<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly Report pursuant to Section 13 or 15(d)
--- of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000
Transition Report Under Section 13 or 15(d) of the
--- Securities Exchange Act of 1934
For the transition period from ________ To ________
Commission File Number: 0-17119
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A-Fem Medical Corporation
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(exact name of small business issuer as specified in its charter)
Nevada 33-0202574
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
10180 SW Nimbus Ave., Suite J5
Portland, OR 97223
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(Address of principal executive offices)
(503) 968-8800
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(Issuer's telephone number)
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 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
----- -----
As of May 9, 2000, the issuer had outstanding 9,563,225 shares of its $.01 par
value Common Stock.
Transitional Small Business Disclosure Format: (Check one) Yes No X
--- ---
<PAGE> 2
PART I - FINANCIAL INFORMATION
See "Basis of Presentation."
ITEM 1. FINANCIAL STATEMENTS
A-Fem Medical Corporation
BALANCE SHEETS
<TABLE>
<CAPTION>
As of
March 31, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 740,930 $ 428,845
Accounts receivable 5,101 6,622
Inventory 55,095 65,581
Prepaids and other 78,803 86,649
------------ ------------
Total current assets 879,929 587,697
EQUIPMENT, FURNITURE and LEASEHOLDS, at cost 1,044,112 1,286,012
Less: accumulated depreciation (619,393) (640,331)
------------ ------------
424,719 645,681
PATENTS and LICENSES, net 63,491 54,700
LOANS RECEIVABLE - officers and directors 66,546 65,675
------------ ------------
Total assets $ 1,434,685 $ 1,353,753
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 89,840 $ 64,101
Current portion of capital lease 12,082 31,664
Accrued expenses 69,199 83,796
Accrued salaries and related liabilities 105,686 84,857
------------ ------------
Total current liabilities 276,807 264,418
LONG-TERM LIABILITIES
Long-term portion of capital lease obligation 3,130 4,660
Long-term note payable 450,000 450,000
------------ ------------
Total long-term liabilities 453,130 454,660
------------ ------------
Total Liabilities 729,937 719,078
STOCKHOLDERS' EQUITY:
Series A Convertible Preferred Stock, $0.01 par value; authorized
8,200,000 shares; issued 7,231,720 and 6,971,305 shares at
March 31, 2000 and December 31, 1999 72,317 69,713
Common Stock, $0.01 par value; authorized 33,000,000 shares;
issued 9,563,225 shares at March 31, 2000 and December 31, 1999 95,632 95,632
Warrants issued for Series A Convertible Preferred Stock 1,542,726 1,152,148
Warrants issued for common stock 76,491 76,491
Additional paid-in capital 18,198,973 18,093,143
Accumulated deficit (19,281,391) (18,852,452)
------------ ------------
Total stockholders' equity 704,748 634,675
------------ ------------
Total liabilities and stockholders' equity $ 1,434,685 $ 1,353,753
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
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A-Fem Medical Corporation
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
----------- -----------
2000 1999
----------- -----------
<S> <C> <C>
Sales, net $ 9,324 $ 25,462
Cost of sales 63,373 69,621
----------- -----------
Gross margin (54,049) (44,159)
Operating Expenses:
Research and development 201,085 248,176
Marketing and selling 16,602 151,279
General and administrative 199,075 243,126
----------- -----------
Total operating expenses 416,762 642,581
----------- -----------
Net operating loss (470,811) (686,740)
----------- -----------
Other income (expense) 41,872 (9,375)
----------- -----------
Net loss $ (428,939) $ (696,115)
=========== ===========
Basic and diluted net loss per share $ (0.04) $ (0.07)
=========== ===========
Weighted average shares outstanding 9,563,225 9,471,875
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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A-Fem Medical Corporation
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
(unaudited)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
--------------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $(428,939) $(696,115)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 24,960 34,031
(Gain) loss on disposal of assets (8,060) 3,595
Other non-cash expenses 7,944 8,164
Other non-cash income (871) (870)
Changes in working capital:
Accounts receivable 1,521 26,779
Inventory 10,486 (181)
Prepaid expenses and other (98) 65,291
Accounts payable 25,739 (171,770)
Accrued expenses (14,597) (9,268)
Accrued salaries and related liabilities 20,829 11,876
--------- ---------
Net cash used in operating activities (361,086) (728,468)
Cash Flows From Investing Activities:
Purchases of equipment, furniture and leaseholds -- (24,209)
Net proceeds from sale of equipment 204,456 --
Other assets (9,185) --
--------- ---------
Net cash provided by (used in) investing activities 195,271 (24,209)
Cash Flows From Financing Activities:
Net repayments of lease obligations (21,112) (59,454)
Net proceeds from sale of common and preferred stock,
exercise of options and warrants, net of expenses 499,012 298,215
--------- ---------
Net cash provided by financing activities 477,900 238,761
Net Increase (Decrease) in Cash and Cash Equivalents 312,085 (513,916)
Cash and Cash Equivalents, beginning of period 428,845 668,369
--------- ---------
Cash and Cash Equivalents, end of period $ 740,930 $ 154,453
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
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A-Fem Medical Corporation
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
A-Fem Medical Corporation (the Company or A-Fem) is a medical technology company
with multiple product platforms targeting women's health needs. A-Fem has
developed three proprietary technology platforms: one based on its INSYNC(R)
miniform interlabial pad, another based on its RAPID-SENSE(R) diagnostic tests
and the third based on its PADKIT(R) SAMPLE COLLECTION SYSTEM. A-Fem currently
markets the INSYNC miniform as an alternative to tampons, pads and liners for
light flow, or in combination for heavier flow protection. The PADKIT, currently
in clinical trials, utilizes a miniform as a noninvasive sample collection
method for use in testing for certain cancers and sexually transmitted and
infectious diseases. A-Fem has also entered into several joint relationships to
develop point-of-care diagnostic products that provide quantified results using
its proprietary RAPID-SENSE technology.
Basis of Presentation
The interim financial data are unaudited; however, in the opinion of
management, the interim data include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods. The financial statements included herein have been prepared by
A-Fem pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although A-Fem believes that the disclosures included herein are
adequate to make the information presented not misleading. Operating results for
the periods presented are not necessarily indicative of future results. These
financial statements should be read in conjunction with the financial statements
and notes to financial statements included in A-Fem's Annual Report on Form
10-KSB for the year ended December 31, 1999.
Net Loss Per Share
Basic and diluted loss per share are required to be computed using the
methods prescribed by Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS 128). Basic loss per share is calculated using the
weighted average number of common shares outstanding for the period and diluted
loss per share is computed using the weighted average number of common shares
and dilutive common equivalent shares outstanding. A net loss was reported in
each of the quarters ended March 31, 2000 and 1999. Stock options for the
purchase of 3,490,130 and 3,738,611 shares at March 31, 2000
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and 1999, respectively, and warrants for the purchase of 2,363,906 and 2,520,006
shares at March 31, 2000 and 1999, respectively, were not included in loss per
share calculations, because to do so would have been anti-dilutive. In addition,
shares of A-Fem's convertible preferred stock and warrants covering shares of
A-Fem's convertible preferred stock outstanding at March 31, 2000 were not
included in loss per share calculations because to do so would have been
anti-dilutive.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). This statement establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS 133 also requires that changes in the derivative instrument's
fair value be recognized currently in results of operations unless specific
hedge accounting criteria are met. In June 1999, the FASB issued Statement of
Financial Accounting Standards No. 137 (SFAS 137) which deferred the effective
date of SFAS 133. SFAS 133 is now effective for fiscal years beginning after
June 15, 2000. The Company expects that adoption of SFAS 133 will not have a
material impact on the Company's financial condition or results of operations.
Reclassifications
Certain amounts have been reclassified in the prior year financial
statement presentation to conform to the current year presentation.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
A-Fem Medical Corporation is a medical technology company with multiple product
platforms targeting women's health needs. A-Fem has developed three proprietary
technology platforms: one based on its INSYNC(R) MINIFORM interlabial pad,
another based on its RAPID-SENSE(R) diagnostic tests, and the third based on its
PADKIT(R) SAMPLE COLLECTION SYSTEM. A-Fem currently markets the INSYNC miniform
as an alternative to tampons, pads and liners for light flow, or in combination
for heavier flow protection. The PADKIT, currently in clinical trials, utilizes
a miniform as a non-invasive sample collection method for use in testing for
certain cancers and sexually transmitted and infectious diseases. A-Fem has also
entered into several joint relationships to develop point-of-care diagnostic
products that provide quantified results using its proprietary RAPID-SENSE
technology.
OVERVIEW
A-Fem continued to experience operating losses during the year ended
December 31, 1999. Further, A-Fem has continued to incur losses into the first
quarter of 2000 and has never generated significant revenues from operations to
offset expenses. A-Fem expects that significant ongoing expenditures will be
necessary to successfully implement its business plan and develop, manufacture
and market its products. These circumstances raise substantial doubt about
A-Fem's ability to continue as a going concern. Execution of A-Fem's plans and
its ability to continue as a going concern depend upon its acquiring substantial
additional financing. Management's plans include efforts to obtain additional
capital and to seek partnering opportunities. A-Fem has raised operating funds
in the past by selling shares of its common and preferred stock for
consideration totaling approximately $2.4 million during 1999 and $0.5 million
during the quarter ended March 31, 2000.
A-Fem may not be able to raise additional funding or enter into a
strategic alliance. If A-Fem is unable to obtain adequate additional financing,
enter into such strategic alliance or generate sufficient sales revenues,
management may be required to curtail A-Fem's product development, marketing
activities and other operations, and A-Fem may be forced to cease operations.
RESULTS OF OPERATIONS
Net sales for the quarter ended March 31, 2000, were approximately
$9,000, as compared to approximately $25,000 for the quarter ended March 31,
1999. This decrease was the result of decreased levels of promotional support
for the INSYNC miniform as compared to the levels maintained during the prior
year.
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Marketing and selling expense for the first quarter of 2000 was
approximately $17,000, as compared to approximately $151,000 for the quarter
ended March 31, 1999. The decrease in marketing and selling expense resulted
from decreased advertising and marketing in 2000 as compared to the expenditures
required to support the product roll-out in 1999.
Research and development expense for the quarter ended March 31, 2000,
was approximately $201,000, as compared to approximately $248,000 for the same
quarter of the prior year. This decrease resulted from a reduction in headcount
and the postponement of expenses associated with the PADKIT clinical studies.
General and administrative expense was approximately $199,000 for the
quarter ended March 31, 2000, as compared to approximately $243,000 for the same
period in the prior year. This decrease resulted from decreased payroll expense
due to a reduction in the number of employees, and a decrease in travel expense
and banking fees.
A-Fem's operating loss for the quarter ended March 31, 2000, was
approximately $471,000, as compared to approximately $687,000 for the same
quarter of the prior year. This decrease resulted from lower expenses in 2000 as
compared to the expenses in 1999.
A-Fem's net loss for the quarter ended March 31, 2000, was approximately
$429,000, as compared to approximately $696,000 for the same period in the prior
year. This decrease reflects the reduction in expenses for the quarter ended
March 31, 2000 as compared to the comparable period in 1999, plus the receipt of
$40,000 related to a development contract.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, A-Fem had cash and cash equivalents of $741,000.
A-Fem's net cash position increased $312,085 between December 31, 1999 and March
31, 2000, as a result of selling shares of preferred stock.
A-Fem expects to continue to incur losses through 2000 and 2001, because
the costs of development are expected to continue to exceed income from product
sales. A-Fem incurs approximately $160,000 per month of operating expenses. In
order to carry out its development plans for RAPID-SENSE and the PADKIT, A-Fem
estimates it will need to raise approximately $3 million in addition to the
funds needed for its monthly operating expenses. If A-Fem were able to raise the
entire $3 million at once, it would take approximately 18 months to complete
A-Fem's development plans for RAPID-SENSE and the PADKIT. A-Fem does not expect
significant amounts of debt financing to be available to it in the near term,
and therefore expects that it will have to issue additional equity. A-Fem cannot
predict on what terms any such financing might be available, but any such
financing could involve issuance of equity below current market prices and
result in significant dilution of existing stockholders.
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FACTORS AFFECTING FORWARD-LOOKING STATEMENTS
The statements contained in this report that are not statements of
historical fact may include forward-looking statements (as defined in Section
27A of the Securities Act of 1933, as amended) that involve a number of risks
and uncertainties. Moreover, from time to time A-Fem may issue other
forward-looking statements. The following factors are among those that could
cause actual results to differ materially from the forward-looking statements
and should be considered in evaluating any forward-looking statements: need for
additional financing; uncertainty associated with need for regulatory approvals;
continuing operating losses; results of financing efforts; lack of revenues from
products; market acceptance risks; uncertainty associated with product
development; the impact of competitive products and pricing; the effect of
economic conditions generally and within the medical technology industry; and
the additional factors listed from time to time in the Company's SEC reports,
including but not limited to, the Company's report on Form 10-KSB for the fiscal
year ended December 31, 1999.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
See Exhibit Index
b) Reports on Form 8-K
None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
A-FEM MEDICAL CORPORATION
Date: May 12, 2000
/s/ Steven T. Frankel
---------------------------------------
Steven T. Frankel
President and Chief Executive Officer
/s/ Martin Harvey
---------------------------------------
Martin Harvey
Controller
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit
No. Description
------- -----------
3.1 Articles of Incorporation, as amended(1)
3.2 Amended and Restated Bylaws(2)
11.1 Statement re: computation of per share earnings
27.1 Financial Data Schedule
</TABLE>
- -----------------
(1) Incorporated by reference to the exhibits to A-Fem's Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1999.
(2) Incorporated by reference to the exhibits to A-Fem's Annual Report on Form
10-KSB/A for the year ended December 31, 1998.
<PAGE> 1
EXHIBIT 11.1
A-FEM MEDICAL CORPORATION
CALCULATIONS OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
For the three months ended
March 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Actual weighted average shares outstanding for the period 9,563,225 9,471,875
Dilutive common and preferred stock, options and
warrants using the treasury stock method(1) -- --
----------- -----------
Total shares used in per share calculations 9,563,225 9,471,875
----------- -----------
Net loss $ (428,939) $ (696,115)
----------- -----------
Basic and diluted net loss per share $ (0.04) $ (0.07)
=========== ===========
</TABLE>
(1) Preferred stock, warrants and options outstanding are not included, as the
effect would be anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM A-FEM
MEDICAL CORPORATION'S FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 741
<SECURITIES> 0
<RECEIVABLES> 5
<ALLOWANCES> 0
<INVENTORY> 55
<CURRENT-ASSETS> 880
<PP&E> 1,044
<DEPRECIATION> (619)
<TOTAL-ASSETS> 1,435
<CURRENT-LIABILITIES> 277
<BONDS> 0
0
72
<COMMON> 96
<OTHER-SE> 537
<TOTAL-LIABILITY-AND-EQUITY> 1,435
<SALES> 9
<TOTAL-REVENUES> 9
<CGS> 63
<TOTAL-COSTS> 63
<OTHER-EXPENSES> 417
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> (429)
<INCOME-TAX> 0
<INCOME-CONTINUING> (429)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (429)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
