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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 September 30, 1999
----------------------------
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, CALIFORNIA 93003 (805) 654-0643
(Address of principal executive offices) (Registrant's telephone
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, 1999, Common Stock, $.01 par value per share,
8,286,986 shares.
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
- --------------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash ................................... $ 2,809 $ 941
Accounts receivable, net ............... 1,386 1,332
Inventories ............................ 2,103 1,961
Prepaid expenses and other
current assets ....................... 249 320
- -------------------------------------------------------------------------------
TOTAL CURRENT ASSETS ........................ 6,547 4,554
PROPERTY AND EQUIPMENT ...................... 3,591 3,437
Less accumulated depreciation .......... (2,558) (2,235)
- -------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET ................. 1,033 1,202
NET ASSETS OF DISCONTINUED OPERATIONS ....... 2,258 3,274
OTHER ASSETS ................................ 1,170 1,440
- -------------------------------------------------------------------------------
TOTAL ASSETS ................................ $ 11,008 $ 10,470
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LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES ................... $ 1,192 $ 1,005
DEFERRED TAX LIABILITY ...................... 122 108
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
50,000,000 shares authorized;
8,286,986 and 8,540,886 shares
issued and outstanding in 1999
and 1998, respectively ............... 83 85
Other stockholders' equity ............. 9,611 9,272
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TOTAL STOCKHOLDERS' EQUITY .................. 9,694 9,357
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .. $ 11,008 $ 10,470
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</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
THREE MONTHS ENDING NINE MONTHS ENDING
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------
(in thousands except per share data)
<S> <C> <C> <C> <C>
SALES ................................ $ 1,984 $ 1,736 $ 6,476 $ 5,906
COSTS AND OTHER (INCOME) EXPENSES
Cost of sales ................... 962 827 3,254 2,832
Selling, general, administrative 807 769 2,282 2,099
Research and development ........ 48 55 241 235
Other, net....................... 49 24 113 180
- --------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES .................... 118 61 586 560
INCOME TAX EXPENSE ................... 41 9 231 136
- --------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS .... 77 52 355 424
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS - NET OF INCOME
TAX EFFECT ...................... -- (9) 23 (54)
GAIN ON DISPOSAL-NET OF INCOME TAX ... -- -- 199 --
- --------------------------------------------------------------------------------
NET INCOME ........................... $ 77 $ 43 $ 577 $ 370
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WEIGHTED AVERAGE SHARES OUTSTANDING
Basic ........................... 8,287 8,639 8,404 8,667
Effect of dilutive shares ....... 21 11 23 178
---------------------------------------
Diluted ......................... 8,308 8,650 8,427 8,845
BASIC AND DILUTED EARNINGS PER SHARE
Continuing operations ........... $ 0.01 $ -- $ 0.04 $ 0.05
Discontinued operations ......... -- -- 0.03 (0.01)
---------------------------------------
Net income ...................... $ 0.01 $ -- $ 0.07 $ 0.04
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
NINE MONTHS ENDING SEPTEMBER 30,
1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES ....................... $ 1,271 $ 599
INVESTING ACTIVITIES ....................... 837 (206)
FINANCING ACTIVITIES ....................... (212) (736)
EFFECT OF EXCHANGE RATES ................... (28) (23)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH ............ $ 1,868 $ (366)
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</TABLE>
See accompanying notes to consolidated financial statements.
4
<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,
1999, are not necessarily indicative of the results that may be expected for the
year ended December 31, 1999. 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, 1998.
The balance sheet at December 31, 1998, 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.
Financial information presented to the notes to the consolidated financial
statements excludes discontinued operations except where noted.
<TABLE>
<CAPTION>
2. INVENTORIES SEPTEMBER 30, DECEMBER 31,
1999 1998
-----------------------------------
(in thousands)
<S> <C> <C>
Raw materials $ 654 $ 580
Work in process 679 679
Finished products 769 702
-----------------------------------
$ 2,103 $ 1,961
===================================
</TABLE>
3. EARNINGS PER SHARE
During the year ended December 31, 1998, 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. 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.
4. COMPREHENSIVE INCOME
SFAS No. 130 requires unrealized gains and losses on the Company's foreign
currency translation adjustments to be included in other comprehensive income.
Total comprehensive income was $549,000 and $347,000 for the nine months and
$134,000 and $42,000 for the three months ended September 30, 1999 and 1998,
respectively.
5
<PAGE>
5. SEGMENT INFORMATION
The Company currently operates in one industry, in vitro diagnostic medical
products. However, the Company has two reportable segments; Biopool
International and its wholly-owned operating subsidiary, Biopool Sweden. The
reportable segments are each managed separately as "stand-alone" business units
and have very little duplication of technical or manufacturing processes.
Biopool International manufactures hemostasis and drugs-of-abuse products, and
Biopool Sweden primarily manufactures test kits for assessing the blood's
fibrinolytic (clot dissolving) system.
<TABLE>
<CAPTION>
INTER-
BIOPOOL COMPANY
INTERNA- BIOPOOL ELIMINA- CONSOLI-
TIONAL SWEDEN TIONS DATED
- --------------------------------------------------------------------------------
(in thousands)
NINE MONTHS ENDED SEPTEMBER 30, 1999
<S> <C> <C> <C> <C>
Sales ....................... $ 5,107 $ 2,263 $ (894) $ 6,476
Less intercompany ........... (333) (561) 894 --
------- ------- ------- -------
Sales to unafilliated
customers ................. 4,774 1,702 -- 6,476
Pre-tax income from
continuing operations ..... 367 219 -- 586
- --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1998
Sales ....................... 4,531 2,081 (706) 5,906
Less intercompany ........... (321) (385) 706 --
------ ------ ------ ------
Sales to unaffiliated
customers ................. 4,210 1,696 -- 5,906
Pre-tax income from
continuing operations ..... 223 337 -- 560
- --------------------------------------------------------------------------------
</TABLE>
6. DISCONTINUED OPERATIONS
On April 30, 1999, the Company consummated the sale of certain business assets
of the Blood Group Serology Division (BCA) for $4.45 million in cash, subject to
future adjustments. BCA ceased operations to the Company's benefit effective May
1, 1999, but continued to convert certain inventory items on behalf of the
buyer.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
SALES AS PREVIOUSLY REPORTED .......... $ 3,516 $11,235
Less BCA sales ................... 1,780 5,329
- --------------------------------------------------------------------------------
AS REPORTED SEPTEMBER 30, 1999 ........ $ 1,736 $ 5,906
================================================================================
</TABLE>
7. RECLASSIFICATION
Certain data in the prior year consolidated financial statements have been
reclassified to conform to the 1999 presentation.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
SALE OF BLOOD GROUP SEROLOGY DIVISION
On April 30, 1999, we consummated the sale of certain business assets of BCA for
$4.45 million in cash. BCA ceased operations to our benefit effective May 1,
1999, but continued to convert certain inventory items on behalf of the buyer
through June 30, 1999. The Consolidated Statements of Operations have been
restated to reflect ongoing hemostasis operations. The sale of BCA will reduce
the Company's future sales by approximately 50%; however, the impact on future
net income will be negligible.
RESULTS OF OPERATIONS
Sales from continuing operations were $2.0 million for the three-month period
and $6.5 million for the nine-month period ended September 30, 1999, compared
with $1.7 million and $5.9 million for the corresponding periods of 1998. The
1999 sales represent increases of 14 and 10 percent, respectively, over the 1998
periods. These increases are the result of renewed emphasis to market our core
hemostasis products.
Cost of goods sold was $962,000 for the three months and $3,254,000 for the nine
months ended September 30, 1999, compared with $827,000 and $2,832,000 for the
same periods in 1998. The year-to-date cost of sales as a percentage of revenues
was 50% in 1999 versus 48% in 1998. This percentage increase is a result of
increasing our allocation of overhead to cost of sales in 1999.
Selling, general and administrative ("SG&A") expenses were $807,000 and
$2,282,000 for the three months and nine months ended September 30, 1999,
compared with $769,000 and $2,099,000 for the same periods of 1998. These
increases were due entirely to increased sales and marketing efforts to improve
sales of our hemostasis products.
The 1999 Other expenses primarily relate to costs incurred to move our Swedish
operations (Biopool Sweden) into larger facilities and the abandonment of
existing leasehold improvements at their current facilities. In 1998,
restructure costs were incurred in conjunction with the closure of our Canadian
operations.
FINANCIAL CONDITION
Our already strong liquidity and capital resources were further enhanced by the
sale of BCA. As of September 30, 1999, working capital was $5.4 million, with a
current ratio of 5.5 to 1.0. On April 30, 1999, we received $4.45 million cash
for the sale of certain BCA assets. The proceeds were used, in part, to pay off
the term note ($1,762,000) and pay certain closing costs (approximately
$775,000), with the balance invested in a short-term certificate of deposit. Net
assets of discontinued operations, equal to $2.3 million, represent the BCA
property, plant, and equipment, which were placed for sale in June 1999. The
saleability and ultimate net proceeds from the sale of such assets are unknown
at this time.
YEAR 2000 READINESS
We have formulated and are implementing a Year 2000 Readiness Plan. Phase I of
this Plan, assessment and identification of potential issues, is complete. Based
upon our current assessment, we believe that we should not experience any
material Year 2000 problems with either our own or any third party systems.
Phase II of the Plan consists of remediation efforts, which will be completed by
November 30, 1999.
To date, we have spent an immaterial amount on our compliance program and do not
expect to spend in excess of $20,000 to complete Phase II.
7
<PAGE>
We are unable, at this time, to fully assess our reasonably likely "worst case"
scenario. However, failures to correct Year 2000 systems, our own, certain key
distributors or certain key vendors, could result in failures or interruptions
of critical business systems which could possibly have a material impact to our
liquidity and financial condition. We do not anticipate material problems with
our power supply or telecommunications systems.
FORWARD LOOKING STATEMENTS
Except for the historical information contained herein, this report contains
forward-looking statements (identified by the words "estimate," "anticipate,"
"expect," "believe," and similar expressions) which are based upon management's
current expectations and speak only as of the date made. These forward-looking
statements are subject to risks, uncertainties and factors that could cause
actual results to differ materially from the results anticipated in the
forward-looking statements and include, but are not limited to, competitors'
pricing strategies and technological innovations, changes in health care and
government regulations, litigation claims, foreign currency fluctuation, product
acceptance, Year 2000 issues, as well as other factors discussed in the
Company's last Report on Form 10-KSB.
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 - None
(b) Reports on Form 8-K - None
8
<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 15, 1999 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
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,809
<SECURITIES> 0
<RECEIVABLES> 1,386
<ALLOWANCES> 0
<INVENTORY> 2,103
<CURRENT-ASSETS> 6,547
<PP&E> 3,591
<DEPRECIATION> 2,558
<TOTAL-ASSETS> 11,008
<CURRENT-LIABILITIES> 1,192
<BONDS> 0
0
0
<COMMON> 83
<OTHER-SE> 9,611
<TOTAL-LIABILITY-AND-EQUITY> 11,008
<SALES> 6,476
<TOTAL-REVENUES> 6,476
<CGS> 3,254
<TOTAL-COSTS> 5,777
<OTHER-EXPENSES> 113
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 586
<INCOME-TAX> 231
<INCOME-CONTINUING> 355
<DISCONTINUED> 222
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 577
<EPS-BASIC> 0.07
<EPS-DILUTED> 0.07
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,010
<SECURITIES> 0
<RECEIVABLES> 1,470
<ALLOWANCES> (31)
<INVENTORY> 1,855
<CURRENT-ASSETS> 4,636
<PP&E> 3,625
<DEPRECIATION> (2,319)
<TOTAL-ASSETS> 10,405
<CURRENT-LIABILITIES> 936
<BONDS> 0
0
0
<COMMON> 86
<OTHER-SE> 9,275
<TOTAL-LIABILITY-AND-EQUITY> 10,405
<SALES> 5,906
<TOTAL-REVENUES> 5,906
<CGS> 2,832
<TOTAL-COSTS> 5,166
<OTHER-EXPENSES> 180
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 560
<INCOME-TAX> 136
<INCOME-CONTINUING> 424
<DISCONTINUED> (54)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 370
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
