SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the quarterly period ended June 30, 1997
Commission File No. 0-15360
BIOJECT MEDICAL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Oregon 93-1099680
(State of other jurisdiction of (I.R.S. identification no.)
employer incorporation or organization)
7620 SW Bridgeport Road
Portland, Oregon 97224
(Address of principal executive offices) (Zip code)
(503) 639-7221
(Registrant's telephone number, including areas 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 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 [ ]
At June 30, 1997 there were 21,284,599 outstanding shares of common stock
of the registrant.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited consolidated financial statements of Bioject
Medical Technologies Inc. (BMT) and its subsidiary, Bioject Inc. (BI)
(together, unless the context otherwise requires, the "Company"), have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission.
The Company's operations are conducted by Bioject Inc., an Oregon corporation,
which is a wholly owned subsidiary of Bioject Medical Technologies Inc., an
Oregon corporation. Although Bioject Inc. commenced operations in 1985, the
Company was formed in December 1992 for the sole purpose of acquiring all the
capital stock of Bioject Medical Systems Ltd., a Company organized under the
laws of British Columbia, Canada, in a stock-for-stock exchange in order
to establish a U.S. domestic corporation as the publicly traded parent
company for Bioject Inc. and Bioject Medical Systems Ltd. Bioject Medical
Systems Ltd. was terminated in fiscal 1997. All references to the Company
herein are to Bioject Medical Technologies Inc. and its subsidiary, unless the
context requires otherwise.
The following 10-Q report reflects the consolidated results of operations,
cash flows and financial position for the first quarter of the year ending
March 31,1998. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the year.
- Consolidated Statements of Operations for the quarters ended
June 30, 1997 and June 30, 1996
- Consolidated Balance Sheets dated June 30, 1997 and March 31, 1997
- Consolidated Statements of Cash Flows for the quarters ended
June 30, 1997 and June 30, 1996
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three-Month Period Ended
June 30,
1997 1996
-------------------------
REVENUES:
Net sales of products $ 342,614 $ 176,869
Licensing/technology fees 125,000 314,900
----------- ---------
467,614 491,769
----------- -----------
EXPENSES:
Manufacturing 556,500 581,542
Research and development 155,755 408,368
Selling, general and administrative 754,563 747,427
Other (income) expense, net ( 6,630) (21,672)
----------- -----------
1,460,188 1,715,665
----------- -----------
INCOME (LOSS) BEFORE TAXES ( 992,574) (1,223,896)
PROVISION FOR INCOME TAXES - -
----------- -----------
NET INCOME (LOSS) $( 992,574) $(1,223,896)
=========== ===========
EARNINGS (LOSS) PER SHARE $ (.05) $ (.08)
=========== ===========
SHARES USED IN PER SHARE CALCULATION 19,789,582 15,585,232
=========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, March 31,
1997 1997
--------------------------
(unaudited)
ASSETS
- ------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 1,793,846 $ 2,116,478
Securities available for sale - -
Accounts receivable 215,870 311,856
Inventories 1,639,105 1,706,456
Prepaid and other current assets 81,240 45,222
----------- -----------
Total current assets 3,730,061 4,180,012
PROPERTY AND EQUIPMENT, at cost:
Machinery and equipment 1,904,039 1,897,174
Production molds 1,801,493 1,798,630
Furniture and fixtures 177,397 176,897
Leasehold improvements 80,447 80,447
Capitalized Interest 106,228 106,228
----------- -----------
4,069,604 4,059,376
Less - Accumulated depreciation (1,562,343) (1,462,338)
----------- -----------
2,507,261 2,597,038
OTHER ASSETS 314,551 310,981
----------- -----------
$ 6,551,873 $ 7,088,031
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 521,848 $ 659,973
Accrued payroll 151,665 213,130
Other accrued liabilities 230,390 199,384
Deferred revenue 125,000 250,000
----------- -----------
Total current liabilities 1,028,903 1,322,487
SHAREHOLDERS' EQUITY:
Preferred stock, no par, 10,000,000
shares authorized; no shares issued
and outstanding - -
Common stock, no par, 100,000,000
shares authorized; issued and
outstanding 21,284,599 shares at
June 30, 1997 and 19,540,413 at
March 31, 1997 40,785,736 40,035,736
Accumulated deficit (35,262,766) (34,270,192)
----------- -----------
Total shareholders' equity 5,522,970 5,765,544
----------- -----------
$ 6,551,873 $ 7,088,031
=========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three-Month Period Ended
June 30,
1997 1996
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $( 992,574) $(1,223,896)
Adjustments to net loss:
Depreciation and amortization 107,505 172,200
Common stock issued for services - 159,350
Net changes in assets and liabilities:
Accounts receivable 95,986 352,149
Inventories 67,351 (261,235)
Prepaid and other current assets (36,018) (2,068)
Accounts payable (138,125) (244,197)
Accrued payroll (61,465) (22,067)
Other accrued liabilities 31,006 8,778
Deferred revenue (125,000) (265,400)
----------- -----------
Net Cash Used in Operating Activities (1,051,334) (1,326,386)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Transfers to restricted cash - (173,163)
Sale of securities available for sale - 993,056
Capital expenditures ( 10,228) (286,480)
Other assets ( 10,070) (1,789)
----------- -----------
Net Cash Used in Investing Activities ( 21,298) 531,624
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt - 450,000
Cash proceeds from common stock 750,000 -
----------- -----------
Net Cash Provided by Financing Activities 750,000 450,000
----------- -----------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) in cash and
cash equivalents (322,632) (344,762)
Cash and cash equivalents at beginning
of period 2,116,478 3,098,251
----------- -----------
Cash and cash equivalents at end
of period $ 1,793,846 $ 2,753,489
=========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY:
The Company's operations are conducted by Bioject Inc., an Oregon corporation,
which is a wholly owned subsidiary of Bioject Medical Technologies Inc., an
Oregon corporation (the "Company"). All significant intercompany transactions
have been eliminated.
Although Bioject Inc. commenced operations in 1985, the Company was formed in
December 1992 for the sole purpose of acquiring all the capital stock of
Bioject Medical Systems Ltd., a Company organized under the laws of British
Columbia, Canada, in a stock-for-stock exchange in order to establish a U.S.
domestic corporation as the publicly traded parent company for Bioject Inc.
and Bioject Medical Systems Ltd. Bioject Medical Systems Ltd. was terminated
in fiscal 1997. All references to the Company herein are to Bioject Medical
Technologies Inc. and its subsidiary, unless the context requires otherwise.
The Company commenced operations in 1985 for the purpose of developing,
manufacturing and distributing a new drug delivery system. Since its
formation, the Company has been engaged principally in organizational,
financing, research and development, and marketing activities. In the last
quarter of fiscal 1993, the Company launched U.S. distribution of its
Biojector 2000 system primarily to the hospital and large clinic market.
The Company's products and manufacturing operations are subject to extensive
government regulation, both in the U.S. and abroad. In the U.S., the
development, manufacture, marketing and promotion of medical devices is
regulated by the Food and Drug Administration ("FDA") under the Federal Food,
Drug, and Cosmetic Act ("FFDCA"). In 1987, the Company received clearance from
the FDA under Section 510(k) of the FFDCA to market a hand-held CO2-powered
jet injection system. In June 1994, the Company received clearance from the
FDA under 510(k) to market a version of its Biojector 2000 system in a
configuration targeted at high volume injection applications. In October 1996,
the Company received 510(k) clearance for a non-needle disposable vial access
device. In March 1997, the Company received additional 510(k) clearance for
certain enhancements to its Biojector 2000 system.
The Company's revenues to date have been derived primarily from licensing
and technology fees and more recently from sales of the Biojector 2000 system
and Biojector syringes to public health clinics, flu immunization clinics and
physicians offices. Future revenues will depend upon acceptance and use by
healthcare providers of the Company's jet injection technology. Uncertainties
over government regulation and competition in the healthcare industry may
impact healthcare provider expenditures and third party payer reimbursements
and, accordingly, the Company cannot predict what impact, if any, subsequent
healthcare reforms might have on its business. In the future the Company may
require additional financing. Failure to obtain such financing on favorable
terms could adversely affect the Company's business.
2. ACCOUNTING POLICIES:
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined in
a manner which approximates the first-in, first out (FIFO) method. Costs
utilized for inventory valuation purposes include labor, materials and
manufacturing overhead. Net inventories consist of the following:
June 30, March 31,
1997 1997
---------- ----------
Raw Materials $ 854,848 $ 815,868
Work in Process 9,763 9,763
Finished Goods 774,494 880,825
---------- ----------
$1,639,105 $1,706,456
========== ==========
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
3. Private Placement:
In June and July 1997, the Company received net proceeds of $1.225 million
in a private placement of 2.9 million shares of common stock and five year
warrants to purchase 1.45 million shares of common stock at $0.71 per share.
Of the total net proceeds received, $750,000 was received and recorded in the
financial statements as of June 30, 1997. The balance of $475,000 was
received in July 1997 and will be reported in the financial statements for the
quarter ended September 30, 1997.
4 . BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying, unaudited consolidated financial statements do not
include all information and footnote disclosures normally included in an
audited financial statement. However, in the opinion of management, all
adjustments (which include only normal, recurring adjustments except as
described below) necessary to present fairly the financial position, cash
flows, and results of operations have been made. It is suggested that these
statements be read in conjunction with the financial statements included in
the Company's Annual Report on Form 10-K for the year ended March 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
During the quarter, the Company continued its focus on sales to the public
health clinic market for the broad range of immunizations and to nursing
organizations for flu immunizations. Also during the quarter, the Company
announced that approximately 400 Wal-Mart stores throughout the country will
offer consumers flu vaccines with the Biojector(R) 2000 needle-free injection
system as part of Wal-Mart's national flu program to launch this fall.
In June and July 1997, the Company completed two private placements for a
total proceeds of $1.25 million in an offering of 2.9 million shares of stock
and 1.45 million warrants. At the completion of the second closing the
Company had a total of 22,447,390 common shares outstanding.
The Company's revenues to date have not been sufficient to cover operating
expenses. However, the Company believes that if its products achieve market
acceptance and the volume of sales increases, and its product costs are
reduced, its costs of goods as a percentage of sales will decrease and
eventually the Company will generate net income. (See "Forward Looking
Statements") The level of sales required to generate net income will be
affected by a number of factors including the pricing of the Company's
products, its ability to attain efficiencies that can be attained through
volume and automated manufacturing, and the impact of inflation on the
Company's manufacturing and other operating costs. There can be no assurance
that the Company will be able to successfully implement its manufacturing cost
reduction program or sell its products at prices or in volumes sufficient to
achieve profitability or offset increases in its costs should they occur.
Revenues and results of operations have fluctuated and can be expected to
continue to fluctuate significantly from quarter to quarter and from year to
year. Various factors may affect quarterly and yearly operating results
including (i) length of time to close product sales, (ii) customer budget
cycles, (iii) implementation of cost reduction measures, (iv) uncertainties
and changes in purchasing due to third party payor policies and proposals
relating to national healthcare reform, (v) timing and amount of payments
under technology development agreements and (vi) timing of new product
introductions by the Company and its competition.
During the fiscal year, the Company will continue to focus its
efforts on expanding sales, reducing the cost of its products, developing
a 1.5 ml. injector for Hoffmann-La Roche, pursuing additional alliances with
pharmaceutical companies and conserving its fiscal resources. The Company
does not expect to report net income from operations in fiscal 1998.
See "Forward Looking Statements."
RESULTS OF OPERATIONS
Revenues from product sales increased from $177,000 in the first quarter of
fiscal 1997 to $342,000 in the first quarter of fiscal 1998 due to increased
orders for the Biojector(R) 2000 system from the public health sector and to
a $40,000 payment from a strategic partner for self injection products.
Licensing and technology revenues are recognized for work performed in
conjunction with product development projects. In the first quarter of fiscal
1997 payments were received from Hoffmann-La Roche for development of a 1.5
ml. injector and from Schering AG for the development of a self injector and
totalled $315,000. In the first quarter fiscal 1998, product development
payments were received from Hoffmann-La Roche and totalled $125,000,
a decrease from the prior year's first quarter due to the completion of the
self injector project.
Manufacturing expense is comprised of the direct costs of product sold,
unabsorbed manufacturing overhead and manufacturing variances and totalled
$582,000 in first quarter fiscal 1997 and $556,000 for the first quarter
fiscal 1998. The decrease from the first quarter of the prior year reflects
product cost reductions and lower manufacturing overhead.
Research and development expenses decreased from $408,000 in the first quarter
of fiscal 1997 to $155,000 in the first quarter of fiscal 1998, due to the
completion the self injector project.
Selling, general and administrative expense remained constant at $747,000 for
the first quarter of fiscal 1997 and $755,000 for the first quarter of fiscal
1998, reflecting the Company's commitment to hold the line on these costs.
Other income decreased from $22,000 in the first quarter of fiscal 1997 to
$7,000 in the first quarter of fiscal 1997, as a result of decreases in cash
balances.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception in 1985, the Company has financed its operations,
working capital needs and capital expenditures primarily from private
placements of securities, exercises of stock options, proceeds received from
its initial public offering in 1986, proceeds received from a public offering
of Common Stock in November 1993, licensing and technology revenues and more
recently from sales of products. Net proceeds received upon issuance of
securities from inception through June 30, 1997 totalled approximately
$41.0 million.
During the first quarter of fiscal 1998 and subsequent to quarter end, the
Company raised in two closings a total of $1.25 million in an offering of
2.9 million shares of common stock and 1.45 million warrants. If the entire
offering had closed by June 30, 1997, cash and marketable securities would
have totalled $2.3 million, assets would have totalled $7.1 million and net
equity would have totalled $6.0 million. At the completion of the second
closing, the Company had a total of 22,447,390 common shares outstanding.
Cash, cash equivalents and marketable securities totalled, $1.8 million
at June 30, 1997 compared to $2.1 million at March 31, 1997. The decrease
resulted primarily from operating losses and from reductions in certain short
term liabilities offset by proceeds received in the first closing of two
private placement offerings.
Inventories decreased from $1.7 million at March 31, 1997 to $1.6 million
at June 30, 1997, due to product sales for the first quarter of fiscal 1998.
The Company expects to expend approximately $50,000 on non-manufacturing
capital equipment additions in fiscal 1998.
The Company believes that its current cash position and cash received from a
private placement of common stock and warrants in June and July 1997, combined
with revenues and other cash receipts will not be adequate to fund the
Company's operations through the end of fiscal 1998. The Company has
identified a number of potential financing sources and is pursuing them
aggressively. See "Forward Looking Statements." Even if the Company is
successful in raising additional financing unforeseen costs and expenses or
lower than anticipated cash receipts from product sales or research and
development activities could accelerate or increase the financing
requirements. The Company has been successful in raising additional financing
in the past and believes that sufficient funds will be available to fund
future operations. See "Forward Looking Statements." However, there can be
no assurance that the Company's efforts will be successful, and there can be
no assurance that such financing will be available on terms which are not
significantly dilutive to existing shareholders. Failure to obtain needed
additional capital on terms acceptable to the Company, or at all, would
significantly restrict the Company's operations and ability to continue
product development and growth and materially adversely affect the Company's
business. The Company has no banking line of credit or other established
source of borrowing. The Company's independent accountants have qualified
their opinion with respect to their audit of the Company's 1997 consolidated
financial statements as the result of doubts concerning the Company's ability
to continue as a going concern in the absence of additional financing.
FORWARD LOOKING STATEMENTS
Certain statements in this report constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company, or industry results, to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. Such risks, uncertainties and factors are
described in more detail in the Company's Annual Report on Form 10-K and other
S.E.C. filings.
SIGNATURE
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.
BIOJECT MEDICAL TECHNOLOGIES INC.
(Registrant)
Date: January 22, 1998 /S/ Peggy J. Miller
---------------------------------
Peggy J. Miller
Vice President and Chief Financial Officer
