<PAGE>
_______________________________________________________________________
_________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1995
___________________________________________________________
COMMISSION FILE NUMBER 0-17714
___________________________________________________________
BIOPOOL INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 58-1729436
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6025 Nicolle Street
Ventura, California 93003
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 805-654-0643
_______________________________________________________________________
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 proceeding 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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
Outstanding at September 30, 1995, Common Stock, $.01 par value per
share, 7,929,096 shares.
_______________________________________________________________________
_______________________________________________________________________
<PAGE>
BIOPOOL INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1- Financial Statements (Unaudited)
Consolidated Balance Sheets as of
September 30, 1995 and December 31, 1994 3
Consolidated Statements of Income for the
Three-Month and Nine-Month Periods Ending
September 30, 1995 and 1994 5
Consolidated Statements of Cash Flows for
the Three-Month and Nine-Month Periods
Ending September 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2- Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1- Legal Proceedings 10
Item 2- Changes in Securities
Not Applicable
Item 3- Defaults upon Senior Securities
Not Applicable
Item 4- Submission of Matters to a Vote of Security
Holders
Not Applicable
Item 5- Other Information
Not Applicable
Item 6- a) No Exhibits
b) The Company did not file any reports on
Form 8-K during the nine months ended
September 30, 1995.
SIGNATURES 11
2
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BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited)
_______________________________________________________________________
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,678,724 $ 1,841,475
Accounts receivable, net of
allowance for doubtful
accounts (1995 - $5,885,
1994 - $10,445) 1,127,446 875,978
Inventories 1,958,597 1,528,696
Prepaid expenses and other
current assets 369,154 109,939
_______________________________________________________________________
TOTAL CURRENT ASSETS 5,133,921 4,356,088
_______________________________________________________________________
PROPERTY AND EQUIPMENT 3,320,173 2,480,480
Less accumulated depreciation
and amortization (1,575,422) (1,309,787)
_______________________________________________________________________
PROPERTY AND EQUIPMENT, NET 1,744,751 1,170,693
_______________________________________________________________________
OTHER ASSETS
Patent application costs, net 148,827 141,180
Excess of cost over net assets
of acquired companies, net 684,351 725,646
Other assets 309,079 65,055
_______________________________________________________________________
TOTAL OTHER ASSETS 1,142,257 913,881
_______________________________________________________________________
TOTAL ASSETS $ 8,020,929 $ 6,458,662
_______________________________________________________________________
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(continued)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(Unaudited)
_________________________________________________________________________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank borrowings $ 26,087 ---
Accounts payable 256,560 $ 218,056
Accrued wages and benefits 178,567 213,026
Accrued professional fees 590,502 78,070
Accrued interest 2,061 2,892
Accrued expenses 95,919 40,312
Income taxes payable 49,255 59,133
Current portion of long-term debt 150,060 68,984
Amount due to officer --- 10,634
_______________________________________________________________________
TOTAL CURRENT LIABILITIES 1,349,011 691,107
_______________________________________________________________________
LONG-TERM DEBT, NET 557,912 193,238
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
50,000,000 shares authorized;
9,421,875 and 9,386,145 shares
issued and outstanding at
September 30, 1995 and December
31, 1994 (less 1,492,779 shares
held in treasury), respectively 93,861 93,861
Additional paid-in capital 9,488,606 9,488,606
Accumulated deficit (3,519,077) (3,953,979)
Cumulative foreign currency
translation adjustment 50,616 (54,171)
________________________________________________________________________
TOTAL STOCKHOLDERS' EQUITY 6,114,006 5,574,317
_______________________________________________________________________
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 8,020,929 $ 6,458,662
_______________________________________________________________________
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ending Nine months ending
September 30, September 30,
1995 1994 1995 1994
_________________________________________________________________________
<S> <C> <C> <C> <C>
SALES $ 1,659,511 $1,363,385 $ 4,977,749 $4,058,124
_______________________________________________________________________
COSTS AND EXPENSES
Cost of sales 828,424 659,268 2,434,455 1,799,738
Selling, general,
and administrative 787,066 547,316 1,881,275 1,617,988
Research and devel-
opment 37,736 17,354 159,701 89,309
________________________________________________________________________
TOTAL COSTS AND
EXPENSES 1,653,226 1,223,938 4,475,431 3,507,035
_______________________________________________________________________
OPERATING INCOME 6,285 139,447 502,318 551,089
_______________________________________________________________________
OTHER INCOME (EXPENSE)
Interest income 21,231 15,389 61,433 41,129
Interest expense (20,461) (3,724) (37,444) (38,777)
Gain (loss) on dis-
posal of assets 999 --- (346) 26,518
Other 30,458 14,996 40,254 28,224
________________________________________________________________________
TOTAL OTHER INCOME
(EXPENSE) 32,227 26,661 63,897 57,094
________________________________________________________________________
INCOME BEFORE TAXES 38,512 166,108 566,215 608,183
INCOME TAXES 40,972 6,737 131,313 58,985
_______________________________________________________________________
NET INCOME (LOSS) $ (2,460) $ 159,371 $ 434,902 $ 549,198
_________________________________________________________________________
________________________________________________________________________
NET INCOME PER SHARE $ --- $ .02 $ .06 $ .07
_______________________________________________________________________
_______________________________________________________________________
</TABLE>
5
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BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
1995 1994
___________________________________________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 434,902 $ 549,198
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 328,699 235,700
(Gain) loss on disposal of assets 346 (26,518)
Changes in operating assets and liabilities:
Accounts receivable (251,468) (255,347)
Inventories (429,901) (22,795)
Prepaid expenses and other assets (200,966) (113,704)
Refundable income taxes (58,249) 18,089
Accounts payable 38,504 (11,265)
Accrued expenses 532,749 (100,534)
Income taxes payable (9,878) 42,824
Amount due to officer (10,634) (1,859)
___________________________________________________________________________
CASH PROVIDED BY OPERATING ACTIVITIES 374,104 313,789
___________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to patent application costs (17,861) (51,985)
Additions to property and equipment (854,295) (453,791)
Proceeds from disposal of assets 2,701 31,598
Other assets (244,024) 17,028
___________________________________________________________________________
CASH USED IN INVESTING ACTIVITIES (1,113,479) (457,150)
___________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings 26,087 90,330
Repayment of long-term debt (74,992) (473,803)
Issuance of long-term debt 520,742 227,100
Issuance of common stock --- 7,600
___________________________________________________________________________
CASH PROVIDED BY FINANCING ACTIVITIES 471,837 (148,773)
Effect of exchange rates 104,787 107,035
___________________________________________________________________________
NET INCREASE (DECREASE) IN CASH (162,751) (185,099)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 1,841,475 1,707,141
___________________________________________________________________________
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,678,724 $ 1,522,042
___________________________________________________________________________
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the nine-month period ended September 30, 1995 is
not necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31,
1994.
The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Raw materials $ 602,017 $ 448,318
Work in process 830,905 643,813
Finished products 525,675 436,565
_____________ ____________
$ 1,958,597 $ 1,528,696
_____________ ____________
_____________ ____________
</TABLE>
3. NET INCOME PER SHARE
The net income per common share is based on the average number of common
shares outstanding during each year (1995 - 7,897,336; 1994 - 7,871,144).
The exercise of outstanding options would have an antidilutive effect on
earnings per share.
4. RECLASSIFICATIONS
Certain 1994 amounts have been reclassified to conform with the 1995
presentation.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Sales increased by $296,126, or 22%, to $1,659,511 for the three-month
period ended September 30, 1995 and increased by $919,625, or 23%, to
$4,977,749 for the nine months ended September 30, 1995, compared to the
corresponding periods in 1994. Sales increased generally throughout all
product areas and included enhanced sales to certain key OEM accounts.
During the nine-month period ended September 30, 1995, one customer
accounted for 11% of sales, and, for the three-month period ended
September 30, 1995, two customers accounted for 23% of sales.
Cost of sales, as a percent of sales, increased by 5%, from 44% to 49%,
for the nine-month period ended September 30, 1995 compared to the
corresponding period in 1994. This increase was due primarily to a shift
in the product mix sold during the period from slightly lower cost
products to slightly higher cost products and does not, in the opinion of
management, reflect a significant trend toward higher cost of sales.
Selling, general and administrative expenses ("SG&A"), increased
approximately $263,000, or 16%, over the corresponding nine-month period
in 1994. This increase is the result of dramatically increased
professional fees incurred by the Company in connection with its
litigation with Medical Analysis Systems, Inc. (see "LEGAL PROCEEDINGS").
The case is currently scheduled for trial on November 20, 1995;
consequently, management expects to cease incurring such expenses prior
to the end of the fourth quarter. The Company is currently recording its
legal fees in connection with the litigation net of expected insurance
reimbursement. Through September 30, 1995, the Company has recorded
legal expenses of $230,000, which amount is net of approximately $371,000
in insurance proceeds actually received or expected to be received from
the Company's general liability insurance carrier, Golden Eagle Insurance
Co. The Company has also tendered a claim under its D & O insurance
policy, which management believes may result in further insurance
reimbursement. Golden Eagle is currently reimbursing legal expenses
under a reservation of its rights, and has filed an action for
declaratory relief against the Company asserting that it is not liable to
defend the Company under its insurance policy. Although management
believes that Golden Eagle is obligated to pay all of its legal expenses
under the policy (which include amounts in excess of those which Golden
Eagle is currently paying), the outcome of the declaratory relief action
cannot be ascertained at this time.
The Company incurred a minor loss of $2,460 in the third quarter of 1995
versus a profit of $159,371 in the same period in 1994, and net income
decreased 21%, from $549,198 to $434,902, for the corresponding nine-
month periods ended September 30, 1994 and 1995, respectively. This was
largely due to the significant professional fees noted above. Had the
8
<PAGE>
Company not incurred the expenses associated with the litigation, it
would have had net income for the three-month period of $192,000.
During the nine-month period ended September 30, 1995, the Company
received approval from the U.S. FDA, by way of 510(k) Pre-market
Notification, to market eight new products; namely, a diagnostic kit for
the detection of von Willebrands disease by electroimmunodiffusion, an
alpha-2-antiplasmin test kit, a multi-analyte drugs-of-abuse control, and
five new clinical chemistry reagents.
LIQUIDITY AND SOURCES OF CAPITAL
At September 30, 1995, the Company had cash and cash equivalents of
approximately $1,679,000 and unused lines of credit of approximately
$676,000.
Cash flows from operating activities were $374,104 for the nine months
ended September 30, 1995, an increase of approximately $60,315, or 19%,
over the same period in 1994. This increase was primarily due to an
increase in accrued expenses offset by an increase in inventories. In
addition, the Company expects to incur significant additional
professional fees in the fourth quarter as the lawsuit proceeds to trial.
The Company believes that its current capital resources, including
existing cash and access to available lines of credit together with funds
generated from operations, should be sufficient to meet the Company's
operating requirements through the remainder of 1995.
9
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
On November 30, 1994, a complaint was filed in Ventura County Superior
Court against the Company and two of its employees by Medical Analysis
Systems, Inc., alleging misappropriation of certain trade secrets, unfair
competition, interference with prospective economic advantage and other
tort- and contract-based claims. On January 4, 1995, the Company filed
a cross complaint in the action alleging defamation, unfair competition
and interference with economic advantage. The lawsuit is currently
scheduled to go to trial in November 1995. Although the ultimate outcome
of this suit cannot be ascertained at this time and liabilities of
indeterminate amounts may be imposed upon the Company, it is the opinion
of management, based on information currently available, that the
allegations are without merit and that the resolution of this suit will
not have a material adverse effect on the consolidated financial
position, results of operations, or cash flows of the Company.
On June 22, 1995, a complaint was filed in Ventura County Superior
Court against the Company by Golden Eagle Insurance Co. for declaratory
relief as to its rights under the Company's general liability insurance
policy with respect to the Medical Analysis Systems, Inc., litigation,
and for reimbursement of all defense costs paid by Golden Eagle in
connection with that action to date. The outcome of this action cannot
be ascertained at this time. In the event that the Company is required
to repay the costs of defense to date, it will likely be required to
record additional SG&A expense, and the impact on the Company's
consolidated financial position and results of operation could be
material.
10
<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.
Date: November 7, 1995 BIOPOOL INTERNATIONAL, INC.
___________________ ___________________________
(Registrant)
Michael D. Bick, Ph.D.
___________________________
Michael D. Bick, Ph.D.
Chief Executive Officer and
Chairman of the Board
Jeffrey C. Hass
___________________________
Jeffrey C. Hass
Secretary and Director of Finance
11
