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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 June 30, 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 Identification No.)
incorporation or organization)
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 June 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>
JUNE 30, DECEMBER 31,
1999 1998
- --------------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash ............................................. $ 2,447 $ 941
Accounts receivable, net ......................... 1,856 1,332
Inventories ...................................... 2,077 1,961
Prepaid expenses and other current assets ........ 301 320
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS ............................... 6,681 4,554
PROPERTY AND EQUIPMENT ............................. 3,454 3,437
Less accumulated depreciation .................... (2,407) (2,235)
- --------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET ........................ 1,047 1,202
NET ASSETS OF DISCONTINUED OPERATIONS .............. 2,317 3,274
OTHER ASSETS ....................................... 1,179 1,440
- --------------------------------------------------------------------------------
TOTAL ASSETS ....................................... $ 11,224 $ 10,470
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LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES .......................... $ 1,542 $ 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 ....................... 9,477 9,272
- --------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY ......................... 9,560 9,357
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $ 11,224 $ 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 SIX MONTHS
ENDING JUNE 30, ENDING JUNE 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------
(in thousands except per share data)
<S> <C> <C> <C> <C>
SALES ............................... $ 2,368 $ 2,117 $ 4,492 $ 4,170
COSTS AND OTHER (INCOME) EXPENSES
Cost of sales ..................... 1,244 1,063 2,292 2,005
Selling, general, administrative .. 803 671 1,475 1,330
Research and development .......... 94 97 193 180
Other ............................. 17 110 64 155
- --------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES ...................... 210 176 468 500
INCOME TAX EXPENSE .................. 82 23 190 127
- --------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS ... 128 153 278 373
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS - NET OF INCOME TAX .... (28) (8) 23 (46)
GAIN ON DISPOSAL - NET OF INCOME TAX 199 -- 199 --
- --------------------------------------------------------------------------------
NET INCOME .......................... $ 299 $ 145 $ 500 $ 327
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WEIGHTED AVERAGE SHARES OUTSTANDING
Basic ............................. 8,387 8,686 8,463 8,674
Effect of dilutive shares ......... 24 158 25 190
---------------------------------------
Diluted ........................... 8,411 8,844 8,488 8,864
=======================================
BASIC AND DILUTED EARNINGS PER SHARE
Continuing operations ............. $ 0.02 $ 0.02 $ 0.03 $ 0.04
Discontinued operations ........... 0.02 -- 0.03 --
---------------------------------------
Net income ........................ $ 0.04 $ 0.02 $ 0.06 $ 0.04
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
SIX MONTHS ENDING JUNE 30,
1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES ......................... $ 934 $ 365
INVESTING ACTIVITIES ......................... 869 (145)
FINANCING ACTIVITIES ......................... (212) (483)
EFFECT OF EXCHANGE RATES ..................... (85) (22)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH .............. $ 1,506 $ (285)
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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 six-month period ended June 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.
<TABLE>
<CAPTION>
2. INVENTORIES JUNE 30, DECEMBER 31,
1999 1998
---------------------------
(in thousands)
<S> <C> <C>
Raw materials ............................ $ 645 $ 580
Work in process .......................... 699 679
Finished products ........................ 733 702
------ ------
$2,077 $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 $368,000 and $305,000 for the six months ended
June 30, 1999 and 1998, respectively.
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.
5
<PAGE>
<TABLE>
<CAPTION>
INTER-
BIOPOOL COMPANY
INTERNA- BIOPOOL ELIMINA- CONSOLI-
TIONAL SWEDEN TIONS DATED
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(in thousands)
SIX MONTHS ENDED JUNE 30, 1999
<S> <C> <C> <C> <C>
Sales ........................... $ 3,497 $ 1,571 $ (576) $ 4,492
Less intercompany ............... (215) (361) 576 --
------- ------- ------- -------
Sales to unafilliated
customers ..................... 3,282 1,210 -- 4,492
Pre-tax income from
continuing operations ......... 323 145 -- 468
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 1998
Sales ....................... 3,087 1,609 (526) 4,170
Less intercompany ........... (222) (304) 526 --
------ ------ ------ ------
Sales to unaffiliated
customers ................. 2,865 1,305 -- 4,170
Pre-tax income (loss) ....... 151 349 -- 500
- --------------------------------------------------------------------------------
</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. The sale of BCA will reduce the Company's future sales by approximately
50%; however, the impact on future net income will be negligible.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1999 1998 1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
SALES AS PREVIOUSLY REPORTED ....... $ 3,075 $ 3,881 $ 6,982 $ 7,719
Less BCA sales ................... (707) (1,764) (2,490) (3,549)
- --------------------------------------------------------------------------------
AS REPORTED JUNE 30, 1999 .......... $ 2,368 $ 2,117 $ 4,492 $ 4,170
================================================================================
</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, 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 through June 30, 1999. The Consolidated Statements
of Operations have been restated to reflect ongoing hemostasis operations.
RESULTS OF OPERATIONS
Sales from continuing operations were $2.4 million for the three-month period
and $4.5 million for the six-month period ended June 30, 1999, compared with
$2.1 million and $4.2 million for the corresponding periods of 1998. The 1999
sales represent increases of 12 and 8 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 $1.2 million for the three months and $2.3 million for
the six months ended June 30, 1999, compared with $1.1 million and $2.0 million
for the same periods in 1998. The year-to-date cost of sales as a percentage of
revenues was 51% 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 $803,000 and
$1,475,000 for the three months and six months ended June 30, 1999, compared
with $671,000 and $1,330,000 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 June 30, 1999, working capital was $5.1 million, with a
current ratio of 4.3 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 we have targeted for
completion by August 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.
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
(a) The Registrant's Annual Meeting of Stockholders was held on June
3, 1999.
(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:
7,330,092 votes for; 149,280 votes against; 0 votes withheld;
0 abstentions; 1,061,514 non-votes.
2. The election of Douglas L. Ayer as a director:
7,330,392 votes for; 148,980 votes against; 0 votes withheld;
0 abstentions; 1,061,514 non-votes.
3. The election of N. Price Paschall as a director:
7,330,392 votes for; 148,980 votes against; 0 votes withheld;
0 abstentions; 1,061,514 non-votes.
4. The election of James H. Chamberlain, as a director:
7,330,392 votes for; 148,980 votes against; 0 votes withheld;
0 abstentions; 1,061,514 non-votes.
8
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(27.1) Restated Financial Data Schedules
(b) Reports on Form 8-K.
1. Form 8-K dated April 19, 1999.
Item 5 - Other Events: Press Release, Biopool
International to Trade on OTC Bulletin Board
2. Form 8-K dated April 30, 1999.
Item 2 - Acquisition or Disposition of Assets: Asset
Purchase Agreement by and among Biopool International,
Inc. ("Seller"), Immucor, Inc., and BCA Acquisition
Corporation ("Buyer").
Item 7 - Financial Statements and Exhibits
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 12, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,447
<SECURITIES> 0
<RECEIVABLES> 1,856
<ALLOWANCES> 0
<INVENTORY> 2,077
<CURRENT-ASSETS> 6,681
<PP&E> 3,454
<DEPRECIATION> 2,407
<TOTAL-ASSETS> 11,224
<CURRENT-LIABILITIES> 1,542
<BONDS> 0
0
0
<COMMON> 83
<OTHER-SE> 9,477
<TOTAL-LIABILITY-AND-EQUITY> 11,224
<SALES> 4,492
<TOTAL-REVENUES> 4,492
<CGS> 2,292
<TOTAL-COSTS> 3,960
<OTHER-EXPENSES> 64
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 468
<INCOME-TAX> 190
<INCOME-CONTINUING> 278
<DISCONTINUED> 222
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 500
<EPS-BASIC> 0.06
<EPS-DILUTED> 0.06
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> JUN-30-1998 DEC-31-1998
<CASH> 1,091 941
<SECURITIES> 0 0
<RECEIVABLES> 1,781 1,332
<ALLOWANCES> 0 0
<INVENTORY> 1,753 1,961
<CURRENT-ASSETS> 5,067 4,554
<PP&E> 3,564 3,437
<DEPRECIATION> 2,214 2,235
<TOTAL-ASSETS> 10,626 10,470
<CURRENT-LIABILITIES> 1,146 1,005
<BONDS> 0 0
0 0
0 0
<COMMON> 87 85
<OTHER-SE> 9,285 9,272
<TOTAL-LIABILITY-AND-EQUITY> 10,626 10,470
<SALES> 4,170 7,934
<TOTAL-REVENUES> 4,170 7,934
<CGS> 2,005 4,216
<TOTAL-COSTS> 3,515 7,312
<OTHER-EXPENSES> 155 42
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 500 436
<INCOME-TAX> 127 (14)
<INCOME-CONTINUING> 373 450
<DISCONTINUED> (46) (36)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 327 414
<EPS-BASIC> 0.04 0.05
<EPS-DILUTED> 0.04 0.05
</TABLE>
