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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
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, 1999
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, (805) 654-0643
Ventura, California 93003 (Registrant's telephone number
(Address of principal executive offices) 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 March 31, 1999, Common Stock, $.01 par value per share, 8,540,886
shares.
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
(Unaudited)
-------------- -----------------
(in thousands except share data)
<S> <C> <C>
ASSETS
Current assets
Cash ....................................... $ 1,025 $ 941
Accounts receivable, net ................... 2,735 2,654
Inventories ................................ 3,915 4,126
Prepaid expenses and other current assets .. 409 395
-------- --------
Total current assets ......................... 8,084 8,116
Property and equipment ....................... 6,462 6,487
Less accumulated depreciation .............. (2,902) (2,758)
-------- --------
Property and equipment, net .................. 3,560 3,729
Other assets ................................. 1,349 1,440
-------- --------
TOTAL ASSETS ................................. $ 12,993 $ 13,285
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other payables ........ $ 1,513 $ 1,832
Debt ....................................... 569 572
-------- --------
Total current liabilities .................... 2,082 2,404
Long-term debt, net .......................... 1,276 1,416
Deferred tax liability ....................... 123 108
Stockholders' equity:
Common stock, $.01 par value, 50,000,000
shares authorized; 8,540,886 and
8,672,884 shares issued and outstanding
in 1999 and 1998, respectively ........... 85 85
Other stockholders' equity ................. 9,427 9,272
-------- --------
Total stockholders' equity ................... 9,512 9,357
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ... $ 12,993 $ 13,285
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
THREE MONTHS ENDING MARCH 31, 1999 1998
- --------------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
Sales .................................. $3,907 $3,838
Costs and expenses
Cost of sales ..................... 2,414 2,322
Selling, general and administrative 957 1,037
Research and development .......... 115 116
Other ............................. 55 43
Interest expense .................. 38 60
------ ------
Income before taxes .................... 328 260
Income tax expense ..................... 127 78
------ ------
Net income ............................. $ 201 $ 182
------ ------
Earnings per share:
Basic ............................. $ 0.02 $ 0.02
Diluted ........................... 0.02 0.02
</TABLE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
THREE MONTHS ENDING MARCH 31, 1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Operating activities .......... $ 291 $ 45
Investing activities .......... (19) (51)
Financing activities .......... (142) (258)
Effect of exchange rates ...... (46) (20)
----- -----
Net increase (decrease) in cash $ 84 $(284)
----- -----
</TABLE>
See accompanying notes to consolidated financial statements.
3
<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, 1999
is 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.
<TABLE>
2. Inventories
<CAPTION>
March 31, 1999 December 31, 1998
(in thousands)
<S> <C> <C>
Raw materials $ 1,367 $ 1,408
Work in process 1,485 1,539
Finished products 1,063 1,179
--------- -------
$ 3,915 $ 4,126
</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.
However, the adoption of this statement had no impact on the Company's net
income or stockholders' equity. Total comprehensive income was $155,000 and
$162,000 for the three months ended March 31, 1999 and 1998, respectively.
5. Segment Information
The Company currently operates in one industry, in vitro diagnostic medical
products. However, the Company has three reportable segments; Biopool
International, its BCA Division, and its wholly-owned operating subsidiary,
Biopool Sweden. The reportable segments are each managed separately because they
manufacture and sell distinct products with different production processes.
Biopool International manufactures hemostasis and drugs-of-abuse products, while
the Company's BCA Division manufactures blood group serology products and
Biopool Sweden primarily manufactures fibrinolytic system testing kits.
4
<PAGE>
<TABLE>
<CAPTION>
Eliminations
Biopool BCA Biopool and
Sweden Division International Corporate Consolidated
- --------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1999
<S> <C> <C> <C> <C> <C>
Sales ........................... $ 782 $ 1,783 $ 1,615 $ (273) $ 3,907
Less intercompany ............... (173) -- (100) 273 --
------- ------- ------- ------- -------
Sales to unafilliated
customers .................. 609 1,783 1,515 -- 3,907
Pre-tax income .................. 54 71 203 -- 328
Identifiable assets ............. 2,118 5,573 5,302 -- 12,993
-------
THREE MONTHS ENDED MARCH 31, 1998
Sales ........................... 764 1,785 1,669 (380) 3,838
Less intercompany ............... (116) -- (264) 380 --
------- ------- ------- ------- -------
Sales to unaffiliated
customers .................. 648 1,785 1,405 -- 3,838
Pre-tax income (loss) ........... 193 (64) 131 -- 260
Identifiable assets ............. 2,188 5,887 5,425 -- 13,500
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. Sale of Blood Group Serology Division
On April 30, 1999, the Company consummated the sale of certain business assets
of the Blood Group Serology Division for $4.45 million in cash, subject to
future adjustments. The Blood Group Serology Division ceased operations to the
Company's benefit effective May 1, 1999, but continued to convert certain
inventory items on behalf of the buyer. The sale of the Blood Group Serology
Division will have a significant effect on the Company's future results of
operations and financial condition.
7. Reclassification
Certain data in the prior year consolidated financial statements have been
reclassified to conform to the 1999 presentation.
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 the
Blood Group Serology Division (referred to as "BCA") for $4.45 million in cash,
subject to future adjustments. BCA ceased operations to our benefit effective
May 1, 1999, but continued to convert certain inventory items on behalf of the
buyer. The sale of BCA will have a significant effect on our future results of
operations and financial condition, as noted below.
Results of Operations
Sales were $3.9 million for the three-month period ended March 31, 1999,
compared with $3.8 million for the corresponding period of 1998. The sale of
hemostasis products grew by 3% over the previous period, while sales for BCA
immunohematology products were flat. Sales of BCA products represented 46% of
consolidated sales in the first quarter of 1999. Sales of BCA products, which
averaged $1.8 million per quarter in 1998, permanently ceased effective May 1,
1999.
5
<PAGE>
Cost of goods sold were $2.4 million for the quarter ended March 31, 1999,
compared with $2.3 million for the same period in 1998. The cost of sales as a
percentage of revenues was 62% in 1999 versus 61% in 1998. Cost of goods sold as
a percentage of revenues for BCA products was 77% for the first quarter of 1999.
Elimination of this product line is expected to significantly improve future
contribution margin rates.
Selling, general and administrative ("SG&A") expenses were $957,000 for the
quarter ended March 31, 1999, compared with $1,037,000 for the same period of
1998. This decrease is due primarily to the closure of our Canadian operations
in June of 1998 and reduced headcount at our BCA facilities as a result of
attrition. Most of the BCA SG&A expenses were eliminated with the sale of BCA.
Our direct sales force was reduced from ten to four employees who will continue
the promotion of hemostasis products.
Interest expense decreased by $22,000 from the prior period as a result of lower
outstanding loan balances and a 1% reduction of the interest rate. The Company
repaid all of its long-term indebtedness at May 1, 1999. Interest income is
anticipated for the balance of the year.
Financial Condition
Our already strong liquidity and capital resources were further enhanced by the
sale of BCA. As of March 31, 1999, working capital was $6.0 million, with a
current ratio of 3.9 to 1.0. On April 30, 1999, we received $4.45 million for
the sale of certain BCA assets. The proceeds were used to pay off the term note,
$1,762,000, with the balance invested in a short-term certificate of deposit.
The BCA property, plant, and equipment, with a net book value of approximately
$2.4 million, will be placed for sale by June 1999. The saleability and ultimate
net proceeds from the sale of such assets are unknown at this time. We continue
to seek opportunities to maximize shareholder value.
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 we have targeted for
completion by July 31, 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.
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.
6
<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 12, 1999 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
7
<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>
1999 1998
----- -----
<S> <C> <C>
Numerator for basic and diluted earnings
per share - net income ...................... $ 201 $ 182
====== ======
Denominator:
Denominator for basic earnings per share -
weighted-average shares ................. 8,541 8,664
Effect of dilutive securities - employee
stock options and warrants .............. 25 341
------ ------
Denominator for diluted earnings per share -
adjusted weighted-average shares ........ 8,566 9,005
====== ======
Basic earnings per share .......................... $ 0.02 $ 0.02
Diluted earnings per share ........................ $ 0.02 $ 0.02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,025,000
<SECURITIES> 0
<RECEIVABLES> 2,735,000
<ALLOWANCES> 0
<INVENTORY> 3,915,000
<CURRENT-ASSETS> 8,084,000
<PP&E> 6,462,000
<DEPRECIATION> 2,902,000
<TOTAL-ASSETS> 12,993,000
<CURRENT-LIABILITIES> 2,082,000
<BONDS> 0
0
0
<COMMON> 85,000
<OTHER-SE> 9,427,000
<TOTAL-LIABILITY-AND-EQUITY> 12,993,000
<SALES> 3,907,000
<TOTAL-REVENUES> 3,907,000
<CGS> 2,414,000
<TOTAL-COSTS> 3,541,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,000
<INCOME-PRETAX> 328,000
<INCOME-TAX> 127,000
<INCOME-CONTINUING> 201,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 201,000
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
