CONFORMED COPY
FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarter ended April 30, 2000
OR
() TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-17378
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VITRO DIAGNOSTICS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 84-1012042
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8100 Southpark Way, Bldg B-1 , Littleton, Colorado 80120
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(Address of principal executive offices) (Zip Code)
(303) 794-2000
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(Registrant's telephone number, including area code)
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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
Yes X No
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The number of shares outstanding of each of the issuer's classes of common
equity as of June 21, 2000 was 8,583,204.
<PAGE>
PART I - FINANCIAL INFORMATION
Vitro Diagnostics, Inc.
Balance Sheets
Assets
(Unaudited) (Audited)
April 30, October 31,
2000 1999
--------------- -------------
Current Assets
Cash Equivalents $ 0 $ 44,291
Accounts Receivable 293,506 108,527
Inventories 218,960 516,011
Prepaid Expense 56,375 68,255
Current portion of note receivable 1,441
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Total Current Assets 568,841 738,525
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Property, Plant and Equipment
Leasehold Improvements 27,645 27,645
Office Equipment & Furniture 14,793 14,793
Lab & EDP Hardware & SW 165,811 136,128
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Total Cost 208,249 178,566
Less Depreciation (151,699) (147,490)
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Net Property & Equipment 56,550 31,076
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Other Assets
Deposits 6,925 6,925
Inventory - Non Current 19,500 51,471
Notes Receivable 5,527 5,059
Patents 144, 879 103,335
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Total Other Assets 176,831 166,791
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Total Assets $ 802,222 $ 936,393
=============== =============
<PAGE>
Vitro Diagnostics, Inc.
Balance Sheets
Liabilities & Stockholders Equity
(Unaudited) (Audited)
April 30, October 31,
2000 1999
--------------- -------------
Current Liabilities
Accounts Payable $ 28,213 $ 16,899
Bank Overdraft 17,546
Payroll Taxes Payable 4,942 5,925
Accrued Expenses 1,033 1,032
Notes Payable - Short Term 208,464 36,640
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Total Current Liabilities 260,198 60,496
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Note Payable, net of current portion 105,432 105,432
Shareholders' Equity
Common Stock: 500,000,000 Shares
Authorized: par $.001;
8,455,087 shares outstanding
at 04/30/00 and 8,455,087
outstanding at 10/31/99 283,036 283,036
Paid in Capital in Excess of Par 3,656,593 3,656,593
Accumulated Deficit (3,503,037) (3,169,164)
--------------- -------------
Total Shareholders' Equity 436,592 770,465
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Total Liabilities and
Shareholders' Equity $ 802,222 $ 936,393
=============== =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
Vitro Diagnostics, Inc.
Statement of Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
-------------------- ----------------------
2000 1999 2000 1999
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue
Product Sales $ 300,913 $ 306,154 $ 570,155 $ 628,245
Cost of Sales
Product 24,902 78,209 188,333 201,463
-------- -------- -------- --------
Gross Profit 276,011 227,945 381,822 426,782
Operating Expenses
Selling, General & Administrative 154,908 83,275 233,118 159,399
Research and Development 101,918 82,519 166,469 139,372
-------- -------- -------- --------
Total Expenses 256,826 165,794 399,587 298,771
-------- -------- -------- --------
Gain (Loss) from Operations 19,185 62,151 (17,765) 128,011
-------- -------- -------- --------
Other Income (Expense)
Other Income 3,085 1,500 3,485 2,775
Interest Expense (9,815) (10,260) (13,848) (16,477)
Accounting Change 0 (305,691)
Penalties Expense (52) - (52) -
-------- -------- -------- --------
Total Other Income and (Expense) (6,782) (8,761) (316,106) (13,702)
-------- -------- -------- --------
Net Gain (Loss) $ (12,403) $ 53,390 $ (333,871) $ 114,309
======== ======== ======== ========
Gain (Loss) Per Share of Common Stock
(8,583,204) Shares outstanding
at 04/30/00 and 6,413,702
outstanding at 04/30/99) $ 0.00 $ 0.01 $ (0.04) $ 0.02
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Vitro Diagnostics, Inc.
Statements of Cash Flows
Six Months Ending 04/30/00 and 99
(Unaudited) (Unaudited)
April 30, April 30,
2000 1999
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Cash Flows from Operating Activities
Net Income (Loss) $ (333,871) $ 114,309
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation & Amortization 4,209 6,363
Changes in Assets & Liabilities:
Decrease (increase) in-
Accounts Receivable (184,979) (99,777)
Inventories 329,022 17,566
Prepaid Expenses 11,880 (6,729)
Deposits 0 10,000
Notes Receivable 974
(Decrease) increase in-
Accounts Payable 11,314 (11,551)
Salaries & Wages Payable (800)
Payroll Taxes Payable (983) (2,507)
Accrued Expenses - -
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Net Cash Provided (Used) by
Operating Activities (162,434) 26,874
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Cash Flows From Investing Activities
Capital Expenditures (29,683) (15,798)
Patents (41,544) (20,229)
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Net Cash Used by Financing Activities (71,227) (36,027)
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Cash Flows from Financing Activities
Increase (decrease) in Short Term
Notes Payable 171,824 9,848
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Net Cash from Investing Activities 171,824 9,848
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Net Increase (Decrease) in Cash (61,837) 695
Cash Beginning 44,291 (4,248)
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Cash Ending $ (17,546) $ (3,553)
=============== =============
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ 46,287 $ 17,734
=============== =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
Vitro Diagnostics, Inc.
Notes to the Financial Statements
April 30, 2000 (Unaudited)
Basis of Presentation
The condensed financial information furnished herein was taken from the books
and records of the Company without audit and was prepared in accordance with the
instructions to Form 10-QSB. The Company believes, however, that it has made all
adjustments necessary to reflect properly the results of operations for the six
month interim period ended April 30, 2000. The adjustments consist only of
normal reoccurring accruals. The results of operations for the six month interim
period ended April 30, 2000 are not necessarily indicative of the results to be
expected for the year ended October 31, 2000.
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the report. For a
complete set of footnotes, reference is made to the Company's Annual Report on
Form 10-KSB for the year ended October 31, 1999 as filed with the Securities and
Exchange Commission and the audited financial statements included therein.
Note -1 Change in Accounting Policy
As of November 1, 1999, the Company changed its method of determining cost of
its finished goods inventory from a method based on costs as a percentage of
gross selling price to cost determined by a study of the manufacturing
processes. Management believes that the new method results in a closer matching
of costs associated with the products, thereby reflecting a more realistic
picture of the Company's financial progress. The effect of the change was to
increase income for the quarter ended April 30, 2000 by $160,378 ($0.02 per
share). The cumulative effect of the change on prior years of $(305,691) ($.04
per share) is a one time charge to income.
Proforma amounts showing the effect of applying the new method retroactively.
Quarter Year to Date
-------------- ---------------
Net income (loss) $ 12,402 $ (28,180)
Loss per common share $ 0.00 $ (0.00)
Management is unable to determine the effect of the change had it occurred on
November 1, 1998 on the quarter ended April 30, 1999.
<PAGE>
Inventories - They are valued at the lower of cost or market using the first-in
first-out method.
Inventories consist of:
04-30-00
------------
Finished Goods $ 108,478
Goods in Process 30,152
Raw Materials 80,330
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$ 218,960
==========
Goods in process inventory which is not expected to be completed and sold in the
next fiscal year is classified as non current.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Introduction
Certain statements contained herein constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1955. Such
forward looking statements include, without limitation, statements regarding the
Company's plan of business operations, potential contractual arrangements,
anticipated revenues and related expenditures. Factors that could cause actual
results to differ materially include, among others, the following: acceptability
of the Company's products in the market place, general economic conditions, and
the overall state of the biotechnology industry. Most of these factors are
outside the contgrol of the Company. Investors are cautioned not to put undue
reliance on forward looking statements. Except as otherwise required by
applicable securities statutes or regulations, the Company disclaims any intent
or obligation to update publicly these forward looking statements, whether as a
result of new information, future events or otherwise.
Liquidity and Capital Resources
At quarter end April 30, 2000, the Company had working capital of $308,643,
consisting of current assets of $568,841 and current liabilities of $260,198.
This represents a decrease in working capital of $138,551 from October 31, 1999.
Current assets decreased by $169,684 while current liabilities increased by
$199,702. In addition to the working capital available at April 30, 2000, the
Company had available two lines of credit totaling $400,000 to help finance
operations and capital requirements. At April 30, 2000, $63,000 was available on
these lines. Management is of the opinion that the Company will require
additional capital from outside sources to finance its capital requirement for
fiscal 2000. Accounts receivable increased by $184,979 during the second quarter
of 2000. This was not due to increased sales, but rather due to the timing of
those sales. Inventory for the first six months decreased by $297,051. (See Note
#1).
During the six months ended April 30, 2000, the Company's operations used,
rather than provided cash. During that time, the Company's operations used
$162,434, compared to cash generated by operations of $26,874 during the six
months ended April 30, 1999. Management believes the decrease in cash flow is
primarily attributable to the change in accounting for the evaluation of
inventory and cost of goods sold. (See Note # 1). The Company relied on
borrowing during the first six months to maintain its R&D department. Proceeds
from sales of antigens will be used to repay this debt. Management anticipates
that if the Company is unable to obtain capital from outside sources, it may be
required to curtail its research and development.
Results of Operations
During the second quarter ended April 30, 2000, the Company realized a net loss
of $12,403 on total revenues of $300,913. The net loss is a decrease of $65,793,
from the net income for the second quarter 1999. The decrease in operations is
attributable to increased R&D and SG& A costs.
In the second quarter of 2000, the Company sold 966 milligrams of all products.
This compares to 1,026 sold during the second quarter of 1999. Prices for the
Company's products remained constant since the second quarter of 1999.
Profit margin from sales of the Company's product increased from the second
quarter of 1999, from 74% for the quarter ended April 30, 1999 to 92% for the
quarter ended April 30, 2000. This change in profit is a direct result of the
accounting change, (see Note # 1). The greatest increase in operating expenses
were SG&A and research and development. SG&A increased $83,275 from the second
quarter of 1999. Purchases of software and laboratory supplies were the cause of
this increase. Research and development expenses increased from $82,519 in the
second quarter of 1999 to $101,918 in the second quarter of 2000. This increase
is attributable to increased emphasis on development of new products and
techniques. Subject to availability of working capital, the Company hopes to
continue this research and development.
During the six months ended April 30, 2000, the Company realized a net loss of
$333,871 on total revenues of $570,155. The net loss is a decrease of $448,180,
from the net income for the first six months of 1999. The decrease in operations
is attributable to an accounting change for the evaluation of cost of goods sold
and finished inventories. In the first six months of 2000, the Company sold
1,731 milligrams of all products. This compares to 2,178 sold during the first
six months of 1999. Prices for the Company's products remained constant since
the first six months of 1999.
Profit margin from sales of the Company's product decreased from the first six
months of 1999, from 68% for the six months ended April 30, 1999 to 67% for the
first six months ended April 30, 2000. The greatest increase in operating
expenses was research and development, which increased from $139,372 in the
first six months of 1999 to $166,469 in the first six months of 2000. This
increase is attributable to increased emphasis on development of new products
and techniques. Subject to availability of working capital, the Company hopes to
continue this research and development
The Company is actively searching for capital assistance. Possible sources of
capital are strategic alliances, private placements and public offering of the
Company's securities
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, on June 28, 2000.
Vitro Diagnostics, Inc.
(Company)
By: /s/ Roger Hurst
------------------------
Roger Hurst, President,
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
in the capacities indicated on June 28, 2000.
Principal Executive, Financial and Accounting Officer and Director:
/s/ Roger Hurst
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Roger Hurst
<PAGE>
