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18
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission file number 1-12178
InnoVet, Inc.
(Exact name of small business issuer as specified in its charter)
Florida
(State or other jurisdiction
of
incorporation or organization)
14255 US 1, Suite 206
Juno Beach, Florida
(Address of principal
executive offices)
59-2699441
(I.R.S. Employer
Identification No.)
33408
(Zip Code)
(407) 626-6025
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports 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 _____
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, $0.001 Par Value; 18,656,881 shares outstanding as
of November 12, 1995.
INDEX
INNOVET, INC.
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets
September 30, 1995 and December 31, 1994
4
Consolidated Condensed Statements of Operations
Nine months ended September 30, 1995 and 1994
5
Three months ended September 30, 1995 and 1994
6
Consolidated Statement of Stockholders' Equity
Nine months ended September 30, 1995
7
Consolidated Condensed Statement of Cash Flows
Nine months ended September 30, 1995 and 1994
8
Notes to Consolidated Condensed Financial Statements
10
Item 2. Management's Discussion and Analysis of Financial
Condition and 12
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
16
Item 2. Changes in Securities
16
Item 3. Defaults upon Senior Securities
16
Item 4. Submission of Matters to a Vote of Securities Holders
16
Item 5. Other Information
16
Item 6. Exhibits and Reports on Form 8-K
16
SIGNATURES 17
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
INNOVE
T,
INC.
AND
SUBSID
IARIES
CONSOL
IDATED
CONDEN
SED
BALANC
E
SHEETS
(Unaud
ited)
ASSETS Septembe December 31,
r 30,
1995 1994
Curren
t
assets
Cash and cash equivalents $ $
7,702 170,472
Investments
- 839,583
Accounts receivable, net of allowance
for doubtful accounts of $0
for 1995 and 1994, respectively
42,371 1,029
Other receivables
- 209,895
Prepaid expenses and other current
assets 16,535 11,217
Total current assets 66,608 1,232,19
6
Proper 2,542
ty, 38,361
plant
and
equipm
ent at
cost
less
accumu
lated
deprec
iation
Other
assets
Notes receivable, long-term, net of
allowance for doubtful accounts of - -
$105,000 for 1995 and 1994,
respectively
Patents, net
25,366 28,006
Investments
80,000 80,000
Security deposits and other assets
24,049 52,676
Total assets $ $
198,565 1,431,23
9
LIABILITIES AND STOCKHOLDERS' EQUITY
Curren
t
liabil
ities
Accounts payable $ $
54,846 135,517
Bank loan, short-term
- 704,961
Accrued expenses
225,000 334,414
Total current liabilities 279,846 1,174,89
2
Stockh
olders
'
equity
Common stock, $.001 par value,
100,000,000 shares authorized;
18,656,881 shares issued at September
30, 1995 and
18,294,881 shares issued at December
31, 1994 18,657 18,295
Capital in excess of par value
18,856,6 18,854,1
54 56
Capital representing stock grants
5,514,99 5,514,99
0 0
Accumulated deficit
(24,471, (24,131,
582) 094)
(81,281) 256,347
Total liabilities and stockholders' $ $
equity 198,565 1,431,23
9
The
accomp
anying
notes
are an
integr
al
part
of
these
statem
ents.
INNOVET, INC. AND
SUBSIDIARIES
CONSOLIDATED
CONDENSED STATEMENT
OF OPERATIONS
(Unaudited)
Nine
Month
s
Ended
Septe
mber
30,
1995 1994
Revenues
Sales $ $
294,52 361,22
6 4
Other income
9,556 9,819
Interest 3,051 43,947
income, net
307,13 414,99
3 0
Costs and expenses
Cost of sales 170,63 212,44
3 9
Compensation
Officers and 137,63 214,97
employees 3 2
Grants under 27,371
stock option -
plans
Consulting 19,438 166,01
1
Research and 43,456 124,05
development 4
Selling, 281,635 313,32
general and 0
administrative
expenses
Legal fees 58,915 112,14
8
Depreciation 1,138 7,965
expense
Foreign (5,873)
currency -
transaction
(gain)/loss
Gain on sale (99,97
of marketable 9) 10,764
securities
Interest 40,625
expense 33,796
647,62 1,222,
1 850
Loss from (340,488) (807,8
continuing 60)
operations
before income
taxes
Provision for income
taxes - -
Loss from (340,4 (807,8
continuing 88) 60)
operations
Discontinued
operations:
Loss from
operations of - (462,8
discontinued 97)
subsidiaries
(less
applicable
income taxes
of $0)
Loss on
disposal of - (1,769
subsidiaries ,357)
(less
applicable
income taxes
of $0)
Net loss $ $
(340,4 (3,040
88) ,114)
Per share:
Continuing $ $
operations (0.02) (0.05)
Discontinued $ $
operations - (0.12)
Net loss $ $
(0.02) (0.17)
Weighted average
shares 18,566 17,893
,214 ,916
Consolidated
Condensed Statements
of Operations
continued on next
page.
The accompanying
notes are an
integral part of
these statements.
INNOVET, INC. AND
SUBSIDIARIES
CONSOLIDATED
CONDENSED STATEMENT
OF OPERATIONS
(Unaudited)
Three
Month
s
Ended
Septe
mber
30,
1995 1994
Revenues
Sales $ $
85,723 124,37
8
Other income
4,000 -
Interest
income, net 6 13,295
89,729 137,67
3
Costs and expenses
Cost of sales
49,667 71,814
Compensation
Officers and
employees 34,408 76,791
Grants under
stock option - 7,968
plans
Consulting
- 55,666
Research and
development (913) 67,502
Selling,
general and 95,902 (41,52
administrative 2)
expenses
Legal fees
6,596 44,109
Depreciation
expense (1,757 2,629
)
Foreign
currency - -
transaction
(gain)/loss
Gain on sale
of marketable - 10,764
securities
Interest
expense - 28,368
183,90 324,08
3 9
Loss from (94,174) (186,4
continuing 16)
operations
before income
taxes
Provision for income
taxes - -
Loss from (94,17 (186,4
continuing 4) 16)
operations
Discontinued
operations:
Loss from
operations of - -
discontinued
subsidiaries
(less
applicable
income taxes
of $0)
Loss on
disposal of - (1,377
subsidiaries ,431)
(less
applicable
income taxes
of $0)
Net loss $ $
(94,17 (1,563
4) ,847)
Per share:
Continuing $ $
operations (0.01) (0.01)
Discontinued $ $
operations - (0.08)
Net loss $ $
(0.01) (0.09)
Weighted average
shares 18,566 17,893
,214 ,916
The accompanying
notes are an
integral part of
these statements.
INNOVET, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENT OF
STOCKHOLDERS' EQUITY
(Unaudited)
Capita Capit Total
l in al
Common Stock Excess of Repre Accumu Stock
senti lated holde
ng rs'
Shares Amou Par StockDefici Equit
nt Value Grant t y
s
Balance, January 1, 17,686,281 $ $ $ $
1994 17,6 18,838 5,485 $(18,9 5,434
86 ,671 ,139 06,673 ,823
)
Capital representing 568,700
exercise of stock 569 - 569
options
Capital representing
stock issued in 39,900 40 15,485 15,52
exchange for 5
services
Capital representing
stock option grants 29,85 29,85
1 1
Net loss
(5,224 (5,22
,421) 4,421
)
Balance, December 18,294,881
31, 1994 18,2 18,854 5,514 (24,13 256,3
95 ,156 ,990 1,094) 47
Capital representing 360,000
exercise of stock 360 - 360
options
Capital representing
stock issued in 2,000 2 2,498 2,500
exchange for
services
Net loss (340,4
88) (340,
488)
Balance, September 18,656,881 $ $ $ $
30, 1995 18,6 18,856 5,514 $(24,4 (81,2
57 ,654 ,990 71,582 81)
)
The accompanying
notes are an
integral part of
these statements.
IN
NO
VE
T,
IN
C.
AN
D
SU
BS
ID
IA
RI
ES
CO
NS
OL
ID
AT
ED
ST
AT
EM
EN
TS
OF
CA
SH
FL
OW
S
(U
na
ud
it
ed
)
Nine
Months
Ended
September
30
1995 1994
Ca
sh
fl
ow
s
fr
om
op
er
at
in
g
ac
ti
vi
ti
es
:
Ne $
t (340,488) $(3,040,1
lo 14)
ss
Ad
ju
st
me
nt
s
to
re
co
nc
il
e
ne
t
lo
ss
to
ne
t
ca
sh
us
ed
in
op
er
at
in
g
ac
ti
vi
ti
es
:
S 2,500
t 17,700
o
c
k
i
s
s
u
e
d
f
o
r
s
e
r
v
i
c
e
s
C -
o 27,371
m
p
e
n
s
a
t
i
o
n
u
n
d
e
r
s
t
o
c
k
o
p
t
i
o
n
p
l
a
n
A 2,640
m 2,641
o
r
t
i
z
a
t
i
o
n
e
x
p
e
n
s
e
D 1,138
e 7,965
p
r
e
c
i
a
t
i
o
n
e
x
p
e
n
s
e
F (5,873)
o -
r
e
i
g
n
c
u
r
r
e
n
c
y
t
r
a
n
s
a
c
t
i
o
n
(
g
a
i
n
)
/
l
o
s
s
L 9,809
o 4,790
s
s
o
n
s
a
l
e
o
f
e
q
u
i
p
m
e
n
t
L -
o 1,769,357
s
s
o
n
d
i
s
p
o
s
a
l
o
f
d
i
s
c
o
n
t
i
n
u
e
d
o
p
e
r
a
t
i
o
n
s
C
h
a
n
g
e
s
i
n
o
p
e
r
a
t
i
n
g
a
s
s
e
t
s
a
n
d
l
i
a
b
i
l
i
t
i
e
s
n
e
t
o
f
e
f
f
e
c
t
s
f
r
o
m
a
c
q
u
i
s
i
t
i
o
n
s
/
d
i
s
p
o
s
i
t
i
o
n
o
f
s
u
b
s
i
d
i
a
r
i
e
s
:
( (41,342)
I 50,599
n
c
r
e
a
s
e
)
d
e
c
r
e
a
s
e
i
n
a
c
c
o
u
n
t
s
r
e
c
e
i
v
a
b
l
e
( 839,583
I -
n
c
r
e
a
s
e
)
d
e
c
r
e
a
s
e
i
n
i
n
v
e
s
t
m
e
n
t
s
( 215,768
I -
n
c
r
e
a
s
e
)
d
e
c
r
e
a
s
e
i
n
o
t
h
e
r
r
e
c
e
i
v
a
b
l
e
s
( -
I 6,025
n
c
r
e
a
s
e
)
d
e
c
r
e
a
s
e
i
n
i
n
v
e
n
t
o
r
y
( -
I (75,000)
n
c
r
e
a
s
e
)
d
e
c
r
e
a
s
e
i
n
n
o
t
e
s
r
e
c
e
i
v
a
b
l
e
( (5,318)
I (24,190)
n
c
r
e
a
s
e
)
d
e
c
r
e
a
s
e
i
n
p
r
e
p
a
i
d
e
x
p
e
n
s
e
s
( 28,627
I (3,721)
n
c
r
e
a
s
e
)
d
e
c
r
e
a
s
e
i
n
s
e
c
u
r
i
t
y
d
e
p
o
s
i
t
s
a
n
d
o
t
h
e
r
a
s
s
e
t
s
I (80,671)
n 71,509
c
r
e
a
s
e
(
d
e
c
r
e
a
s
e
)
i
n
a
c
c
o
u
n
t
s
p
a
y
a
b
l
e
I (109,414)
n (178,356)
c
r
e
a
s
e
(
d
e
c
r
e
a
s
e
)
i
n
a
c
c
r
u
e
d
e
x
p
e
n
s
e
s
I (704,961)
n -
c
r
e
a
s
e
(
d
e
c
r
e
a
s
e
)
i
n
s
h
o
r
t-
t
e
r
m
b
o
r
r
o
w
i
n
g
s
D
i
s
c
o
n
t
i
n
u
e
d
o
p
e
r
a
t
i
o
n
s-
n
o
n
c
a
s
h
c
h
a
r
g
e
s
a
n
d
working capital changes
- 497,611
Net cash used for operating
activities (188,002) (865,813)
Ca
sh
fl
ow
s
fr
om
in
ve
st
in
g
ac
ti
vi
ti
es
:
Sa 24,872
le 1,200
of
pr
op
er
ty
,
pl
an
t
an
d
eq
ui
pm
en
t
Pr -
oc 10,000
ee
ds
fr
om
sa
le
of
di
sc
on
ti
nu
ed
op
er
at
io
ns
In -
ve (16,884)
st
in
g
ac
ti
vi
ti
es
of
di
sc
on
ti
nu
ed
op
er
at
io
ns
Net cash provided by (used) for
investing activities 24,872 (5,684)
(continue
d)
IN
NO
VE
T,
IN
C.
AN
D
SU
BS
ID
IA
RI
ES
CO
NS
OL
ID
AT
ED
ST
AT
EM
EN
TS
OF
CA
SH
FL
OW
S
(U
na
ud
it
ed
)
Nine
Months
Ended
September
30
1995 1994
Ca
sh
fl
ow
s
fr
om
fi
na
nc
in
g
ac
ti
vi
ti
es
:
Pr 360
oc 509
ee
ds
fr
om
ex
er
ci
se
of
st
oc
k
op
ti
on
s
Re -
pa (400,000)
ym
en
t
of
di
re
ct
or
/o
ff
ic
er
/s
ha
re
ho
ld
er
lo
an
s
Pr -
oc 1,000,000
ee
ds
fr
om
di
re
ct
or
/o
ff
ic
er
/s
ha
re
ho
ld
er
lo
an
s
Fi -
na (84,296)
nc
in
g
ac
ti
vi
ti
es
of
di
sc
on
ti
nu
ed
op
er
at
io
ns
Net cash provided by financing
activities 360 516,213
In (162,770)
cr (355,284)
ea
se
(d
ec
re
as
e)
in
ca
sh
an
d
ca
sh
eq
ui
va
le
nt
s
Ca 170,472
sh 582,622
an
d
ca
sh
eq
ui
va
le
nt
s,
be
gi
nn
in
g
of
pe
ri
od
Ca $ 7,702 $
sh 227,338
an
d
ca
sh
eq
ui
va
le
nt
s,
en
d
of
pe
ri
od
Su
pp
le
me
nt
al
di
sc
lo
su
re
s
of
ca
sh
fl
ow
in
fo
rm
at
io
n
Ca
sh
pa
id
du
ri
ng
th
e
ye
ar
:
I $ 41,577 $
n 58,965
t
e
r
e
s
t
Su
pp
le
me
nt
al
sc
he
du
le
of
no
nc
as
h
in
ve
st
in
g
an
d
fi
na
nc
in
g
ac
ti
vi
ti
es
:
(a In
) 19
95
,
th
e
Co
mp
an
y
re
tu
rn
ed
a
la
bo
ra
to
ry
ma
ch
in
e
to
th
e
ve
nd
or
va
lu
ed
at
$1
8,
80
0
wh
ic
h
wa
s
us
ed
in
th
e
re
se
ar
ch
an
d
de
ve
lo
pm
en
t
of
th
e
ge
nd
er
se
le
ct
io
n
te
ch
no
lo
gy
.
(b In
) 19
94
,
th
e
Co
mp
an
y
so
ld
it
s
wh
ol
ly
ow
ne
d
su
bs
id
ia
ry
,
DR
A
&
As
so
ci
at
es
in
ex
ch
an
ge
fo
r
$1
0,
00
0
in
ca
sh
an
d
a
fi
ve
ye
ar
no
te
re
ce
iv
ab
le
in
th
e
am
ou
nt
of
$7
5,
00
0.
Th
e
ac
co
mp
an
yi
ng
no
te
s
ar
e
an
in
te
gr
al
pa
rt
of
th
es
e
st
at
em
en
ts
.
INNOVET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
NOTE A - BASIS OF CONSOLIDATION
The Consolidated Condensed Balance Sheets at September 30,
1995 and December 31, 1994 and the related Consolidated Condensed
Statements of Operations for the three months and nine months
ended September 30, 1995 and 1994, Consolidated Statements of
Stockholders' Equity for the nine months ended September 30, 1995
and Consolidated Condensed Statements of Cash Flows for the nine
months ended September 30, 1995 and 1994, have been prepared in
accordance with the instructions for Form 10-QSB and, therefore,
do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and
changes in financial position in conformity with statements,
including the footnotes thereto in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1994. In the opinion
of management, all adjustments considered necessary for a fair
presentation of the results of operations for the nine months
ended September 30, 1995 have been included.
NOTE B - REALIZATION OF ASSETS
The accompanying financial statements have been prepared
assuming the continuation of the Company as a going concern.
However, the Company has sustained substantial losses from
operations in recent years and has a significant accumulated
deficit. During 1994, the Company implemented a strategic plan
in order to overcome its financial difficulties. The Company
divested all of its operating subsidiaries, thereby greatly
reducing its future losses and converting the subsidiaries'
assets to cash in order to provide working capital and reduce its
obligations to creditors.
In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts
shown in the accompanying consolidated balance sheet is dependent
upon continued operations of the Company, which in turn is
dependent upon the Company's ability to be successful in and to
finance its future operations. The financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset and liability amounts that might
result from the above uncertainties.
At September 30, 1995, the Company had $7,702 in cash and
cash equivalents which, combined with remaining assets, are not
sufficient to support its operations for the next twelve months.
Management has taken or will take the following steps to attempt
to improve its financial condition:
In April 1995, in connection with the sale of its wholly-
owned subsidiary, Cambridge Veterinary Sciences, Limited ("CVS")
to Enviromed plc, the Company sold 886,700 Enviromed plc shares
for 75 pence each in two separate transactions. Proceeds of
$1,060,000 were received. Approximately $880,000 was used to
retire a secured bank debt , with the balance of $180,000
available to the Company.
The Company's outstanding obligations at September 30, 1995
have been reduced essentially to its current accounts payable and
to its obligation to its former President and Chief Executive
Officer, Jesse Houdeshell, pursuant to the Termination, Release
and Consulting Agreement with Dr. Houdeshell dated February 23,
1994. The Company is currently negotiating a modification of
this agreement due to the Company's present financial condition.
The Company has reduced its corporate operating and
personnel expenses in order to conserve cash. In July 1995, the
Company terminated its long-term office lease which was due to
expire in October 1997 and moved to a new location. This has
resulted in a two-thirds reduction in the Company's monthly
rental expense.
The Company continues to seek methods to increase revenues
from the sale of its product. The Company has received future
purchase orders for monthly deliveries from August to December
1995 that would provide estimated revenues of $211,250. However,
the present sales volume is not sufficient to cover all of the
Company's working capital needs for the next twelve months.
The Company has engaged in negotiations to sell or license
the rights to its consumer product and its gender selection
technology to raise more cash.
The Company is examining opportunities to merge with and/or
acquire other companies which would provide revenues and cash
flow sufficient to sustain it.
The Company is due 98,522 shares of Enviromed plc stock from
the sale of its wholly owned subsidiary CVS. However, on June
22, 1995, the date the shares were to be issued to the Company,
the Company was notified of a claim under the warranties
provision of the sale agreement which hinders the release of the
remaining shares. As of the date of this report, the 98,522
shares have not been issued to the Company. The Company is
pursuing this matter with its legal counsel in order to arrive at
a quick and favorable resolution. Accordingly, the receivable on
the balance sheet representing these shares (under the caption
other receivables) was adjusted from its carrying price of 45
pence to a market value of zero pence per share which resulted in
a charge of $70,598 in the third quarter.
Management believes that as a result of the actions stated
above, the Company can continue in operation; however, there is
no assurance that such actions will be consummated or will
eliminate the Company's losses or the need for additional
capital.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(a) Results of Operations.
(1) Three months ending September 30. Revenues. Total
sales for the pet stain and odor eliminator decreased by $38,655
for the three months ending September 30, 1995 to $85,723 from
the same period in 1994. The decrease is due to the timing of
shipments from the manufacturer of the product. Also, the 1994
sales included $13,295 of diagnostic kit sales. The sale of
diagnostic kits by InnoVet Inc. ceased in December 1994 due to
the sale of the manufacturing subsidiary, CVS. The Company
recorded $4,000 of other income in 1995 due to the licensing of
IVET-629.
Gross margins. Gross margins decreased from 48% for the
three months ending September 30, 1994 to 45% for the same period
in 1995 mainly due to the change in product mix included in gross
margin. Diagnostic kit sales ceased in December 1994 and the pet
stain and odor eliminator aerosol was the only product sold in
1995.
Compensation of officers and employees. Compensation of
officers and employees was reduced by $42,383 or 55% due the fact
that effective August 31, 1995, the Company no longer has any
full-time executives. Compensation from grants under stock
option plans was reduced from $7,968 for the three months ending
September 30, 1994 to $0 for the same period in 1995 since no
stock options were granted to officers and employees.
Consulting fees. Consulting fees were lower in 1995 by
$55,666 or 100% due to the termination of all consulting
agreements provided by Ronald S. Brakke, Chief Executive Officer
who resigned on April 5, 1995.
Research and development expenses. Research and development
expenses decreased by $68,415 or 100% in the third quarter 1995
compared to the same quarter last year. The Company has suffered
delays in the licensing of IVET-629 and the development of the
gender selection technology. To conserve cash, the Company
suspended further development of its gender selection technology
and biological testing of its IVET-629 product in the second
quarter of 1995.
Selling, general and administrative expenses. Selling,
general and administrative expenses increased $137,424 in the
third quarter of 1995 compared to the same quarter for 1994.
This increase in 1995 compared to 1994 was caused by the
reclassification of expenses in 1994 from selling, general and
administrative to discontinued operations for specific SG&A
expenses directly related to the discontinued operations.
Interest income and expense. Interest income decreased by
$13,289 for the three months ending September 30, 1995 compared
to the same period in 1994. The interest bearing cash accounts
that were collateral for bank loans were used to payoff the loans
in 1994, thereby reducing the cash balances generating interest
income for 1995. Interest expense decreased for the third
quarter of 1995 compared to the same quarter of the prior year by
$28,368 due to the payment of a short-term bank loan which was
drawn down by the Company in December of 1994. The proceeds of
the loan were used to repay secured lenders as a condition
precedent to the sale of CVS. The balance of the loan was repaid
in May of 1995.
Provision for income taxes. The Company has not recorded
any income tax expense (benefit) since the Company has never been
profitable. The Company's net loss decreased by $1,469,673 from
a net loss of $1,563,847 for the three months ended September 30,
1994 to a net loss of $94,174 for the three months ended
September 30, 1995. The net loss decreased in 1995 resulting
from the divestiture of all operating subsidiaries in 1994, as
well as, a reduction in corporate operating and personnel
expenses.
Discontinued operations. In the quarter ended September 30,
1994, losses of $1,377,431 were recorded as a loss on disposal of
the discontinued operations of the former subsidiaries. No
losses from discontinued operations were recorded in the same
period of 1995 since the divestiture of all subsidiaries was
completed in 1994.
(2) Nine months ending September 30. Revenues. Total sales
decreased by $107,857 for the nine months ending September 30,
1995 compared to the same nine months for 1994. The sales
decline was due to the discontinued sales of diagnostic kits by
the Company after the sale of its manufacturing subsidiary, CVS
in December 1994, as well as, the timing of shipments of the
Company's pet stain and odor eliminator. The 1994 sales for the
first nine months included $27,956 of diagnostic kit sales
compared to $0 in 1995 for the same nine months.
Cost of revenues. Cost of revenues decreased by $41,816 for
the nine months ending September 30, 1995 compared to the same
period for the prior year because of the discontinued sales of
diagnostic kits, as well as, the reduced level of shipments of
the pet stain and odor eliminator product.
Compensation of officers and employees. Compensation of
officers and employees was reduced by $77,339 or 36% because one
less officer was employed in the entire nine months compared to
the same period in 1994. Also, effective August 31, 1995, the
Company no longer has any full-time employees. Compensation from
grants under stock option plans was reduced from $27,371 for the
nine months ending September 30, 1994 to $0 for the same period
in 1995 because no stock options were granted.
Consulting fees. Consulting fees were lower in 1995 by
$146,573 or 88% due to the termination of all consulting
agreements provided by Ronald S. Brakke, Chief Executive Officer
who resigned on April 5, 1995.
Research and development expenses. Research and development
expenses decreased by $80,598 or 65% in the first nine months of
1995 compared to the same period last year. The Company has
experienced delays in the licensing of IVET-629 and the
development of the gender selection technology. To conserve
cash, the Company suspended further development of its gender
selection technology and biological testing of its IVET-629
product in the first quarter of 1995.
Selling, general and administrative expenses. Selling,
general and administrative expenses decreased $31,685 or 10% in
the first nine months of 1995 compared to the same period of
1994. The lower selling, general and administrative expenses for
the first nine months of 1995 are attributable to the continuing
cost-cutting program which began in April of 1994.
Legal expenses. Legal expenses decreased by $53,233 in the
first nine months of 1995 compared to the same period in 1994.
Legal expenses for the first half of 1994 included one-time
expenditures relating to the agreement with Jesse Houdeshell, the
former President and Chief Executive Officer of the Company who
retired on March 1, 1994.
Gain on sale of marketable securities. The Company recorded
a gain on sale of marketable securities of $99,979 in the nine
months ending September 30, 1995 due to the sale of 886,700
capital shares of Enviromed plc stock that was received from the
sale of CVS in December 1994. At the close of the Company's
calendar year ending December 31, 1994, the shares were valued at
68 pence. The mentioned shares were sold in the second quarter
of 1995 to institutional investors in Britain under two separate
transactions at a price of 75 pence each, thereby resulting in
the recognized gain.
Interest income and expense. Interest income decreased by
$40,896 for the nine months ending September 30, 1995 compared to
the same period in 1994. The interest bearing cash accounts that
were collateral for bank loans were used to payoff their
respective loans in 1994, thereby reducing the cash balances
generating interest income for 1995. Interest expense increased
for the nine months ending September 30, 1995 compared to the
same period of the prior year by $6,829 due to a short-term bank
loan which was drawn down by the Company in December of 1994.
The proceeds of the loan were used to repay secured lenders as a
condition precedent to the sale of CVS. The balance of the loan
was repaid in May of 1995.
Provision for income taxes. The Company has not recorded
any income tax expense (benefit) since the Company has never been
profitable. The Company's net loss decreased by $2,699,626 from
a net loss of $3,040,114 for nine months ended September 30, 1994
to a net loss of $340,488 for the nine months ended September 30,
1995. The net loss decreased in 1995 resulting from the
divestiture of all operating subsidiaries in 1994, a reduction in
corporate operating and personnel expenses, and a recognized
gain from the sale of the Enviromed plc shares.
Discontinued operations. For the nine months ending
September 30, 1994, losses of $462,897 were recorded as losses
from operations of discontinued subsidiaries. These losses were
incurred from the beginning of the year through March 31, 1994,
the date the decision was made to dispose of the subsidiaries.
Also, in the nine months ending September 30, 1994, losses of
$1,769,357 were recorded as a loss on disposal of the
discontinued operations of the former subsidiaries. No losses
from discontinued operations were recorded in the same period
during 1995 since the divestiture of all subsidiaries was
completed in 1994.
(b) Liquidity.
At September 30, 1995, the Company had $7,702 in cash and
cash equivalents which combined with the remaining assets is not
sufficient to support its operations for the next twelve months.
As more fully described in Note B to the September 30, 1995
financial statements, the Company has taken action and has plans
to revise its operations and financial requirements. See Note B
to the financial statements.
The Company's only source of revenue is from the sale of its
pet stain and odor eliminator aerosol product. The Company has
received future purchase orders for monthly deliveries from
August to December 1995 that would provide revenues of $211,250.
However, the present sales volume is not sufficient to cover all
of the Company's working capital needs for the next twelve
months.
In the meantime, the Company has been attempting to
negotiate the sale or license of the rights to its consumer
product and its gender selection technology to raise cash. The
Company is examining opportunities to acquire or merge with other
companies to obtain additional revenue and cash flow sufficient
to sustain it.
Management believes that as a result of the actions
discussed above, the Company can continue in operation; however,
there is no assurance that such actions will be consummated or
will eliminate the Company's losses or the need for additional
capital.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. None
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.
InnoVet, Inc.
(Registrant)
/s/SCOTT P. CIELEWICH
Date: November 14, 1995 Scott P. Cielewich, Executive
Vice President and
Chief Financial Officer
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