<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q/A
Amendment No. 1 to
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE THIRD QUARTER ENDED JUNE 30, 1995
Commission File Number 1-10492
EPITOPE, INC.
Incorporated in IRS Employer
the State of Oregon Identification No. 93-0779127
8505 S.W. Creekside Place
Beaverton, Oregon 97008-7108
(503) 641-6115
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____
Number of shares of Common Stock, no par value, outstanding as of June 30,
1995: 12,436,479
<PAGE>
The Registrant hereby amends Part I, Item 1, of its Quarterly Report on
Form 10-Q for the period ended June 30, 1995, as follows:
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Page No.
Condensed Consolidated Balance Sheets at June 30, 1995 and
September 30, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations for the three months and nine
months ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statement of Changes in Shareholders' Equity for
the nine months ended June 30, 1995 . . . . . . . . . . . . . . . . . . . 5
Condensed Consolidated Statements of Cash Flows for the nine months ended
June 30, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . 7
<PAGE>
<TABLE>
<CAPTION>
EPITOPE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
6/30/95 9/30/94
(Unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents . . . . . . . . . . $13,623,216 $11,024,997
Marketable securities . . . . . . . . . . . . 9,939,689 5,603,414
Accounts receivable, net of allowance for
doubtful accounts
of $72,044 and $51,696, respectively . . . 800,187 348,312
Other receivables . . . . . . . . . . . . . . 749,641 373,668
Inventories (Note 2) . . . . . . . . . . . . 1,630,057 1,668,772
Prepaid expenses . . . . . . . . . . . . . . 377,189 141,855
__________ __________
Total current assets . . . . . . . . . . . . 27,119,979 19,161,018
Property and equipment, net . . . . . . . . . 2,683,391 4,430,695
Patents and proprietary technology . . . . . 503,649 411,238
Investment in unconsolidated subsidiary
(Note 5) . . . . . . . . . . . . . . . . . 2,584,979 -
Other assets and deposits (Notes 2 and 3) . . 426,264 552,302
__________ __________
33,318,262 24,555,253
Liabilities and Shareholders' Equity
Current liabilities
Current portion of installment notes payable 17,758 17,758
Accounts payable . . . . . . . . . . . . . 569,206 522,085
Salaries, benefits and other accrued
liabilities . . . . . . . . . . . . . . . . . 2,315,593 1,437,142
_________ _________
Total current liabilities . . . . . . . . . . 2,902,557 1,976,985
Long-term portion of installment notes payable 25,188 37,886
Convertible notes, due 1997 (Note 3) . . . . 3,620,003 4,070,000
Shareholders' equity (Notes 3 and 4):
Preferred stock, no par value - 1,000,000
shares authorized;
no shares issued or outstanding . . . . . . - -
Common stock, no par value - 30,000,000 shares
authorized; 12,436,479 and 10,926,551 shares
issued and outstanding, respectively . . . 93,142,985 71,559,900
Accumulated deficit . . . . . . . . . . . . . (66,372,471) (53,089,518)
__________ __________
26,770,514 18,470,382
__________ __________
$33,318,262 $24,555,253
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
__________________________________________________________________________________________
Three months ended Nine months ended
6/30/95 6/30/94 6/30/95 6/30/94
<S> <C> <C> <C> <C>
Revenues
Product sales . . . . . . $ 1,527,004 $ 1,347,846 $ 4,314,954 $ 4,195,714
Grants and contracts . . 41,518 11,317 62,983 22,364
_________ _________ _________ _________
1,568,522 1,359,163 4,377,937 4,218,078
Costs and expenses
Product costs . . . . . . 1,651,710 1,780,927 5,627,348 5,294,239
Research and development
costs . . . . . . . . . . 1,779,307 1,565,218 5,016,535 4,375,887
Selling, general and
administrative
expenses . . . . . . . 2,593,588 1,899,679 7,672,697 5,745,788
_________ _________ _________ _________
6,024,605 5,245,824 18,316,580 15,415,914
Loss from operations . . (4,456,083) (3,886,661) (13,938,643) (11,197,836)
Other income, net . . . . 307,822 86,155 655,690 82,680
_________ _________ ________ ________
Net loss . . . . . . . . $(4,148,261)$(3,800,506) $(13,282,953)$(11,115,156)
Net loss per share . . . $ (.34)$ (.36) $ (1.14)$ (1.14)
Weighted average number of
shares outstanding . . . . 12,339,314 10,645,117 11,697,000 9,783,181
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
Common Stock Accumulated
Shares Dollars deficit Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances at September 30, 1994 10,926,551 $71,559,900 $(53,089,518) $18,470,382
Common stock issued upon
exercise of options . . 137,173 1,735,991 - 1,735,991
Common stock issued as
compensation . . . . . 13,714 235,660 - 235,660
Compensation expense on
stock option grants . . - 1,015,370 - 1,015,370
Common stock issued upon
exercise of warrants . 1,336,000 18,892,750 - 18,892,750
Common stock issued upon
exchange of convertible
notes. . . . . . . . . 23,041 449,991 - 449,991
Equity issuance costs . . - (746,677) - (746,677)
Net loss for the period . - - (13,282,953) (13,282,953)
Balances at June 30, 1995 12,436,479 $93,142,984 $(66,372,471) $26,770,514
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<S> <C> <C>
Nine months ended June 30 1995 1994
Cash flows from operating activities
Net loss . . . . . . . . . . . . . . . . . . $(13,282,953) $(11,115,156)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization . . . . . . . 1,157,180 805,557
Gain (loss) on disposition of property . . . (24) 1,541
Increase in accounts receivable and other
receivables . . . . . . . . . . . . . . . . (827,848) (475,075)
Increase in inventories . . . . . . . . . . . (483,214) (719,664)
Increase in prepaid expenses . . . . . . . . (235,334) (155,285)
(Increase) decrease in other assets and
deposits . . . . . . . . . . . . . . . . . (12,781) 9,198
Increase (decrease) in accounts payable and
accrued liabilities . . . . . . . . . . . . 1,026,122 (169,130)
Common stock issued as compensation . . . . . 235,660 315,517
Compensation expense on stock option grants
and salary deferral program . . . . . . . . 914,820 986,418
_________ _________
Net cash used in operating activities . . . . (11,508,372) (10,516,079)
Cash flows from investing activities
Investment in marketable securities . . . . . (7,777,437) -
Proceeds from sale of marketable securities . 3,441,162 -
Additions to property and equipment . . . . . (1,249,364) (2,165,038)
Proceeds from sale of property . . . . . . . 10,080 1,000
Expenditures for patents and proprietary
technology . . . . . . . . . . . . . . . . (209,705) (121,303)
Expenditures for investments . . . . . . . . - (47,748)
_________ _________
Net cash used in investing activities . . . . (5,785,264) (2,333,089)
Cash flows from financing activities
Principal payments under installment purchase
obligations . . . . . . . . . . . . . . . . (12,698) (13,991)
Proceeds from issuance of common stock . . . 20,651,230 22,901,604
Cost of equity issuance . . . . . . . . . . . (746,677) (265,544)
__________ __________
Net cash provided by financing activities . . 19,891,855 22,622,069
Net increase in cash and cash equivalents . . 2,598,219 9,772,901
Cash and cash equivalents at beginning of
period . . . . . . . . . . . . . . . . . . 11,024,997 8,556,676
__________ __________
Cash and cash equivalents at end of period . $13,623,216 $18,329,577
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 - The Company
Epitope, Inc. (the Company or Epitope) is an Oregon corporation utilizing
biotechnology to develop and market medical diagnostic products and, through
its agricultural units, new plants and related products.
Note 2 - Summary of Significant Accounting Policies
CONSOLIDATION
The interim condensed consolidated financial statements include the accounts
of Epitope and its wholly owned subsidiaries.
The interim condensed consolidated financial statements included herein are
unaudited; however, in the opinion of the Company, the interim data include
all adjustments, consisting only of normal recurring adjustments, necessary
for a fair statement of the results of operations for the interim periods.
These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 1994 Annual Report on Form 10-K.
Results of operations for the period ended June 30, 1995 are not necessarily
indicative of the results of operations for the full fiscal year.
MARKETABLE SECURITIES
Effective October 1, 1994, the Company adopted Financial Accounting Standards
Board Statement No. 115 (SFAS 115), Accounting for Certain Investments in Debt
and Equity Securities. Pursuant to SFAS No. 115, the Company has categorized
all of its investments as available-for-sale securities. This adoption did
not have a material impact on the Company's financial statements.
INVENTORIES
June 30, 1995 September 30, 1994
------------------------------------------------------------------------------
Raw materials. . . . . . . . . . . $ 803,408 $ 721,199
Work-in-process. . . . . . . . . . 338,665 595,597
Finished goods . . . . . . . . . . 386,308 293,674
Supplies . . . . . . . . . . . . . 101,676 58,302
---------- ----------
$1,630,057 $1,668,772
INCOME TAXES
Effective October 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. The
implementation of this standard had no material impact on the Company's
reported financial position or results of operations.
The Company accounts for certain revenue and expense items differently for
income tax purposes than for financial reporting purposes. These differences
arise principally from methods used in accounting for stock options,
depreciation rates, clinical trials, and amortization associated with acquired
technologies.
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
Note 2 - Summary of Significant Accounting Policies (continued)
NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of shares of
common stock outstanding during the period. Unexercised stock options and
warrants are excluded from such computations because their effect on net loss
per share would be antidilutive.
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash financing activities not included in the Condensed Consolidated
Statements of Cash Flows for the nine months ended June 30, 1995 and 1994 are
as follows:
1995 1994
Conversion of notes to equity (Note 3) $ 427,496 $341,357
Discount on private placement of common stock - 3,024,413
Inventory contributed to Fresche Blossoms,
L.L.C. (Note 5) 565,303 -
Equipment contributed to Fresche Blossoms,
L.L.C. (Note 5) 2,109,676 -
Investment in unconsolidated subsidiary
(Note 5) 2,584,979 -
Note 3 - Long-Term Debt
On June 30, 1992, a wholly owned subsidiary of the Company, Agritope, Inc.
(Agritope), completed a private placement with several European institutional
investors pursuant to which $5,495,000 of convertible notes were issued. The
notes are unsecured, mature on June 30, 1997 and bear interest at the rate of
4% per annum which is payable on each June 30 and December 31 until all
outstanding principal and interest on the notes have been paid in full. In
the event of an initial public offering of Agritope common stock, the notes
would be automatically converted to shares of Agritope common stock at 90% of
the public offering price. Costs incurred in connection with the debt
issuance are included in other assets and are being amortized over the
five-year life of the notes. Amortization expense of debt issuance costs for
the nine months ended June 30, 1995 amounted to $72,950, leaving an
unamortized balance of $220,264.
The notes may be converted into shares of Epitope common stock at a price of
$19.53 per share. During the nine months ended June 30, 1995 and 1994,
investors exchanged $449,991 and $369,976, respectively, principal amount of
convertible notes. In conjunction with the exchanges, unamortized debt
issuance costs of $22,495 and $28,619 related to such notes were recognized as
equity issuance costs.
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
Note 4 - Shareholders' Equity
On March 29, 1995 the Company announced that it would extend the expiration
date and modify certain terms for several series of warrants that were
originally scheduled to expire on April 22, 1995.
The action involved warrants issued in private placements, to purchase 1.3
million shares of Epitope common stock at a price of $14-7/8 per share,
478,100 shares at a price of $17-7/8 per share and 375,000 shares at a price
of $20 per share. Through December 31, 1995, holders of warrants originally
exercisable at $14-7/8 may exercise such warrants at a price of $16 per share.
On January 1, 1996, through September 30, 1996, the exercise price for such
warrants will be increased to $18-1/2 per share. For holders of the warrants
originally exercisable at $17-7/8 per share, the exercise price was increased
to $18-1/2 per share effective April 23, 1995, through a new expiration date
of March 31, 1997. The $20 per share warrants may be exercised at that price
until March 31, 1997. Holders exercising any of the extended warrants after
April 22, 1995 may not sell the newly acquired shares for a period of sixty
days following date of purchase.
<PAGE>
Notes to Condensed Consolidated Financial Statements (Unaudited) continued)
Note 5 - Divestiture of Certain Operations
VINIFERA, INC.
On June 1, 1995, the Company's wholly owned subsidiary, Agritope, Inc.
(Agritope) sold its equity interest in Vinifera, Inc. (Vinifera) to VF
Holding, Inc. (VF) an affiliate of a Swiss investment group. The purchase
price includes $3.9 million which was due on June 15, 1995, $2 million due in
November 1995 and up to $5 million in earnout payments based on gross profits
of Vinifera. VF also agreed to contribute $4 million of operating funds to
Vinifera, of which $450,000 was paid on June 1, 1995. Agritope has designated
a representative to serve on Vinifera's board of directors. Agritope has also
agreed to conduct research and diagnostic testing services for Vinifera and to
lease its Woodburn, Oregon, farm and greenhouse facilities to Vinifera for an
interim period of at least one year until Vinifera relocates its operations
nearer to its U.S. customer base in northern California. Vinifera will also
purchase administrative support services from the Company for a one-year
transition period.
The $3.9 million installment due June 15, 1995 has not been paid. VF has
advised Agritope that the payment will be made by August 31, 1995. VF has
further advised the Company that, by August 31, 1995, it also intends to pay
the $2 million installment which is due in November. Agritope has retained
5,000,000 shares of Vinifera common stock and a security interest in the
assets of Vinifera to secure the VF obligation. Agritope discontinued funding
Vinifera operations as of June 1, 1995, when Vinifera commenced utilizing the
initial capital contribution of $450,000 from VF to fund its operations. The
Company has deferred any recognition of gain on this transaction. Any gain on
this sale will be recognized as sales proceeds are collected.
AGRIMAX, INC.
On June 7, 1995, Agritope's wholly owned subsidiary, Agrimax, Inc. (Agrimax)
completed formation of a new venture in North Carolina to conduct its
Charlotte, North Carolina fresh flower business. The new unit, Fresche
Blossoms, L.L.C. (FB) will be operated by the shareholders of Universal
American Flowers, Inc. (UAF). The parties are to decide by August 31, 1995
whether to proceed with a merger of FB into UAF. If the merger is consummated,
Agrimax will contribute its Charlotte equipment to the combined entity and
will receive an estimated 18% equity interest in the combined entity. If the
merger is not consummated, FB will be liquidated and the net proceeds will be
distributed to Agrimax and the other members of FB in proportion to their
capital accounts.
The UAF shareholders contributed management assistance to FB plus customer
lists and retail accounts from the states of Georgia, North Carolina, South
Carolina, Virginia and Tennessee in exchange for a 60% interest in profits and
losses of FB. Agrimax contributed rent-free use of equipment at its Charlotte
facility and its Charlotte inventories, store displays and operating supplies
having a book value of approximately $580,000 to FB in exchange for a 40%
interest in the profit and losses of FB. Agrimax also agreed to lend to FB not
more than $400,000 for working capital, if needed, and granted FB an exclusive
license to use its Fresche Blossoms(R), Everguard(R), and Fresche Blossoms
Express(TM) trademarks as well as the formula for its proprietary floral
preservative. The book value of Agrimax inventory and equipment is included in
the accompanying financial statements under the caption "Investment in
unconsolidated subsidiary."
<PAGE>
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 authorized.
EPITOPE, INC., an Oregon corporation
August 17, 1995
--------------- /s/Adolph J. Ferro, Ph.D.
Date Adolph J. Ferro, Ph.D.
President, Chief Executive Officer
and Director
(Principal Executive Officer)
August 17, 1995
--------------- /s/Gilbert N. Miller
Date Gilbert N. Miller
Executive Vice President, Chief
Financial Officer
(Principal Financial Officer)
August 17, 1995
---------------- /s/Terry J. Paulsen
Date Terry J. Paulsen
Accounting Manager
(Principal Accounting Officer)
