U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB -- Quarterly or Transitional Report
(Added by 34-30968, eff. 8/13/93, as amended)
(Mark One)
[ X ] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1996
[ ] Transition Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from________________to__________________
Commission file number 0-17032
PROTEIN DATABASES, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-3186604
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
405 Oakwood Road, Huntington Station, New York 11746
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(Address of principle executive offices) (Zip Code)
(516)-673-3939
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Issuer's telephone number
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(Former name, former address and former fiscal year, 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 Exchange Act during the past 12 months (or for such short-
er 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___.
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at June 30, 1996
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Common Stock $.01 par value 1,459,724
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PROTEIN DATABASES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
( UNAUDITED )
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 280,596
Accounts receivable 397,614
Inventory 44,758
Prepaid expenses 17,335
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Total current assets 740,303
PROPERTY AND EQUIPMENT-NET 282,747
OTHER ASSETS 13,520
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TOTAL $ 1,036,570
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LIABILITES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 75,340
Accrued expenses 48,890
Unearned revenue 34,332
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Total current liabilities 158,562
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STOCKHOLDERS' EQUITY:
Common stock 14,597
Additional paid-in capital 8,519,636
Accumulated deficit (7,656,225)
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Stockholders' Equity 878,008
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TOTAL $1,036,570
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<PAGE>
PROTEIN DATABASES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
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1996 1995 1996 1995
---- ---- ---- ----
Revenues $547,436 $774,593 $909,349 $1,493,980
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Expenses
Cost of sales 173,127 163,468 349,089 344,630
General and
administrative 175,887 166,825 334,081 328,565
Marketing and
sales 187,725 259,318 388,351 472,474
Research and
development 138,992 132,456 289,715 256,775
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Total expenses 675,731 722,067 1,361,236 1,402,444
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Income (loss)
before income
taxes (128,295) 52,526 (451,887) 91,536
========= ======= ========== ==========
Income taxes 0 1,250 0 2,500
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Net income
(loss) $(128,295) $ 51,276 $(451,887) $ 89,036
========= ======== ========= ==========
Net income
(loss) per
common
share $(.09) $.03 $(.31) $.05
========= ======== ========== ==========
Weighted average number
of shares used in
computing earnings
per share 1,459,724 1,713,729 1,459,724 1,630,473
========= ========= ========= =========
<PAGE>
PROTEIN DATABASES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
( UNAUDITED )
For the Six Months
Ended June 30,
1996 1995
---- ----
Cash flow from operations:
Net income (loss) $(451,887) $ 89,036
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 48,000 48,000
Stock options compensation 22,491
Changes in operating assets and liabilities:
Accounts receivable 23,878 421,338
Inventory 19,930 17,044
Prepaid expenses and deposits (4,048) 4,890
Accounts payable and accrued expenses (77,769) (177,036)
Unearned revenue 4,641 (26,289)
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Net cash provided by operations (437,255) 399,474
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Cash flows from investments in
property and equipment, net (60,867) (105,756)
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Increase (Decrease) in cash and cash equivalents (498,122) 293,718
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Cash and cash equivalents, beginning of period 778,718 622,895
-------- ---------
Cash and cash equivalents, end of period $280,596 $916,613
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<PAGE>
PROTEIN DATABASES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 - GENERAL:
The accompanying unaudited financial statements include all adjustments,
consisting of normal recurring accruals, which are, in the opinion of
management, necessary for a fair statement of the results of the interim
periods. The statements have been prepared in accordance with the require-
ments for quarterly reports on Form 10-QSB and, therefore, do not include
all disclosures or financial details required by generally accepted account-
ing principles. These condensed financial statements should be read in
conjunction with the financial statements and the notes thereto included in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
1995.
The results of operations for the interim periods are not necessarily
indicative of results to be expected for a full year's operations.
<PAGE>
PROTEIN DATABASES, INC. AND SUBSIDIARY
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Management's Discussion and Analysis of Operations
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Liquidity and Capital Resources
As a result of Pharmacia Biosystems B.V. and Pharmacia Biotech AB's
("Pharmacia") purchases of the Company's software products, the Company
operated profitably in the quarter and six months ended June 30, 1995.
However, as a result of the completion of Pharmacia's software purchase
requirements during the third quarter of 1995, the Company operated un-
profitably in the fourth quarter of 1995 and the first two quarters of 1996.
On April 19, 1996 the Company was informed by Pharmacia, the most significant
worldwide distributor of its products, that Pharmacia has selected another
company to supply it with image analysis software systems. Pharmacia has
no further obligations to make purchases of the Company's products.
The Company implemented cost reduction measures in the beginning of the
second quarter of 1996 and management currently believes that the Company
may have adequate funds to sustain its operations in 1996. However, the
Company is almost totally dependent upon distributors for the sale of its
products outside of the United States. Pharmacia accounted for 29% and 42%,
and Toyobo Co. Ltd., the exclusive distributor of the Company's products in
Japan and a non-exclusive distributor of the Company's products in all other
countries in the Far East, accounted for 19% and 23%, respectively, of the
Company's total revenues in 1995 and 1994, respectively.
The Company is attempting to arrange one or more suitable alternative dis-
tributors for its products and is exploring other arrangements to improve its
financial position. In July, the Company entered into a distribution agree-
ment with MWG-BIOTECH GmbH ("MWG") under which MWG distributes the
Company's Macintosh based image analysis software products connected to the
Company's 420oe densitometer. The agreement, which terminates on December 31,
1997, provides for MWG to be the Company's exclusive distributor of those
products in Germany, Austria and Switzerland if MWG meets certain relatively
modest sales minimums. Notwithstanding the distribution agreement with MWG,
if the company is not successful in completing additional distribution or
other arrangements in the near future, the Company's sales in 1996 will be
materially and adversely affected and the Company will not operate profitably.
The Company had no material commitments for capital equipment additions at
June 30, 1996.
Revenues
The Company generates revenues primarily by selling software systems and to a
lesser extent, from contract research and development, royalties and other
income sources.
Software systems revenues include revenues from the sale of the Company's
proprietary software, Original Equipment Manufacturers (OEM) equipment,
software maintenance and software updates. Software systems revenues during
the second quarter and first six months of 1996 include sales of OEM equip-
ment that cost $116,442 and $222,534, respectively, as compared with $79,643
and $196,525, respectively, of such costs in the second quarter and first six
months of 1995, respectively. The Company obtains its principle OEM equipment
from a limited number of suppliers. If the Company were unable to continue
to obtain the equipment on reasonable terms from its current suppliers, or
from alternate sources, the Company would be materially and adversely
affected.
Excluding the cost of OEM equipment, the Company's Software systems revenues
during the second quarter and first half of 1996 decreased approximately 33%
and 46%, respectively, from the comparable periods of 1995. The decreases
were primarily due to decreases in the number of products sold under the
Company's distribution agreements with Pharmacia and by the Company's direct
sales staff in North America.
Expenses
Excluding higher costs of OEM equipment described above, the the reduction in
the Company's cost of sales expenses in the three and six months ended June
30, 1996 from the comparable periods of the prior year was primarily attribu-
table to lower costs for equipment supplies and maintenance, travel and
freight. Except for OEM equipment costs, which vary significantly with the
level of the Company's revenues, cost of sales expenses were relatively
fixed.
The increase in the Company's general and administration expenses in the
three and six months ended June 30, 1996 from the comparable periods of the
prior year was primarily attributable to higher professional fees and travel
and business meetings expenses.
The Company's marketing and sales expenses decreased in the three and six
months ended June 30, 1996 from the comparable periods in the prior year
principally as a result of lower promotional, travel and commission expenses.
The increase in the Company's research and development expenses in the three
and six months ended June 30, 1996 from the comparable periods in the prior
year was primarily attributable to an increase of one employee in the depart-
ment and higher travel expenses. The Company's principal research and
development costs for its current products have been incurred in prior years,
but the Company needs continually to maintain and improve its products, as
well as to develop new products, and anticipates ongoing research and develop-
ment efforts.
<PAGE>
Part II - Other Information
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Item 6. Exhibits and Reports on Form 8-K
( a ) Exhibits: EX-27.
( b ) Reports on Form 8-K: There were no reports on Form 8-K filed
by the Company during the three months ended June 30, 1996.
<PAGE>
Signatures
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In accordance with the requirements of the Securities and Exchange Act,
the registrant caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
Protein Databases, Inc.
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(Registrant)
Dated August 9, 1996 S/Stephen H. Blose
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Stephen H. Blose
Director, President and
Chief Executive Officer
Dated August 9, 1996 S/Alan P. Chodosh
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Alan P. Chodosh
Vice President of Finance
(Principal Financial and
Accounting Officer)
