
Shareholders' equity:
Common stock, no par value, 24,800,000 shares authorized,
5,803,000 shares issued and outstanding at March 31, 1995
and December 31, 1994 29,318,000 29,318,000
Unrealized holding losses from securities available for sale (1,777,000) (1,695,000)
Accumulated deficit (18,915,000) (19,669,000)
----------- -----------
Total shareholders' equity 8,626,000 7,954,000
----------- -----------
$11,368,000 $10,311,000
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
SYNBIOTICS CORPORATION
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
March 31, December 31,
1995 1994
----------- -----------
(unaudited) (audited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 754,000 $ 419,000
Adjustments to reconcile net income to net cash
used for operating activities:
Depreciation and amortization 251,000 201,000
Changes in assets and liabilities:
Accounts receivable (579,000) (1,759,000)
Receivable from affiliates 22,000
Inventories (107,000) 643,000
Other assets 65,000 (88,000)
Accounts payable and accrued expenses 379,000 671,000
Other liabilities 6,000 3,000
----------- -----------
Net cash provided by operating activities 769,000 112,000
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment (60,000) (105,000)
Investment in securities available for sale (5,000)
Loans to affiliates (300,000)
----------- -----------
Net cash used for investing activities (65,000) (405,000)
----------- -----------
Net increase (decrease) in cash and equivalents 704,000 (293,000)
Cash and equivalents - beginning of year 447,000 3,928,000
----------- -----------
Cash and equivalents - end of period $1,151,000 $3,635,000
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
SYNBIOTICS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - INTERIM FINANCIAL STATEMENTS:
The accompanying balance sheet as of March 31, 1995 and the statements of
operations and of cash flows for the three month periods ended March 31, 1995
and 1994 have been prepared by Synbiotics Corporation (the Company) and have not
been audited. These financial statements, in the opinion of management, include
all adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of the financial position, results of operations and cash
flows for all periods presented. The financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB filed for the year ended December 31,
1994. Interim operating results are not necessarily indicative of operating
results for the full year.
NOTE 2 - SECURITIES AVAILABLE FOR SALE:
Included in current assets are securities available for sale which consist of
U.S. Government Treasury bills.
NOTE 3 - INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Raw materials $ 624,000 $ 576,000
Work in process 767,000 756,000
Finished goods 1,479,000 1,431,000
---------- ----------
$2,870,000 $2,763,000
========== ==========
</TABLE>
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
RESULTS OF OPERATIONS
Total revenue for the first quarter of 1995 decreased by $681,000 or 12% from
the first quarter of 1994. Product sales during the first quarter of 1995
decreased $660,000 or 12%. The decrease is due to a $1,127,000 or 46% decrease
in vaccine sales, offset by an increase of $467,000 or 15% in diagnostic sales.
Vaccine sales decreased primarily due to decreased international shipments of
bulk feline leukemia vaccine to Rhone-Merieux, which bottles and markets the
Company's feline leukemia vaccine under its own brand name in certain parts of
Europe, and the fact that vaccine sales during the first quarter of 1994 were
unusually large as a result of initial "load-in" distributor purchases as part
of the Company's new vaccine product line launch. The increased diagnostic
sales are primarily due to the introduction of ICT GOLD/TM/ HW, the Company's
new canine heartworm diagnostic, in March 1995.
The cost of sales as a percentage of product revenue decreased to 45% during the
first quarter of 1995 as compared to 49% for the first quarter of 1994. The
decrease is due to the increased sales of diagnostic products, which generally
have higher profit margins, and the decrease in sales of vaccine products, which
generally have lower profit margins.
Research and development expenses during the first quarter of 1995 decreased by
$48,000 or 19% from the first quarter of 1994. The decrease is due to completion
of the development of the Company's ICT GOLD/TM/ HW canine heartworm diagnostic
test which was introduced in March 1995.
General and administrative expenses during the first quarter of 1995 decreased
by $433,000 or 55% from the first quarter of 1994. The decrease is due to a
decrease in legal expenses as a result of the settlement of major litigation in
December 1994.
The Company's business is seasonal, and is concentrated within the canine
heartworm selling season, which falls mainly in the quarters ending March 31 and
June 30 of each year. Sales and profits from operations in the quarters ending
September 30 and December 31 of each year are expected to be less favorable than
in the heartworm selling season.
FINANCIAL CONDITION
Management believes that the Company's present capital resources, which included
working capital of $4,663,000 at March 31, 1995, are sufficient to meet its
current working capital needs.
PART II. OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS:
------------------
None.
ITEM 2. CHANGES IN SECURITIES:
----------------------
None.
7
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
--------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
----------------------------------------------------
None.
ITEM 5. OTHER INFORMATION:
------------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
---------------------------------
(a) Exhibits
--------
11.1 Computation of Loss Per Share.
27 Financial Data Schedule (for electronic filing purposes only).
(b) 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, thereto duly
authorized.
SYNBIOTICS CORPORATION
Date: May 15, 1995 /s/ Michael K. Green
-----------------------
Michael K. Green
Vice President of Finance and Chief Financial Officer
(signing both as a duly authorized officer and as
principal financial officer)
8
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SYNBIOTICS CORPORATION EXHIBIT 11.1
------------
COMPUTATION OF EARNINGS PER SHARE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1995 1994
----------- ----------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net income per statement of operations $ 754,000 $ 419,000
=========== ==========
Weighted average number of shares outstanding 5,803,000 5,906,000
=========== ==========
Primary earnings per share $ .13 $ .07
=========== ==========
FULLY DILUTED EARNINGS PER SHARE:
Net income per statement of operations $ 754,000 $ 419,000
=========== ==========
Reconciliation of weighted average number of shares per
primary computation above, to amount used for fully
diluted computation:
Weighted average number of shares outstanding, per
primary computation 5,803,000 5,906,000
Add-effect of outstanding options (as determined by
the application of the treasury method) 3,000 6,000
----------- ----------
Weighted average number of shares, as adjusted 5,806,000 5,912,000
=========== ==========
Fully diluted earnings per share $ .13 $ .07
=========== ==========
</TABLE>
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEET AS OF MARCH 31, 1995 AND THE RELATED CONDENSED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,
1995 INCLUDED ELSEWHERE IN THIS FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,151
<SECURITIES> 507
<RECEIVABLES> 2,102
<ALLOWANCES> 79
<INVENTORY> 2,870
<CURRENT-ASSETS> 7,405
<PP&E> 4,383
<DEPRECIATION> 3,150
<TOTAL-ASSETS> 11,368
<CURRENT-LIABILITIES> 2,742
<BONDS> 0
<COMMON> 29,318
0
0
<OTHER-SE> (20,692)
<TOTAL-LIABILITY-AND-EQUITY> 11,368
<SALES> 4,826
<TOTAL-REVENUES> 4,885
<CGS> 2,183
<TOTAL-COSTS> 4,113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 772
<INCOME-TAX> 18
<INCOME-CONTINUING> 754
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 754
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
