<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/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 March 31, 1998
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 (805) 654-0643
(Address of principal executive offices) (Registrant's telephone number
including area code)
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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 March 31, 1998, Common Stock, $.01 par value per share,
8,672,884 shares.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
(Unaudited)
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(in thousands except share data)
<S> <C> <C>
ASSETS
Current assets
Cash $ 1,092 $ 1,376
Accounts receivable, net 2,896 2,677
Inventories 3,697 3,784
Prepaid expenses and other
current assets 370 286
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Total current assets 8,055 8,123
Property and equipment 6,634 6,583
Less accumulated depreciation (2,548) (2,398)
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Property and equipment, net 4,086 4,185
Other assets 1,359 1,370
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TOTAL ASSETS $13,500 $13,678
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other payables $ 1,606 $ 1,688
Debt 917 964
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Total current liabilities 2,523 2,652
Long-term debt, net 1,644 1,873
Deferred tax liability 108 108
Stockholders' equity:
Common stock, $.01 par value, 50,000,000
shares authorized; 8,672,884 and
8,648,828 shares issued and out-
standing in 1998 and 1997, respec-
tively 86 86
Other stockholders' equity 9,139 8,959
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Total stockholders' equity 9,225 9,045
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,500 $13,678
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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 MARCH 31, 1998 1997
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(in thousands except share data)
<S> <C> <C>
Sales $ 3,838 $ 4,103
Costs and expenses
Cost of sales 2,322 2,485
Selling, general and administrative 1,037 1,043
Research and development 116 109
Restructuring costs 43 --
Other -- (19)
Interest expense 60 88
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3,578 3,706
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Income before taxes 260 397
Income tax expense 78 87
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Net income $ 182 $ 310
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Earnings per share:
Basic $ 0.02 $ 0.04
Diluted $ 0.02 $ 0.03
</TABLE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
THREE MONTHS ENDING MARCH 31, 1998 1997
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(in thousands)
<S> <C> <C>
Operating activities $ 45 $ (422)
Investing activities (51) (294)
Financing activities (258) (211)
Effect of exchange rates (20) (156)
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Net decrease in cash $ (284) $(1,083)
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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 three month
period ended March 31, 1998 is not necessarily indicative of the results that
may be expected for the year ended December 31, 1998. 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, 1997.
The balance sheet at December 31, 1997 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>
<CAPTION>
2. Inventories March 31, December 31,
1998 1997
-------------------------
(in thousands)
<S> <C> <C>
Raw materials $1,091 $ 821
Work in process 1,540 1,661
Finished products 1,066 1,302
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$3,697 $3,784
</TABLE>
3. Earnings per Share
During the year ended December 31, 1997, the Company adopted SFAS No. 128,
"Earnings Per Share," which required a change in the method used to compute
earnings per share. Under this new standard, primary and fully diluted
earnings per share were replaced with "Basic" and "Diluted" earnings per
share. For Biopool, basic earnings per share amounts under the new standard
were $0.01 per share higher than the primary earnings per share previously
presented. As required by SFAS No. 128, all prior period amounts have been
restated to conform to the new presentation.
Basic earnings per share is based upon the weighted-average number of common
shares outstanding. Diluted earnings per share is based upon the weighted
average number of common shares and dilutive potential common shares
outstanding. Potential common shares are outstanding options under the
Company's stock option plans and outstanding warrants, which are included
under the treasury stock method.
<PAGE>
BIOPOOL INTERNATIONAL, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Sales were $3.8 million for the three-month period ended March 31, 1998,
compared with $4.1 million for the corresponding period of 1997.
Approximately $200,000 of the decline was the result of the unavailability of
a finished product (BayRho ) from a single supplier. This product became
backordered in February without notice, and management has been advised by the
manufacturer that this product may not be available again until August of this
year. For the year ended December 31, 1997, sales of this product had been
approximately $140,000 per month. The Company currently has no alternative
source for a product equivalent to BayRho . Prolonged disruption in the
supply of this product will likely lead to the loss of customers for, and
future sales of, this product, and such loss could continue to have an adverse
impact on the Company's sales and results of operations.
Cost of sales, as a percentage of sales, was unchanged at 61% for the two
comparable periods.
In the first quarter of 1997, selling, general and administrative expenses
included approximately $50,000 of transitional costs associated with the BCA
acquisition. In the same period of 1998, increased selling and marketing
expenditures and general wage increases resulted in expenditures on par with
the prior year period.
On December 23, 1997, the Company announced the restructuring of its
operations by closing its facilities in Canada and consolidating the
operations of its subsidiary, Biopool Canada Inc., with operations conducted
at the Company's facilities in Ventura, California. Restructuring charges of
$342,000 were charged in the fourth quarter of 1997 and $43,000 in the
first quarter of 1998. It is anticipated that the transfer of technology,
manufacturing, and administrative functions will be completed by June 30,
1998, for an additional charge of approximately $100,000. Management
anticipates cost savings from the restructuring beginning in the third quarter
of 1998.
Interest expense for the first quarter of 1998 decreased $28,000 from the
prior year period as a result of lower outstanding loan balances. Total debt
outstanding at March 31, 1998, was $2.6 million versus $3.6 million a year
ago.
Income tax expense for the first quarter of 1997 includes a benefit related to
utilization of domestic NOL carryforwards. All NOL benefits were exhausted
during 1997, which has the effect of increasing the Company's effective tax
rate beginning the first quarter of 1998.
Financial Condition
The Company's liquidity and capital resources remained strong into the first
quarter of 1998. Working capital as of March 31, 1998, was $5.5 million, with
a current ratio of 3.2 to 1.0. Approximately $276,000 of cash was used to pay
down debt during the current quarter. The total debt to equity ratio at March
31, 1998, was 28%. 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
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 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: May 14, 1998 BIOPOOL INTERNATIONAL, INC.
____________________ _______________________________
(Registrant)
/s/ Michael D. Bick, Ph.D.
_______________________________
Michael D. Bick, Ph.D.
President, 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
Three Months Ended March 31,
(in thousands except per share data)
<CAPTION>
1998 1997
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<S> <C> <C>
Numerator for basic and diluted earnings
per share - net income $ 182 $ 310
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Denominator:
Denominator for basic earnings per share -
weighted-average shares 8,664 8,578
Effect of dilutive securities - employee
stock options and warrants 341 691
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Denominator for diluted earnings per share -
adjusted weighted-average shares 9,005 9,269
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Basic earnings per share $ 0.02 $ 0.04
Diluted earnings per share $ 0.02 $ 0.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,092,000
<SECURITIES> 0
<RECEIVABLES> 2,896,000
<ALLOWANCES> 0
<INVENTORY> 3,697,000
<CURRENT-ASSETS> 8,055,000
<PP&E> 6,634,000
<DEPRECIATION> 2,548,000
<TOTAL-ASSETS> 13,500,000
<CURRENT-LIABILITIES> 2,523,000
<BONDS> 0
0
0
<COMMON> 86,000
<OTHER-SE> 9,139,000
<TOTAL-LIABILITY-AND-EQUITY> 13,500,000
<SALES> 3,838,000
<TOTAL-REVENUES> 3,838,000
<CGS> 2,322,000
<TOTAL-COSTS> 3,518,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,000
<INCOME-PRETAX> 260,000
<INCOME-TAX> 78,000
<INCOME-CONTINUING> 182,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 182,000
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
