<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE 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, 1997
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Commission file number 0-17714
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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, (805) 654-0643
California 93003 (Registrant's telephone
(Address of principal executive offices) number including area 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 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, 1997, Common Stock, $.01 par value per
share, 8,637,664 shares.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
(Unaudited)
- -----------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
ASSETS
Current assets
Cash $ 1,226 $ 2,019
Accounts receivable, net 2,987 1,560
Inventories 4,198 2,027
Prepaid expenses and other current
assets 248 289
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Total current assets 8,659 5,895
Property and equipment 6,719 3,661
Less accumulated depreciation (2,330) (2,018)
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Property and equipment, net 4,389 1,643
Deposit on acquisition -- 4,500
Other assets 1,143 1,085
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TOTAL ASSETS $ 14,191 $ 13,123
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
(Unaudited)
- -----------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other payables $ 1,611 $ 988
Debt 964 972
- -----------------------------------------------------------------------
Total current liabilities 2,575 1,960
Long-term debt, net 2,173 2,811
Stockholders' equity:
Common stock, $.01 par value, 50,000,000
shares authorized; 8,637,664 and
8,570,380 shares issued and outstanding
in 1997 and 1996, respectively 86 86
Other stockholders' equity 9,357 8,266
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Total stockholders' equity 9,443 8,352
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,191 $ 13,123
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ending Nine Months Ending
September 30, September 30,
1997 1996 1997 1996
- -----------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C> <C> <C>
Sales $ 4,315 $ 2,006 $12,661 $ 5,873
Costs and expenses
Cost of sales 2,458 973 7,478 2,884
Selling, general, adminis-
trative and other 1,197 720 3,506 1,949
Interest expense 75 16 238 52
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Income before taxes 585 297 1,439 988
Income tax (expense) benefit 92 (30) 286 (25)
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Net income $ 493 $ 327 $ 1,153 $ 1,013
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Earnings per share:
Primary $ 0.06 $ 0.04 $ 0.13 $ 0.13
Fully diluted $ 0.06 $ 0.04 $ 0.13 $ 0.13
</TABLE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ending September 30,
1997 1996
- -----------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Operating activities $ 516 $ 712
Investing activities
Acquisition of BCA (4,729) --
Other 4,128 (122)
Financing activities (542) 20
Effect of exchange rates (166) 40
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Net increase (decrease) in cash $ (793) $ 650
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BIOPOOL INTERNATIONAL, INC.
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-QSB 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, 1997, are
not necessarily indicative of the results that may be expected for
the year ended December 31, 1997. For further information, refer
to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1996.
The balance sheet at December 31, 1996, 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.
<TABLE>
2. Inventories
<CAPTION>
September 30, December 31,
1997 1996
(in thousands)
----------------------------
<S> <C> <C>
Raw materials $ 1,191 $ 448
Work in process 1,615 700
Finished products 1,392 879
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$ 4,198 $ 2,027
</TABLE>
3. Acquisition
On January 1, 1997, the Company acquired certain assets of the
Blood Group Serology Division of Organon Teknika Corporation
located in West Chester, Pennsylvania, for $4,500,000 in cash.
Another $229,000 of costs associated with the acquisition were
capitalized in the first nine months of 1997. The Company funded
the acquisition, in part, from the privately placed sales of
500,000 shares of its Common Stock to a group of accredited
investors and, in part, from the proceeds of a $3.5 million credit
facility. The acquisition was accounted for as a purchase.
<PAGE>
<TABLE>
The following unaudited data was prepared for analytical purposes
only. Proforma consolidated operating results give effect as if
the acquisition occurred January 1, 1996.
<CAPTION>
Nine Months Ended September 30,
1997 1996
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(in thousands except share data)
<S> <C> <C>
Net sales $12,661 $11,844
Net income 1,153 1,201
Earnings per share $ 0.13 $ 0.14
</TABLE>
4. Earnings per Share
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be
adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. The impact of
Statement 128 on the calculation of fully diluted earnings per
share for these periods is not expected to be material.
<PAGE>
BIOPOOL INTERNATIONAL, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION &
RESULTS OF OPERATIONS
Acquisition of Blood Group Serology
On January 1, 1997, the Company purchased certain assets of the Blood
Group Serology Division (referred to as "BCA") of Organon Teknika
Corporation for $4,500,000 in cash. This acquisition will have a
significant impact on the Company's future operating results and
financial condition. This acquisition has approximately doubled the
number of employees of the Company and substantially increased the
Company's sales.
Results of Operations
Sales increased by $2.3 million, or 115%, to $4.3 million for the
three-month period and increased by $6.8 million, or 116%, to $12.7
million for the nine-month period ended September 30, 1997, compared
with the corresponding periods of 1996. While the majority of the
increases were due to the acquisition of BCA, sales from the core
hemostasis business grew approximately 8% for the nine-month period as
a result of the addition of a direct sales force and new distribution
agreements.
Costs of sales increased $1.5 million and $4.6 million for the 1997
periods compared with the respective 1996 periods. As a percentage of
sales, year-to-date cost of sales increased to 59% in 1997 compared
with 49% in 1996. The percentage increase in cost of sales was due
almost entirely to the excess manufacturing capacity that currently
exists at the Company's newly-acquired BCA facility in West Chester,
Pennsylvania. Management intends to capitalize on this opportunity by
attempting to grow market share of existing products and adding new,
profitable product lines.
Selling, general, administrative and other expenses increased by 68%
and 78% for the third quarter and first nine months of 1997,
respectively, compared with the same periods in 1996. The majority of
these increases were due to the BCA acquisition. The Company also
added management positions during 1996 in anticipation of ongoing
internal growth and acquisition activities. Furthermore, significant
transitional costs associated with the BCA acquisition and costs
related to the installation of new computer hardware and software were
incurred in the first half of the year. These transitional costs ended
during the third quarter as anticipated.
Interest expense for the nine months of 1997 increased $186,000 over
the prior year period as a result of bank financing for the BCA
acquisition.
<PAGE>
Income tax expense for the first nine months of 1997 includes a benefit
related to utilization of domestic NOL carryforwards. It is
anticipated that all NOL benefits will be utilized in 1997, which will
have the effect of decreasing net income beginning the first quarter of
1998. Income tax expense for the 1996 periods was significantly lower
than in 1997 due to the recognition of additional deferred tax
benefits.
Earnings per share were flat for the nine months of 1997 as compared to
1996, in spite of higher net income as a result of: (1) the issuance of
500,000 shares of Common Stock related to the purchase of BCA, and (2)
relatively higher market prices for the Company's Common Stock, which
had the effect of increasing the number of equivalent shares
outstanding.
Financial Condition
The Company's liquidity and capital resources remained strong into the
third quarter of 1997. Working capital as of September 30, 1997, was
$6.1 million, with a current ratio of 3.4 to 1. Approximately $600,000
of the Company's cash was used to establish working capital for the BCA
operations which were purchased without accounts receivables and
payables. The total debt to equity ratio at September 30, 1997, was
33%, and $646,000 in principal was paid during the first nine months of
1997. The Company's management believes that the current availability
of cash, lines of credit, working capital, and cash flow from
operations are adequate to meet the Company's needs for at least the
next twelve months. The Company continues to seek potential
acquisitions and potential sources of capital to finance such
acquisitions, although it has no commitments for either at this time.
<PAGE>
BIOPOOL INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(11) Statements regarding computation of earnings per
share.
(b) Reports on Form 8-K - None.
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 5, 1997 BIOPOOL INTERNATIONAL, INC.
------------------- -----------------------------
(Registrant)
/s/ Michael D. Bick, Ph.D.
-----------------------------
Michael D. Bick, Ph.D.
Chief Executive Officer and
Chairman of the Board
/s/ Robert K. Foote
-----------------------------
Robert K. Foote
Chief Financial Officer and
Corporate Secretary
<PAGE>
EXHIBIT 11
<TABLE>
BIOPOOL INTERNATIONAL, INC.
Statement Regarding Computation of Per Share Earnings
Nine Months Ended September 30,
<CAPTION>
1997 1996
-------------------------
<S> <C> <C>
Primary
Average shares outstanding 8,609 7,971
Net effect of dilutive stock options
and warrants based on the treasury
stock method using average market
price 519 301
Total shares 9,128 8,272
Net income $1,153 $1,013
Per share amount $ 0.13 $ 0.12
Fully diluted
Average shares outstanding 8,609 7,971
Net effect of dilutive stock options
and warrants based on the treasury
stock method using the higher of
average or year-end market price 515 349
Total shares 9,124 8,320
Net income $1,153 $1,013
Per share amount $ 0.13 $ 0.12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,226,000
<SECURITIES> 0
<RECEIVABLES> 2,987,000
<ALLOWANCES> 0
<INVENTORY> 4,198,000
<CURRENT-ASSETS> 8,659,000
<PP&E> 6,719,000
<DEPRECIATION> 2,330,000
<TOTAL-ASSETS> 14,191,000
<CURRENT-LIABILITIES> 2,575,000
<BONDS> 0
0
0
<COMMON> 86,000
<OTHER-SE> 9,357,000
<TOTAL-LIABILITY-AND-EQUITY> 14,191,000
<SALES> 12,661,000
<TOTAL-REVENUES> 12,661,000
<CGS> 7,478,000
<TOTAL-COSTS> 10,984,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 238,000
<INCOME-PRETAX> 1,439,000
<INCOME-TAX> 286,000
<INCOME-CONTINUING> 1,153,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,153,000
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
