U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[ X ] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 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
- -------------------------------- -----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
405 Oakwood Road, Huntington Station, New York 11746
- ---------------------------------------------- ----------
(Address of principle executive offices) (Zip Code)
(516)-673-3939
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Issuer's telephone number
- --------------------------------------------------------------------------
(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___.
---
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 November 6, 1996
- --------------------------- ---------------------------------
Common Stock $.01 par value 1,459,724
<PAGE>
PROTEIN DATABASES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
( UNAUDITED )
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 301,242
Accounts receivable 198,377
Inventory 43,191
Prepaid expenses 16,768
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Total current assets 559,578
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PROPERTY AND EQUIPMENT-NET 267,435
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OTHER ASSETS 13,520
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TOTAL $ 840,533
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 60,738
Accrued expenses 36,393
Unearned revenue 31,354
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Total current liabilities 128,485
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STOCKHOLDERS' EQUITY:
Common stock 14,597
Additional paid-in capital 8,519,636
Accumulated deficit (7,822,185)
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Stockholders' Equity 712,048
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TOTAL $ 840,533
==========
<PAGE>
PROTEIN DATABASES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues $308,863 $696,128 $1,218,212 $2,190,108
-------- -------- ---------- ----------
Expenses
Cost of sales 88,484 146,958 437,573 491,588
General and
administrative 138,707 157,429 472,788 488,494
Marketing and
sales 137,400 231,839 525,751 704,313
Research and
development 110,232 127,333 399,947 384,108
------- ------- ---------- ----------
Total expenses 474,823 663,559 1,836,059 2,068,503
------- ------- ---------- ----------
Net income
(loss) $(165,960) $32,569 $(617,847) $121,605
========= ======= ========== ==========
Net income
(loss) per
common
share $(.11) $.02 $(.42) $.07
========= ======== ========== ==========
Weighted average number
of shares used in
computing earnings
(loss) per share
1,459,724 1,713,729 1,459,724 1,658,225
========= ========= ========= =========
<PAGE>
PROTEIN DATABASES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
( UNAUDITED )
For the Nine Months
Ended September 30,
-------------------
1996 1995
---- ----
Cash flow from operations:
Net income (loss) $(617,847) $ 121,605
Adjustments to reconcile net income
to net cash provided by (used in) operations:
Depreciation and amortization 72,000 72,000
Changes in operating assets and liabilities:
Accounts receivable 223,115 364,578
Inventory 21,497 20,646
Prepaid expenses and deposits (3,481) (8,336)
Accounts payable and accrued expenses (104,868) (148,147)
Unearned revenue 1,663 (46,289)
-------- ---------
Net cash provided by (used in) operations (407,921) 376,057
-------- ---------
Cash flows used for investments in
property and equipment, net (69,555) (98,232)
-------- ---------
Increase (decrease) in cash and cash equivalents (477,476) 277,825
Cash and cash equivalents, beginning of period 778,718 622,895
-------- ---------
Cash and cash equivalents, end of period $301,242 $900,720
======== =========
<PAGE>
PROTEIN DATABASES, INC., AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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
--------------------------------------
Management's Discussion and Analysis of Operations
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Liquidity and Capital Resources
As a result of purchases of the Company's software products by Pharmacia
Biosystems B.V. and Pharmacia Biotech AB ("Pharmacia"), the Company
operated profitably in the quarter and nine months ended September 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 three quarters of 1996.
On April 19, 1996 the Company was informed by Pharmacia, the most significant
worldwide distributor of its products, that Pharmacia elected not to renew
its contract to distribute 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
will 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% of the Company's total
revenues in 1995 and 1994, respectively.
The Company is attempting to arrange one or more suitable alternative dis-
tribution arrangements for its products; however, if the Company is not
successful in completing such arrangements, the Company's sales will continue
to be materially and adversely affected and the Company will not operate
profitably.
During the quarter ended September 30, 1996, the Company had a net loss from
operations of $165,960. As of September 30, 1996, the Company's total current
assets were $559,578 (including cash and cash equivalents of $301,242) and its
total liabilities were $128,485 (see accompanying Balance Sheet)
The Company had no material commitments for capital equipment additions at
September 30, 1996.
Revenues
The Company generates revenues primarily by selling software 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 third quarter and first nine months of 1996 include sales of OEM equip-
ment that cost $40,239 and $262,773, respectively, as compared with $75,375
and $271,900, respectively, of such costs in the third quarter and first nine
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 third quarter and first nine months of 1996 decreased approxi-
mately 47% 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 lower costs of OEM equipment described above, the reduction in
the Company's cost of sales expenses in the quarter and nine months ended
September 30, 1996 from the comparable periods in the prior year was
primarily attributable 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 are
relatively fixed.
The decrease in the Company's general and administration expenses in the
three and nine months ended September 30, 1996 from the comparable periods
of the prior year was primarily attributable to lower compensation expenses,
which were partially offset by higher professional fees.
The Company's marketing and sales expenses decreased in the three and nine
months ended September 30, 1996 from the comparable periods in the prior year
principally as a result of lower promotional, travel, salaries and commission
expenses.
The decrease in the Company's research and development expenses in the three
months ended September 30, 1996 from the comparable period in the prior year
was primarily attributable to lower compensation 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 development efforts.
<PAGE>
Part II - Other Information
---------------------------
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 September 30, 1996.
<PAGE>
Signatures
----------
In accordance with the requirements of the Securities Exchange Act, the
registrant has caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
Protein Databases, Inc.
-----------------------
(Registrant)
Dated November 11, 1996 S/Stephen H. Blose
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Stephen H. Blose
Director, President and
Chief Executive Officer
Dated November 11, 1996 S/Alan P. Chodosh
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Alan P. Chodosh
Vice President of Finance
(Principal Financial and
Accounting Officer)
INDEX TO EXHIBITS
27 - FINANCIAL DATA SCHEDULE
FINANCIAL DATA SCHEDULE EXHIBIT 27
[ARTICLE] 5
[DESCRIPTION] FDS FOR 3RD QUARTER 10-QSB
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
PROTEIN DATABASES, INC.'S SEPTEMBER 30, 1996 FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] SEP-30-1996
[CASH] 301,242
[SECURITIES] 0
[RECEIVABLES] 198,377
[ALLOWANCES] 0
[INVENTORY] 43,191
[CURRENT-ASSETS] 559,578
[PP&E] 1,000,033
[DEPRECIATION] (732,598)
[TOTAL-ASSETS] 840,533
[CURRENT-LIABILITIES] 128,485
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 14,597
[OTHER-SE] 697,451
[TOTAL-LIABILITY-AND-EQUITY] 840,533
[SALES] 1,218,212
[TOTAL-REVENUES] 1,218,212
[CGS] 437,573
[TOTAL-COSTS] 1,836,059
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] (617,847)
[INCOME-TAX] 0
[INCOME-CONTINUING] (617,847)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (617,847)
[EPS-PRIMARY] (.42)
[EPS-DILUTED] (.42)
</TABLE>
