<PAGE>
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
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 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, (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 June 30, 1998, Common Stock, $.01 par value per share,
8,686,986 shares.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
(Unaudited)
- -----------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
ASSETS
Current assets
Cash $ 1,091 $ 1,376
Accounts receivable, net 2,923 2,677
Inventories 3,869 3,784
Prepaid expenses and other current assets 470 286
- -----------------------------------------------------------------------------
Total current assets 8,353 8,123
Property and equipment 6,608 6,583
Less accumulated depreciation (2,605) (2,398)
- -----------------------------------------------------------------------------
Property and equipment, net 4,003 4,185
Other assets 1,352 1,370
- -----------------------------------------------------------------------------
TOTAL ASSETS $13,708 $13,678
- -----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other payables $ 1,896 $ 1,688
Debt 918 964
- -----------------------------------------------------------------------------
Total current liabilities 2,814 2,652
Long-term debt, net 1,414 1,873
Deferred tax liability 108 108
Stockholders' equity:
Common stock, $.01 par value, 50,000,000
shares authorized; 8,673,686 and
8,648,828 shares issued and out-
standing in 1998 and 1997, respectively 87 86
Other stockholders' equity 9,285 8,959
- -----------------------------------------------------------------------------
Total stockholders' equity 9,372 9,045
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,708 $13,678
- -----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ending Six Months Ending
June 30, June 30,
1998 1997 1998 1997
- -----------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C> <C> <C>
Sales $ 3,881 $ 4,243 $ 7,719 $ 8,346
Costs and expenses
Cost of sales 2,303 2,535 4,625 5,020
Selling, general,
administrative 1,139 1,094 2,176 2,137
Research and development 111 96 227 205
Restructuring costs 95 -- 138 --
Other 14 (14) 14 (33)
Interest expense 56 75 116 163
- -----------------------------------------------------------------------------
Income before taxes 163 457 423 854
Income tax expense 18 107 96 194
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Net income $ 145 $ 350 $ 327 $ 660
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- -----------------------------------------------------------------------------
Earnings per share:
Basic $ 0.02 $ 0.05 $ 0.04 $ 0.08
Diluted $ 0.02 $ 0.04 $ 0.04 $ 0.07
</TABLE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ending June 30,
1998 1997
- -----------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Operating activities $ 365 $ 260
Investing activities (145) (466)
Financing activities (483) (435)
Effect of exchange rates (22) (204)
- -----------------------------------------------------------------------------
Net increase (decrease) in cash $ (285) $ (845)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
<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 six-month
period ended June 30, 1998, are 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>
2. Inventories
<CAPTION>
June 30, December 31,
1998 1997
(in thousands)
<S> <C> <C>
Raw materials $ 1,136 $ 821
Work in process 1,615 1,661
Finished products 1,118 1,302
------------------------
$ 3,869 $ 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 for the 1997 periods. 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 OF FINANCIAL CONDITION &
RESULTS OF OPERATIONS
Results of Operations
Sales were $3.9 million for the three-month period and $7.7 million for the
six-month period ended June 30, 1998, compared with $4.2 million and $8.3
million for the corresponding periods of 1997, respectively. Sales of
hemostasis products for the six months ended June 30, 1998, were approximately
3% above last year, and the overall decline in sales was solely attributed to
our BCA business. Approximately $375,000, or 60%, of the year-to-date decline
in sales was the result of the unavailability of a finished product (BayRho )
from a single supplier as previously reported. 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 September of
this year. In spite of repeated efforts, the Company still 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. Additionally,
international sales were down approximately $280,000 for the six-month period
ended June 30, 1998, when compared with the prior year, in part as a result of
the loss of business through certain key distributors in Europe. The
Company's management is seeking to add new distributors or other strategic
business arrangements in these markets. On July 13, 1998, the Company
announced the appointment of a new vice president of marketing and business
development in an effort to improve future sales.
Cost of sales decreased $232,000 for the three months and $395,000 for the six
months ended June 30, 1998, compared with the respective 1997 periods as a
result of lower sales. As a percentage of sales, year-to-date cost of sales
remained relatively flat at approximately 60%. This percentage should improve
with the anticipated cost savings associated with the closure of the Canadian
facilities, and management continues to pursue additional cost reductions.
Selling, general and administrative expenses increased $45,000 and $39,000 for
the three months and six months ended June 30, 1998, compared with the same
periods of 1997. The first six months of 1997 included approximately $80,000
of incremental costs associated with the transition of the then newly acquired
BCA business. The increased costs for the 1998 periods were due to increased
company-wide selling and marketing expenditures and general wage increases, as
well as increased allowance for BCA doubtful accounts receivable.
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 recorded in the fourth quarter of 1997 and $43,000 in the first
quarter of 1998. The transfer of technology, manufacturing, and
administrative functions was completed June 30, 1998, for additional second
quarter charges of $95,000. Management anticipates cost savings from the
consolidation beginning in the third quarter of 1998.
Interest expense for the three months and six months ended June 30, 1998,
decreased $19,000 and $47,000, respectively, from the same prior year periods
as a result of lower outstanding loan balances. Total debt outstanding at
June 30, 1998, was $2.3 million versus $3.3 million a year ago.
<PAGE>
Income tax expense for the 1997 periods include benefits related to
utilization of domestic NOL carryforwards. All NOL benefits were exhausted
during 1997. Income taxes for the second quarter of 1998 included a tax
benefit associated with certain restructuring charges accrued in the fourth
quarter of 1997.
Financial Condition
The Company's liquidity and capital resources remained strong into the second
quarter of 1998. Working capital as of June 30, 1998, was $5.5 million, with
a current ratio of 3.0 to 1.0. Approximately $505,000 of cash was used to pay
down debt during the first six months of 1998. The total debt to equity ratio
at June 30, 1998, was 25%. 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.
In addition, the Company repurchased 13,300 shares of its Common Stock on the
open market during the month of June 1998 at an average purchase price of
$1.24 per share. The Company also purchased an additional 5,000 shares at an
average price of $1.34 per share during the first two weeks of July 1998, all
pursuant to the Company's stock repurchase program as announced June 5, 1998.
<PAGE>
BIOPOOL INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Registrant's Annual Meeting of Stockholders was held on June
3, 1998.
(b) The following directors were elected for the ensuing year at the
Annual Meeting:
Michael D. Bick, Ph.D. N. Price Paschall
Douglas L. Ayer James H. Chamberlain
No other director's term of office continued after the Annual Meeting.
(c) The matters voted upon at the Annual Meeting, the number of votes
cast for, against, or withheld, as well as the number of abstentions
and non-votes as to each such matter were as follows:
1. The election of Michael D. Bick, Ph.D., as a director:
6,692,338 votes for; 35,550 votes against; 0 votes withheld; 0
abstentions; 1,944,996 non-votes.
2. The election of Douglas L. Ayer as a director:
6,695,438 votes for; 32,450 votes against; 0 votes withheld; 0
abstentions; 1,994,996 non-votes.
3. The election of N. Price Paschall as a director:
6,695,438 votes for; 32,450 votes against; 0 votes withheld; 0
abstentions; 1,994,996 non-votes.
4. The election of James H. Chamberlain, as a director:
6,695,438 votes for; 32,450 votes against; 0 votes withheld; 0
abstentions;1,994,996 non-votes.
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.
Form 8-K dated June 18, 1998.
Item 5 - Other Events - Registration of Securities Under
Rights Agreement Dated as of June 12, 1998.
Item 7 - Financial Statements and Exhibits
<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: August 13, 1998 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
Six Months Ended June 30,
(in thousands except per share data)
<CAPTION>
1998 1997
<S> <C> <C>
Numerator for basic and diluted earnings
per share - net income $ 327 $ 660
------ ------
Denominator:
Denominator for basic earnings per share -
weighted-average shares 8,674 8,595
Effect of dilutive securities - employee
stock options and warrants 190 538
------ ------
Denominator for diluted earnings per share -
adjusted weighted-average shares 8,864 9,133
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BASIC EARNINGS PER SHARE $ 0.04 $ 0.08
DILUTED EARNINGS PER SHARE $ 0.04 $ 0.07
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,091,000
<SECURITIES> 0
<RECEIVABLES> 2,923,000
<ALLOWANCES> 0
<INVENTORY> 3,869,000
<CURRENT-ASSETS> 8,353,000
<PP&E> 6,608,000
<DEPRECIATION> 2,605,000
<TOTAL-ASSETS> 13,708,000
<CURRENT-LIABILITIES> 2,814,000
<BONDS> 0
0
0
<COMMON> 87,000
<OTHER-SE> 9,285,000
<TOTAL-LIABILITY-AND-EQUITY> 13,708,000
<SALES> 7,719,000
<TOTAL-REVENUES> 7,719,000
<CGS> 4,625,000
<TOTAL-COSTS> 7,180,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116,000
<INCOME-PRETAX> 423,000
<INCOME-TAX> 96,000
<INCOME-CONTINUING> 327,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 327,000
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
