================================================================================
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, 2000
------------------------------
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)
-----------------------------------------------
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, 2000, Common Stock, $.01 par value per share, 8,319,951
shares.
================================================================================
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
(Unaudited)
- --------------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash ......................................... $ 2,567 $ 2,749
Accounts receivable, net ..................... 1,925 1,770
Inventories .................................. 2,078 1,941
Prepaid expenses and other current assets .... 262 198
Deferred tax benefits ........................ 109 109
Net assets of discontinued operations ........ 2,064 2,256
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS ........................... 9,005 9,023
PROPERTY AND EQUIPMENT ......................... 3,589 3,553
Less accumulated depreciation ................ (2,509) (2,427)
- --------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET .................... 1,080 1,126
OTHER ASSETS ................................... 1,040 884
- --------------------------------------------------------------------------------
TOTAL ASSETS ................................... $ 11,125 $ 11,033
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities ...................... $ 970 $ 1,077
DEFERRED TAX LIABILITY ......................... 126 122
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 50,000,000
shares authorized; 8,319,951 and
8,286,986 shares issued and outstanding
in 2000 and 1999, respectively ............. 83 83
Other stockholders' equity ................... 9,946 9,751
- --------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY ..................... 10,029 9,834
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..... $ 11,125 $ 11,033
================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
THREE MONTHS ENDING MARCH 31, 2000 1999
- --------------------------------------------------------------------------------
(in thousands except per share data)
<S> <C> <C>
SALES ............................................. $ 2,409 $ 2,123
Cost of sales ..................................... 1,162 1,048
- --------------------------------------------------------------------------------
GROSS PROFIT ...................................... 1,247 1,075
Operating expenses:
Selling, general and administrative ............. 886 602
Research and development ........................ 81 98
Other (income) expenses, net ...................... (35) 47
- --------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES .................................... 315 328
Income tax expense ................................ 115 127
- --------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS ................. 200 201
DISCONTINUED OPERATIONS NET OF INCOME
TAX EFFECT ...................................... -- --
- --------------------------------------------------------------------------------
NET INCOME ........................................ $ 200 $ 201
================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic ........................................... 8,294 8,541
Effect of dilutive shares ....................... 42 25
----------------------
Diluted ......................................... 8,336 8,566
======================
BASIC AND DILUTED EARNINGS PER SHARE
Continuing operations ........................... $ 0.02 $ 0.02
Discontinued operations ......................... -- --
----------------------
Net income ...................................... $ 0.02 $ 0.02
======================
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
THREE MONTHS ENDING MARCH 31, 2000 1999
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES ............................. $(310) $ 291
INVESTING ACTIVITIES ............................. (59) (19)
FINANCING ACTIVITIES ............................. 28 (142)
DISCONTINUED OPERATIONS .......................... 192 --
EFFECT OF EXCHANGE RATES ......................... (33) (46)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH .................. $(182) $ 84
================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
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 three month period ended March 31,
2000, is not necessarily indicative of the results that may be expected for the
year ended December 31, 2000. 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, 1999.
The balance sheet at December 31, 1999 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 March 31, December 31,
2000 1999
----------------------------
(in thousands)
<S> <C> <C>
Raw materials ............................ $ 695 $ 710
Work in process .......................... 654 646
Finished products ........................ 729 585
------ ------
$2,078 $1,941
====== ======
</TABLE>
3. 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 $167,000 and
$155,000 for the three months ended March 31, 2000 and 1999, respectively.
5. RECLASSIFICATION
Certain data in the prior year consolidated financial statements have been
reclassified to conform to the 2000 presentation. The prior year consolidated
financial statements have been restated to reflect ongoing operations and,
accordingly, financial information presented in the notes to the consolidated
financial statements excludes discontinued operations, except where noted.
5
<PAGE>
6. 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 because they manufacture and
sell distinct products with different production processes. Biopool
International manufactures hemostasis and drugs-of-abuse products, and Biopool
Sweden primarily manufactures fibrinolytic system testing kits.
The Company evaluates the segments and allocates resources based on net income
or loss. The accounting policies of the reportable segments are the same as
those described in the 1999 Form 10-KSB, "Summary of significant accounting
policies."
The consolidated financial statements include the following information for the
continuing operation of Biopool International and Biopool Sweden in thousands of
dollars.
<TABLE>
<CAPTION>
INTER-
BIOPOOL COMPANY
INTER- BIOPOOL ELIMINA- CONSOLI-
NATIONAL SWEDEN TIONS DATED
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 2000
Sales ........................... $ 1,852 $ 951 $ (394) $ 2,409
Less intercompany ............... (158) (236) 394 --
------- ------- ------- -------
Sales to unafilliated
customers ..................... 1,694 715 -- 2,409
Pre-tax income from
continuing operations ......... 91 224 315
Total assets .................... 8,814 2,444 (133) 11,125
- --------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1999
Sales ........................... 1,615 781 (273) 2,123
Less intercompany ............... (100) (173) 273 --
------ ------ ------ ------
Sales to unaffiliated
customers ..................... 1,515 608 -- 2,123
Pre-tax income from
continuing operations ......... 274 54 328
Total assets .................... 9,029 2,046 (42) 11,033
- --------------------------------------------------------------------------------
</TABLE>
7. 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. BCA ceased
operations to the Company's benefit effective May 1, 1999, but continued to
convert certain inventory items on behalf of the buyer. At March 31, 2000, net
assets of discontinued operations consisted of BCA property and plant amounting
to $2.1 million. The property and plant are currently in escrow, which is
expected to close by June 1, 2000.
6
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999
- --------------------------------------------------------------------------------
(in thousands)
<S> <C>
Sales as previously reported ................................ $3,907
LESS BCA SALES ......................................... 1,784
- --------------------------------------------------------------------------------
As reported September 30, 1999 .............................. $2,123
================================================================================
</TABLE>
8. LITIGATION
On March 10, 2000, the Company was served with a complaint filed in U.S.
District Court by Agen Biomedical Ltd. claiming that Biopool infringed an Agen
patent. The Company prepared and filed an answer. Management believes the
complaint to be without merit and that it will have no material impact to the
Company's financial position or results of operations.
9. SUBSEQUENT EVENT
On May 4, 2000, the Company and Xtrana, Inc., jointly announced that they
entered into a definitive Agreement and Plan of Reorganization to merge.
Pursuant to the Merger Agreement, Xtrana will be merged with and into Biopool,
with Biopool surviving and the separate existence of Xtrana ceasing. Upon
consummation of the Merger, Biopool will issue 9,369,461 shares of common stock
in exchange for all outstanding common and preferred stock of Xtrana. As a
result, immediately following the Merger, the former Xtrana stockholders will
hold approximately 50% and Biopool stockholders will hold approximately 50% of
the outstanding shares of capital stock of the surviving corporation. Of these
shares, 1,873,892 shares will be issued and placed in an escrow account, and may
be canceled if Xtrana suffers any liabilities under the indemnification
provisions of the Merger Agreement or if Xtrana fails to meet the gross revenue
targets agreed to in the Merger Agreement. In the future, we may have to issue
additional shares of common stock to Xtrana stockholders if we suffer any
liability under the indemnification provisions set for the in the Merger
Agreement or if Xtrana meets certain gross revenue targets agreed to in the
Merger Agreement.
Biopool will be the surviving corporation in the merger, and at the effective
time of the merger Xtrana will cease to exist as a separate corporate entity.
The Certificate of Incorporation and Bylaws of Biopool will be the certificate
of incorporation and bylaws of the combined corporation. Pursuant to the Merger
Agreement, John H. Wheeler, the Chief Executive Officer of Xtrana, will be the
Chief Executive Officer of the surviving corporation. After the effective time
of the Merger, the board of directors of the surviving corporation will consist
of seven members. Initially, Biopool and Xtrana will each have the right to
designate three directors, and together they will select one additional mutually
agreeable director.
Xtrana was incorporated in Delaware in 1998. Xtrana, based in Denver, Colorado,
has developed new proprietary nucleic acid (DNA/RNA) testing technology, which
it plans to commercialize. Potential markets for this testing technology include
the detection of food and environmental contamination, forensics and paternity
identity testing, infectious human disease testing including bacterial warfare,
and research and other clinical applications.
The affirmative vote a majority of all outstanding shares of Biopool common
stock entitled to vote is required to approve the Merger and the Merger
Agreement. Biopool has filed a preliminary proxy statement with the Securities
and Exchange Commission, and will be noticing its Annual Stockholders Meeting,
which will include as an agenda item the approval of the proposed merger with
Xtrana, and distributing to its stockholders a definitive proxy statement
shortly. The meeting is expected to be held in the third quarter of this year.
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 our BCA
Division for $4.45 million in cash.
7
<PAGE>
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 reduced the Company's sales by
approximately 50%; however, the impact on pretax income was negligible.
PROPOSED MERGER WITH XTRANA, INC.
On May 4, 2000, we signed a definitive agreement to merge with Xtrana, Inc. The
merger is subject to stockholder approval, which will be solicited in connection
with our Annual Meeting of Stockholders, currently scheduled for sometime in the
third quarter of this year. Xtrana was incorporated in Delaware in 1998. Xtrana,
based in Denver, Colorado, has developed new proprietary nucleic acid (DNA/RNA)
testing technology, which it plans to commercialize. Potential markets for this
testing technology include the detection of food and environmental
contamination, forensics and paternity identity testing, infectious human
disease testing including bacterial warfare, and research and other clinical
applications.
Certain one-time costs associated with this merger will be reported during the
first three quarters of 2000. Once the merger is consummated, we anticipate
growth in revenues, as well as a corresponding increase in related expenses,
especially research and development costs and amortization of purchased
intangible assets. We anticipate this merger will have a material negative
near-term impact on net income, but the specific magnitude is unknown at this
time. We will also experience reduced earnings per share in the near-term as a
result of the issuance of 9,369,461 shares of Biopool Common Stock related to
the merger.
RESULTS OF OPERATIONS
Sales were $2.4 million for the three-month period ended March 31, 2000,
compared with $2.1 million for the corresponding period of 1999, representing a
13% increase. This increase was the direct result of a renewed emphasis on
marketing our core hemostasis products.
Cost of goods sold were $1,162,000 for the quarter ended March 31, 2000,
compared with $1,048,000 for the same period in 1999. The cost of sales as a
percentage of revenues was 48% in 2000 versus 49% in 1999.
Selling, general and administrative ("SG&A") expenses were $886,000 for the
quarter ended March 31, 2000, compared with $602,000 for the same period of
1999. This increase was primarily the result of increased sales and marketing
efforts to improve domestic sales and certain one-time professional fees.
The 2000 Other income relates to interest income and favorable foreign exchange
transactions. The 1999 Other expenses primarily related to costs incurred to
move our Swedish operations (Biopool Sweden) into larger facilities.
Discontinued operations reflect no activity in 2000 and breakeven results in
1999.
FINANCIAL CONDITION
As of March 31, 2000, working capital was $8 million, with a current ratio of
9.3 to 1.0. Net assets of discontinued operations, equal to $2.1 million,
representing the BCA property, plant, and equipment, are stated at the estimated
net realizable value and are expected to close escrow by June 1, 2000.
Our current availability of cash, unused line of credit, working capital, cash
flow from operations, and the pending sale of BCA assets are adequate to meet
our ongoing hemostasis needs for at least the next twelve months. However, we
may seek additional financing later this year to fully support the Xtrana
activities. We will investigate and pursue financing options during the second
quarter in anticipation of the merger.
Upon consummation of the Xtrana merger, we will issue 9,369,461 shares of
Biopool Common Stock to the Xtrana stockholders. This issuance will have a
dilutive affect on earnings per share in the near term.
8
<PAGE>
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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K.
1. Form 8-K dated April 3, 2000.
Item 5 - Other Events: Press Release, Complaint
Alleging Patent Infringement Filed Against Biopool
International
9
<PAGE>
BIOPOOL INTERNATIONAL, INC.
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, 2000 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
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,567
<SECURITIES> 0
<RECEIVABLES> 1,925
<ALLOWANCES> 0
<INVENTORY> 2,078
<CURRENT-ASSETS> 9,005
<PP&E> 3,589
<DEPRECIATION> 2,509
<TOTAL-ASSETS> 11,125
<CURRENT-LIABILITIES> 970
<BONDS> 0
0
0
<COMMON> 83
<OTHER-SE> 9,946
<TOTAL-LIABILITY-AND-EQUITY> 11,125
<SALES> 2,409
<TOTAL-REVENUES> 2,409
<CGS> 1,162
<TOTAL-COSTS> 1,162
<OTHER-EXPENSES> (35)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 315
<INCOME-TAX> 115
<INCOME-CONTINUING> 200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 200
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,035
<SECURITIES> 0
<RECEIVABLES> 1,506
<ALLOWANCES> 0
<INVENTORY> 2,059
<CURRENT-ASSETS> 4,973
<PP&E> 1,609
<DEPRECIATION> (510)
<TOTAL-ASSETS> 10,657
<CURRENT-LIABILITIES> 1,023
<BONDS> 0
0
0
<COMMON> 85
<OTHER-SE> 9,426
<TOTAL-LIABILITY-AND-EQUITY> 10,657
<SALES> 2,123
<TOTAL-REVENUES> 2,123
<CGS> 1,048
<TOTAL-COSTS> 1,048
<OTHER-EXPENSES> 47
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 328
<INCOME-TAX> 127
<INCOME-CONTINUING> 201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 201
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
