<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
10-Q/A
For Quarter Ended: December 31, 1994
Commission File Number 0-14983
APPLIED MICROBIOLOGY, INC.
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(Exact name of registrant as specified in its charter)
New York 11-2653613
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(State or other jurisdiction of (IRS Employer Identification number)
incorporation of organization)
771 Old Saw Mill River Road, Tarrytown, New York 10591
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(Address of principal executive offices) (Zip Code)
(914) 347-5767
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(Registrant's telephone number, including area code)
170 53rd Street, Brooklyn, New York 11232
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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
filing requirements for the past 90 days.
YES X NO _________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, Par Value $ .005 18,165,358 shares as of December 31, 1994
<PAGE>
APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1 Condensed Consolidated Financial
Statements (Unaudited)
Balance Sheets at December 31, 1994
and June 30, 1994 3 - 4
Statements of Operations for the three
months ended December 31, 1994 and
December 31, 1993, and for the
six months ended December 31, 1994
and December 31, 1993 5
Statement of Stockholders' Equity
for the six months ended
December 31, 1994 6
Statements of Cash Flows for the six
months ended December 31, 1994
and December 31, 1993 7
Notes to Financial Statements 8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 June 30 December 31 June 30
1994 1994 1994 1994
(Unaudited) (Note) (Unaudited) (Note)
GBP'000 GBP'000 $'000 $'000
----------- ------- ----------- -------
ASSETS
Current assets:
Cash and cash equivalents 2,465 3,273 3,837 5,048
Trade accounts receivable
less allowance for
doubtful accounts of
GBP 9,000 at December
and GBP 20,000 at June 781 855 1,216 1,319
Inventories (Note D) 1,159 945 1,804 1,458
Prepayments and other current
assets 456 396 710 611
Due from affiliated companies 373 4 580 6
------- ------- ------- -------
Total current assets 5,234 5,473 8,147 8,442
Property, plant and equipment,
at cost less accumulated
depreciation of GBP 2,587,000
at December and GBP 2,432,000
at June 1,928 1,650 3,001 2,545
Patent costs and licensed
technology at cost less
accumulated amortization of
GBP 371,000 at December and
GBP 313,000 at June 526 505 819 779
Other asset 66 27 102 42
------- ------- ------- -------
TOTAL ASSETS 7,754 7,655 12,069 11,808
======= ======= ======= =======
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
December 31 June 30 December 31 June 30
1994 1994 1994 1994
(Unaudited) (Note) (Unaudited) (Note)
GBP'000 GBP'000 $'000 $'000
----------- ------- ----------- -------
LIABILITIES, REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable 8 8 12 12
Accounts payable and accrued
expenses 381 482 593 743
Due to affiliated companies 35 152 55 234
Other liabilities 65 40 101 62
Dividends payable 20 17 31 26
Income tax payable 115 7 179 11
------- ------- ------- -------
Total current liabilities 624 706 971 1,088
Notes payable 10 14 16 22
Deferred taxes payable 280 280 436 432
------- ------- ------- -------
TOTAL LIABILITIES 914 1,000 1,423 1,542
------- ------- ------- -------
Preferred stock:
Redeemable preferred stock,
$0.01 par value, authorised
6,500,000 shares, issued
and outstanding 1,500,000
shares, aggregate liquidation
value GBP 964,000 758 758 1,500 1,500
Stockholders' Equity:
Common stock, $0.005 par value,
authorised 25,000,000 shares.
Issued and outstanding
18,165,358 at December 31
and 18,155,858 at June 30 47 47 91 91
Additional paid-in capital 21,022 21,011 31,369 31,351
Accumulated deficit (15,196) (15,413) (22,943) (23,276)
Currency translation adjustments 209 252 629 600
-------- -------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 6,082 5,897 9,146 8,766
-------- -------- -------- --------
TOTAL LIABILITIES, REDEEMABLE 7,754 7,655 12,069 11,808
PREFERRED STOCK AND STOCKHOLDERS' ======== ======== ======== ========
EQUITY
See notes to condensed consolidated financial statements
Note: The Balance Sheet as of June 30, 1994 has been derived from the audited
consolidated financial statements at that date.
<PAGE>
APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
--------------------------------------- -------------------------------------
1994 1993 1994 1993 1994 1993 1994 1993
GBP'000 GBP'000 $'000 $'000 GBP'000 GBP'000 $'000 $'000
------- ------- ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales 1,553 1,484 2,451 2,201 3,243 3,082 5,059 4,586
Cost of Sales (528) (492) (833) (730) (1,037) (986) (1,618) (1,467)
------ ------ ------ ------ ------ ------ ------ ------
GROSS PROFIT 1,025 992 1,618 1,471 2,206 2,096 3,441 3,119
Other operating income 46 66 73 98 91 100 142 149
Selling, general and
administrative expenses (716) (669) (1,130) (992) (1,381) (1,255) (2,156) (1,867)
Research costs (192) (107) (303) (159) (384) (173) (599) (258)
Depreciation and amortization (100) (98) (158) (145) (197) (194) (308) (288)
------ ------ ------ ------ ------ ------ ------ ------
OPERATING INCOME 63 184 100 273 335 574 520 855
Interest income 18 16 28 23 49 48 76 71
Interest expense (2) (1) (3) (1) (3) (1) (5) (1)
------ ------ ------ ------ ------ ------ ------ ------
INCOME BEFORE TAX EXPENSE 79 199 125 295 381 621 591 925
Tax (expense)/credit (103) 16 (163) 24 (126) (16) (198) (24)
------ ------ ------ ------ ------ ------ ------ ------
NET (LOSS)/INCOME (24) 215 (38) 319 255 605 393 901
------ ------ ------ ------ ------ ------ ------ ------
EARNINGS PER SHARE - GBP 0.01 - $ 0.02 GBP 0.01 GBP 0.03 $ 0.02 $ 0.05
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Preferred Common Additional Accumulated Currency
Stock Stock Paid In Deficit Translation
Capital Adjustment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1994 - 47 21,011 (15,413) 252
Common stock issued on exercise
of options - - 11 - -
Net income for the period - - - 255 -
Preference dividend paid - - - (18) -
Preference dividend provided - - - (20) -
Arising on translation during
the period - - - - (43)
---- ---- ------ ------- ----
- 47 21,022 (15,196) 209
==== ==== ====== ======= ====
$'000 equivalent - 91 31,369 (22,943) 629
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
December 31
1994 1993 1994 1993
GBP'000 GBP'000 $'000 $'000
------- ------- ----- -----
Cash flows from operating activities
Net income 255 605 393 901
Adjustments to reconcile net income
to cash (used in)/provided
by operating activities:-
Depreciation and amortization 197 194 308 288
Provision for deferred income taxes - 5 - 7
Changes in assets and liabilities:
Decrease in trade accounts receivable 74 428 116 638
(Increase)/decrease in inventories (213) 89 (333) 133
Increase in other assets (98) (41) (153) (62)
Increase in amounts due from
affiliated companies (362) (28) (557) (46)
Increase in income tax payable 108 12 169 18
Decrease in accounts payable and
accrued expenses (101) (177) (156) (265)
Decrease in amounts due to
affiliated companies (129) (12) (200) (18)
Increase/(decrease) in other payables 25 (46) 39 (68)
----- ----- ----- -----
Net cash (used in)/provided by
operating activities (244) 1,029 (374) 1,526
----- ----- ----- -----
Cash flows from investing activities:
Acquisition of property and equipment (416) (55) (651) (82)
Patent and licenced technology costs (87) (92) (136) (136)
----- ----- ----- -----
Net cash used in investing activities (503) (147) (787) (218)
----- ----- ----- -----
Cash flows from financing activities:
Dividend paid (36) (97) (60) (144)
Repayment of notes payable (4) (4) (6) (6)
Proceeds from issue of common stock 11 - 18 -
Decrease in bank overdraft - (193) - (291)
----- ----- ----- -----
Net cash used in financing activities (29) (294) (48) (441)
----- ----- ----- -----
Net (decrease)/increase in cash and
cash equivalents (776) 588 (1,209) 867
Cash and cash equivalents at
beginning of period 3,273 2,366 5,048 3,571
Effect of exchange rate movement (32) 49 (2) (12)
----- ----- ----- -----
Cash and cash equivalents at
end of period 2,465 3,003 3,837 4,426
===== ===== ===== =====
Supplementary disclosure of cash
flow information:
Interest paid 3 1 4 1
Tax paid 17 100 27 148
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1994
Note A Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial statement reporting and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all 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 six
month period ended December 31, 1994 are not necessarily indicative
of the results that may be expected for the year ending June 30,
1995. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's annual report
on Form 10-K for the year ended June 30, 1994.
Note B Currency
As a consequence of the acquisition in August 1992 of Aplin & Barrett
Limited, which for financial reporting purposes is accounted for as a
reverse acquisition, the reporting currency for the combined entity
is the Great Britain pound (GBP). For information purposes, U.S.
dollar ($) translated figures are included.
Note C Exchange Rate
Balances denominated in $ have been converted to GBP at the following
rates:
1994 1993
Rate Rate Method
---- ---- ------
Statement of operations
and Statement of cash
flows:
- quarter to September 30 1.5432 1.4928 average rate
- quarter to December 31 1.578 1.4829 for period
Balance sheet
- assets and liabilities 1.5565 1.4737 period end rate
- stockholders' equity historical rate
accounts
Note D Inventories
The components of inventory consist of the following:-
December 31 June 30
1994 1994
GBP'000 GBP'000
----------- -------
Raw materials 62 62
Work in process 474 396
Finished products 623 487
------- ------
1,159 945
------- ------
Note E Preferred Stock Dividends
Dividends payable on Preferred Stock as of December 31, 1994 are
approximately 20,000 pounds.
<PAGE>
APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1994
Note F Income Taxes
Effective July 1, 1992 the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. The
Company has fully reserved the tax benefit of its operating loss
carry forwards due to the fact that the likelihood of realization of
the tax benefits cannot be established.
Note G Earnings per share
Earnings per share for the quarters ending September 30, 1993,
December 31, 1993 and September 30, 1994 is computed based on the
weighted average number of shares actually outstanding plus the
shares that would be outstanding assuming the exercise of dilutive
stock options, all of which are considered to be common stock
equivalents. The number of shares that would be issued from the
exercise of stock options has been reduced by the number of shares
that could have been purchased from the proceeds at the average
market price of the company's stock. Earnings per share for the
quarter ending December 31, 1994 does not include the exercise of
stock options because the effect of such inclusion would be to
increase earnings per share.
3 months ended 6 months ended
December 31 December 31
1994 1993 1994 1993
No. of shares No. of shares
------------- -------------
Average shares outstanding 18,163,691 18,100,858 18,160,916 17,932,211
Net effect of dilutive stock
options - 931,844 158,012 818,150
----------- ---------- ---------- ----------
Total average shares 18,163,691 19,032,702 18,318,928 18,750,361
----------- ----------- ---------- ----------
GBP'000 GBP'000 GBP'000 GBP'000
Net (loss)/income (24) 215 255 605
Preferred stock dividend (20) (16) (38) (54)
----------- ----------- ---------- ----------
Net income attributable to
common stockholders (44) 199 217 551
----------- ----------- ---------- ---------
Earnings per share of
common stock - GBP 0.01 GBP 0.01 GBP 0.03
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Following the acquisition in August 1992 of Aplin & Barrett Limited (A&B),
which was accounted for as a reverse acquisition, in accordance with U.S. GAAP
the reporting currency for the financial statements is the Great Britain Pound
Sterling (GBP). Most of the figures in this discussion are therefore stated
in that currency. Certain salient figures are also shown in U.S. dollars ($),
based on the exchange rates disclosed in Note C to the condensed consolidated
financial statements.
Financial Condition
At December 31, 1994 the Company had working capital of GBP 4.610 million
($7.176 million), including a cash balance of GBP 2.465 million ($3.837
million), compared to June 30, 1994 working capital of GBP 4.767 million
($7.354 million), including a cash balance of GBP 3.273 million ($5.048
million). The reduction in cash balance is due in part to an increase in
amounts due from affiliates, due to timing of transactions, of approximately
GBP 0.362 million ($ 0.557 million).
The Company had a cash outflow from operations in the six months to December
31, 1994 of GBP 0.244 million ($ 0.374 million), compared with the cash
generated of GBP 1.029 million ($ 1.526 million) in the six months to December
31, 1993. In addition to the outflow from operations, cash was used for
capital expenditure (GBP 0.503 million) and preferred stock dividends (GBP
0.036 million). The largest portion of the capital expenditure was spent at
the Company's UK manufacturing facility to upgrade the operations. Further
significant expenditure is anticipated in this area, although the Company is
considering, among other things, financing through leasing of equipment and
raising capital.
Results of Operations
Sales
Sales in the quarter increased over the corresponding period in 1993 by 4.6%,
to GBP 1.553 million ($ 2.451 million), and in the six month period by 5.2% to
GBP 3.243 million ($ 5.059 million). In $ terms, due to the fluctuation in
the exchange rate since last year, the increases were 11.4% for the quarter,
and 10.3% for the six month period.
The percentage of sales included in the total by product is:-
% of sales in quarter % change
1994 1993 1994 vs 1993
---- ---- ------------
Nisaplin 75.7 73.4 8.0
Ambicin 5.4 10.4 (46.5)
Other sales 18.9 16.2 22.1
------ ------ ------
100.0 100.0 4.6
------ ------ ------
% of sales in 6 months % change
1994 1993 1994 vs 1993
---- ---- ------------
Nisaplin 76.9 75.9 6.7
Ambicin 3.5 8.2 (57.7)
Other sales 19.6 15.9 29.6
------ ------ ------
100.0 100.0 5.2
------ ------ ------
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Sales of Ambicin were lower than in 1993, both in the quarter and in the six
months. This is partly due to selling goods to a major customer on a
consignment basis.
Included in Other sales are sales of lactobacillus acidophilus, Direct-Set
cultures, media, and agency sales. Sales of lactobacillus acidophilus reduced
in the quarter by 80%, and in the six months by 18.1%, sales in the first
quarter having increased. Sales of Direct-Set cultures increased by 94.7% in
the quarter, and by 100.0% in the six months, and accounted for 9.5% of total
sales in the quarter. Sales of media increased by 27.7% in the quarter, but
are down by 23.5% for the six months. Agency sales increased by 58.3% in the
quarter, and 153.5% in the six months.
Cost of Sales
Cost of sales as a percentage of revenues was 34.0% in the quarter, and 32.0%
in the six months, compared with 1993 figures of 33.2% and 32.0% respectively.
Research costs
Research costs increased in the quarter by GBP 0.085 million (79.4%), and in
the six month period by GBP 0.211 million (122.0%). The Company has continued
to increase its investment in research, mostly in the pharmaceutical area.
Additional staff have been recruited both in U.S. and U.K., and further
recruitment is anticipated. The Company will shortly be relocating its U.S.
laboratories to provide better facilities.
Selling, General and Administrative Expenses
In the three months to December 31, 1994, selling, general and administrative
expenses increased by GBP 0.047 million (7.0%) over 1993. In the six month
period to December 31, 1994, selling, general and administrative expenses
increased by GBP 0.126 million (10.0%).
Of the increase in the quarter, GBP 30,000 is due to increased costs in the
area of quality management as the Company increases its commitment to quality
in light of its ISO 9002 approved status. GBP 20,000 is due to increased
process development activity, following on from the research work being
conducted. The fluctuation in exchange rate reduces the GBP value of U.S.
expenses by approximately GBP 23,000 compared with 1993.
Of the increase in selling, general and administrative expenses in the six
month period, GBP 49,000 is in quality management, GBP 23,000 in process
development, and GBP 77,000 in marketing.
Income Before Tax Expense
In the three months to December 31, 1994, income before tax expense was GBP
0.079 million ($ 0.125 million), compared with GBP 0.199 million ($ 0.295
million) in 1993.
Tax Expense
The Company's A&B subsidiary continues to be in dispute with the U.K. tax
authorities about the appropriateness of certain tax deductions claimed. The
Company continues to believe it is more likely than not that it will prevail
in respect of previous years. The Company is, however, prepared to agree with
the authorities that it will limit future deductions to a percentage of its
profits.
Accordingly, the tax expense for the quarter has been calculated on the basis
that A&B will limit these deductions to 80% of its income before such
deductions and includes an adjustment to the previous quarter's figures.
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No exhibits are filed with this report.
No reports were filed on Form 8-K during the six months ended December 31,
1994.
<PAGE>
APPLIED MICROBIOLOGY, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorised.
APPLIED MICROBIOLOGY, INC.
Registrant
Date: September 11, 1995 By: /s/ Fredric D. Price
Fredric D. Price
President and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 2,465
<SECURITIES> 0
<RECEIVABLES> 790
<ALLOWANCES> 9
<INVENTORY> 1,159
<CURRENT-ASSETS> 5,234
<PP&E> 4,515
<DEPRECIATION> 2,587
<TOTAL-ASSETS> 7,754
<CURRENT-LIABILITIES> 624
<BONDS> 0
<COMMON> 47
758
0
<OTHER-SE> 6,035
<TOTAL-LIABILITY-AND-EQUITY> 7,754
<SALES> 3,243
<TOTAL-REVENUES> 3,383
<CGS> 1,037
<TOTAL-COSTS> 2,999
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> 381
<INCOME-TAX> 126
<INCOME-CONTINUING> 255
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 255
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
