<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
10Q/A
For Quarter Ended: September 30, 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)
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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 $.005 18,162,858 shares as of September 30, 1994
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APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1 Financial Statements (Unaudited)
Condensed consolidated balance sheets
at September 30, 1994 and
June 30, 1994 3 - 4
Condensed consolidated statements of
operations for the three months
ended September 30, 1994 and
September 30, 1993 5
Condensed consolidated statement of
changes in stockholders' equity
for the three months ended
September 30, 1994 6
Condensed consolidated statements of
cash flows for the three
months ended September 30, 1994
and September 30, 1993 7
Notes to Condensed consolidated financial
statements 8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8K 12
SIGNATURES 13
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APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 June 30 September 30 June 30
1994 1994 1994 1994
(Unaudited) (Note) (Unaudited) (Note)
GBP'000 GBP'000 US$'000 US$'000
------------ ------- ------------ -------
ASSETS
Current assets:
Cash and cash equivalents 2,657 3,273 4,183 5,048
Trade accounts receivable
less allowance for
doubtful accounts of
GBP 9,000 at September
and GBP 20,000 at June 831 855 1,308 1,319
Inventories (Note D) 1,014 945 1,597 1,458
Prepayments and other
current assets 434 396 683 611
Due from affiliated
companies 411 4 647 6
------ ------ ------ ------
Total current assets 5,347 5,473 8,418 8,442
Property and equipment at
cost less accumulated
depreciation of GBP
2,515,000 at September
and GBP 2,432,000 at June 1,794 1,650 2,825 2,545
Patent costs and licensed
technology at cost less
accumulated amortization
of GBP 336,000 at September
and GBP 313,000 at June 514 505 809 779
Other asset 27 27 42 42
------ ------ ------ ------
TOTAL ASSETS 7,682 7,655 12,094 11,808
====== ====== ====== ======
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
September 30 June 30 September 30 June 30
1994 1994 1994 1994
(Unaudited) (Note) (Unaudited) (Note)
GBP'000 GBP'000 US$'000 US$'000
------------ ------- ------------ -------
LIABILITIES, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable 8 8 13 12
Accounts payable and accrued
expenses 383 482 603 743
Due to affiliated companies 45 152 71 234
Other liabilities 69 40 109 62
Dividends payable 18 17 28 26
Income tax payable 30 7 47 11
------- ------- ------- -------
Total current liabilities 553 706 871 1,088
Notes payable 12 14 19 22
Deferred taxes payable 280 280 441 432
------- ------- ------- -------
TOTAL LIABILITIES 845 1,000 1,331 1,542
------- ------- ------- -------
Preferred stock:
Redeemable preferred stock,
$0.01 par value, authorised
6,500,000 shares. Issued and
outstanding 1,500 shares,
aggregate involuntary
liquidation value GBP 953,000. 758 758 1,500 1,500
Stockholders' Equity:
Common stock, $0.005 par value,
authorised 25,000,000 shares.
Issued and outstanding
18,162,858 at September and
18,155,858 at June 47 47 91 91
Additional paid-in capital 21,018 21,011 31,362 31,351
Accumulated deficit (15,152) (15,413) (22,874) (23,276)
Currency translation adjustments 166 252 684 600
------- ------- ------- -------
TOTAL STOCKHOLDERS' EQUITY 6,079 5,897 9,263 8,766
------- ------- ------- -------
TOTAL LIABILITIES, REDEEMABLE
PREFERRED STOCK AND
STOCKHOLDERS' EQUITY 7,682 7,655 12,094 11,808
------- ------- ------- -------
------- ------- ------- -------
See notes to condensed consolidated financial statements
Note: The Balance Sheet as of June 30, 1994 has been derived from the audited
consolidated financial statements at that date.
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APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30
1994 1993 1994 1993
GBP'000 GBP'000 US$'000 US$'000
------- ------- ------- -------
Sales 1,690 1,598 2,608 2,385
Cost of Sales (509) (494) (785) (737)
------ ------ ------ ------
GROSS PROFIT 1,181 1,104 1,823 1,648
Other operating income 45 34 69 51
Selling, general and
administrative
expenses (665) (586) (1,026) (875)
Research costs (192) (66) (296) (99)
Depreciation and
amortization (97) (96) (150) (143)
------ ------ ------ ------
OPERATING INCOME 272 390 420 582
Interest income 31 32 48 48
Interest expense (1) - (2) -
------ ------ ------ ------
INCOME BEFORE TAX EXPENSE 302 422 466 630
Tax expense (23) (32) (35) (48)
------ ------ ------ ------
NET INCOME 279 390 431 582
====== ====== ====== ======
EARNINGS PER SHARE GBP 0.01 GBP 0.02 $0.02 $0.03
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
Preferred Common Additional Accumulated Currency
Stock Stock Paid In Deficit Translation
Capital Adjustment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- ------- ---------- ----------- -----------
Balance at June 30,
1994 - 47 21,011 (15,413) 252
Common stock issued on
exercise of options - - 7 - -
Net income for the
period - - - 279 -
Preference dividend
provided - - - (18) -
Arising on translation
during the period - - - - (86)
--------- ------- --------- ---------- ----------
Balance at September
30, 1994 - 47 21,018 (15,152) 166
--------- ------- --------- ---------- ----------
--------- ------- --------- ---------- ----------
US$'000 equivalent - 91 31,362 (22,874) 684
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
September 30
1994 1993 1994 1993
GBP'000 GBP'000 US$'000 US$'000
------- ------- ------- -------
Cash flows from operating activities:
Net income 279 390 431 582
Adjustments to reconcile net income to
cash (used in)/provided by operating
activities:
Depreciation and amortization 97 96 150 143
Provision for deferred income taxes - 11 - -
Changes in assets and liabilities:
Decrease in trade accounts receivable 24 323 37 482
(Increase)/decrease in inventories (69) 99 (106) 148
(Increase) in other assets (39) (106) (60) (158)
(Increase) in amounts due from
affiliated companies (413) (409) (637) (611)
Increase in income tax payable 23 53 35 79
(Decrease) in accounts payable and
accrued expenses (98) (293) (151) (437)
(Decrease) in amounts due to
affiliated expenses companies (119) (15) (184) (22)
Increase/(Decrease) in other payables 29 (45) 45 (67)
----- ------ ------- -------
Net cash (used in)/provided by operating
activities (286) 104 (440) 139
----- ------ ------- -------
Cash flows from investing activities:
Acquisition of property and equipment (213) (36) (329) (54)
Patent costs and licensed technology (51) (28) (79) (42)
----- ------ ------- -------
Net cash used in investing activities (264) (64) (408) (96)
----- ------ ------- -------
Cash flows from financing activities:
Dividend paid (18) (60) (28) (90)
Repayment of notes payable (2) (1) (3) (1)
Proceeds from issue of common stock 7 - 11 -
Decrease in bank overdraft - (193) - (288)
----- ------ ------- -------
Net cash used in financing activities (13) (254) (20) (379)
----- ------ ------- -------
Net (decrease) in cash and cash
equivalents (563) (214) (868) (336)
Cash and cash equivalents at beginning
of period 3,273 2,366 5,048 3,571
Effect of exchange rate movement (53) 19 3 38
----- ------ ------- -------
Cash and cash equivalents at end of
period 2,657 2,171 4,183 3,273
----- ------ ------- -------
----- ------ ------- -------
Supplementary disclosure of cash
flow information:
Interest paid 1 - 1 -
Tax paid/(received) 1 (21) 2 (31)
See notes to condensed consolidated financial statements
<PAGE>
APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 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 three month period
ended September 30, 1994 are not necessarily indicative of the
results that may be expected for the year ended 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 (US$) translated figures are
included.
Note C Exchange Rate
Balances denominated in US$ have been converted to GBP at the
following rates:-
1994 1993
Rate Rate Method
---- ---- ------
Statement of operations
and Statement of cash 1.5432 1.4928 average rate
flows for period
Balance sheet
- assets and liabilities 1.5745 1.5077 period end rate
- stockholders equity
accounts historical rate
Note D Inventories
The components of inventory consist of the following:-
September 30 June 30
1994 1994
GBP'000 GBP'000
------------ -------
Raw materials 56 62
Work in process 390 396
Finished products 568 487
------ ------
1,014 945
------ ------
Note E Preferred Stock Dividends
Dividends payable on Preferred Stock as of September 30, 1994 are
approximately GBP 18,000.
<PAGE>
APPLIED MICROBIOLOGY, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1993
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 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 and warrants 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.
3 months ended
September 30
1994 1993
No. of Shares No. of Shares
------------- -------------
Average shares outstanding 18,158,141 17,763,564
Net effect of dilutive stock
options 316,023 711,030
------------ ------------
Total average shares 18,474,164 18,474,594
------------ ------------
GBP'000 GBP'000
------- -------
Net income 279 390
Preferred stock dividend (18) (38)
------------ ------------
Net income attributable to
common stockholders 261 352
------------ ------------
Earnings per share of common
stock GBP 0.01 GBP 0.02
<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
(GBP). Most of the figures in this discussion are therefore stated in that
currency. Certain salient figures are also shown in U.S. dollars (US$), based
on the exchange rates disclosed in Note C to the condensed consolidated
financial statements.
Financial Condition
At September 30, 1994 the Company had working capital of GBP 4.794 million
(US$ 7.547 million), including a cash balance of GBP 2.657 million (US$ 4.183
million), compared to June 30, 1994 working capital of GBP 4.767 million (US$
7.354 million), including a cash balance of GBP 3.273 million (US$ 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 0.407 (USD 0.641).
The Company had a cash outflow from operations in the three months to
September 30, 1994 of GBP 0.286 million, compared with the cash generated of
GBP 0.440 million in the three months to September 30, 1993. The major
components of the cash outflow in the period was settlement of accounts
payable. In addition to the outflow from operations, cash was used for capital
expenditure (GBP 0.264 million) and preferred stock dividends (GBP 0.018
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 expected in this area.
Results of Operations
Sales
Sales in the quarter increased over the corresponding period in 1993 by 5.8%,
to GBP 1.690 million (US$ 2.608 million). In US$ terms, due to the
fluctuation in the exchange rate the increase was 9.4%.
The percentage of sales included in the total by product is:-
% of sales in quarter % change
1994 1993 94 vs 93
---- ---- --------
Nisaplin 78.3 78.4 5.5
Ambicin 1.4 5.9 (74.5)
Other Sales 20.3 15.7 36.8
----- ----- -----
100.0 100.0 5.8
----- ----- -----
In value terms, Nisaplin sales increased by 5.5% over the same quarter last
year, due largely to increased sales in Europe and the Middle East.
Sales of Ambicin were lower than 1993, due principally to a change in selling
policy, whereby goods are now shipped to a major customer on a consignment
basis. This change was made in the current quarter.
Included in Other Sales are sales of lactobacillus acidophilus, direct-set
cultures, and other agency sales. Sales of lactobacillus acidophilus
increased by GBP 27,000 (46.4%). This continues the trend of higher sales
observed in the latter part of the previous fiscal, although it continues to
be to existing customers - no new business has been obtained. Sales of
direct-set cultures increased by GBP 74,000 (107.1%). This has been achieved
largely by gaining some medium-sized accounts from competitors, and by
manufacturers changing from the more traditional bulk set cultures. Sales of
other agency goods increased by GBP 45,000 (657.1%) This is due to the
Company gaining a UK agency for cheese wax since 1993.
Cost of Sales
Cost of sales as a percentage of revenues was 30.1%, compared with 30.9% in
1993, which is largely accounted for by increased margins on nisaplin,
obtained both by higher selling price and reduced raw material costs.
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Research Costs
Research costs increased in the quarter by GBP 0.126 million (190.9%). The
Company has continued to increase its investment in research, almost
exclusively in the pharmaceutical area. Additional staff have been recruited
both in U.S. and U.K. and further recruitment is expected.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased in the quarter by GBP
0.079 million (13.5%). Of this increase, GBP 41,000 is due to increased sales
and marketing costs, as the Company continues to strengthen its marketing
efforts. Two new sales managers have been recruited in U.S., as the Company
has adopted a policy of direct sales, rather than use of a distributor. A
further GBP 22,000 of the increase is due to the recruitment of additional
staff in its process development section in U.K. as a follow on from the
research work being conducted.
Income Before Tax Expense
Income before tax expense for the quarter was GBP 0.302 million (US$ 0.466
million), compared with GBP 0.422 million (US$ 0.630 million) in 1993.
This represents a decrease of 30.3%, which is chiefly due to the increased
research costs above.
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Report on Form 8-K
No exhibits are filed with this report.
No reports were filed on Form 8-K during the three months ended September 30,
1994.
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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
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<SECURITIES> 0
<RECEIVABLES> 842
<ALLOWANCES> 9
<INVENTORY> 1,014
<CURRENT-ASSETS> 5,347
<PP&E> 4,309
<DEPRECIATION> 2,515
<TOTAL-ASSETS> 7,682
<CURRENT-LIABILITIES> 553
<BONDS> 0
<COMMON> 47
758
0
<OTHER-SE> 6,032
<TOTAL-LIABILITY-AND-EQUITY> 7,682
<SALES> 1,690
<TOTAL-REVENUES> 1,766
<CGS> 509
<TOTAL-COSTS> 1,463
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
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