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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 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 incorporation (I.R.S. Employer
or organization) Identification No.)
6025 NICOLLE STREET, VENTURA, CALIFORNIA 93003
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (805) 654-0643
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.01 per share Not Applicable
Common Stock Purchase Rights
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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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. /X/
The aggregate market value of Biopool International, Inc. Common Stock, $.01 par
value, held by non affiliates, computed by reference to the average of the
closing bid and asked prices as reported by OTCBB on March 20, 2000, was
$8,026,313.
Number of shares of Common Stock of Biopool International, Inc., $.01 par value,
issued and outstanding as of December 31, 1999: 8,286,986.
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INDEX TO ANNUAL REPORT
ON FORM 10-KSB
PART I PAGE
Item 1. Business........................................................... 3
Item 2. Properties......................................................... 11
Item 3. Legal Proceedings.................................................. 11
Item 4. Submission of Matters to a Vote of Security-Holders................ 11
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters ............................................... 11
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................... 12
Item 7. Financial Statements and Supplementary Data........................ 14
Item 8. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure ............................... 14
PART III
Item 9. Directors and Executive Officers................................... 14
Item 10. Executive Compensation............................................ 16
Item 11. Security Ownership of Certain Beneficial Owners
and Management ................................................... 17
Item 12. Certain Relationships and Related Transactions.................... 18
Item 13. Exhibits, Financial Statement Schedules and Reports
on Form 8-K ...................................................... 18
SIGNATURES................................................................. 19
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PART I
ITEM 1. BUSINESS
Biopool is engaged in the research, development, manufacture, and
marketing of in vitro (outside the body) diagnostic products for use in disease
detection and prevention. We sell over 100 products on a worldwide basis to
hospitals, clinical laboratories, commercial reference laboratories, and
research institutions.
The Company was incorporated in Delaware in 1987. Our corporate office
is located in Ventura, California. We have one wholly-owned operating
subsidiary, Biopool AB, located in Umea, Sweden, where we also carry on product
development, manufacturing, and sales and marketing activities.
During the first half of 1999, we consummated the sale of certain
business assets of our former BCA Division. BCA ceased operations to our benefit
effective May 1, 1999, but we continued to convert certain inventory items on
behalf of the buyer through June 30, 1999. Biopool no longer conducts business
in the immunohematology (blood bank) market.
INDUSTRY
The worldwide in vitro diagnostics market is estimated to be worth
approximately $20 billion annually. Our products are sold to specific markets
within the worldwide in vitro diagnostics market. Those segments are estimated
to be worth approximately $1 billion annually, in the aggregate. Our products
are used, in general, to diagnose disease, identify individuals at risk for
developing certain diseases, and monitor patients undergoing therapy for certain
disease states. These products are typically referred to as reagents or test
kits and are used by highly trained laboratory technologists utilizing a wide
range of testing devices, which perform the ultimate analysis. In a typical
example, patient samples (blood, plasma, urine, or other body fluids) are mixed
with manufactured reagent(s), such as those we produce, and a reaction is then
measured by specific instrumentation. The test result obtained thus provides
certain diagnostic information to the clinician.
In vitro diagnostic products are utilized by health care professionals
worldwide. Diagnostic testing is most often performed in:
- hospital-based laboratories
- commercial reference laboratories
- physician office laboratories.
Our products address three key disciplines of the total in vitro
diagnostics market:
o HEMOSTASIS/FIBRINOLYSIS
The market for these reagents and test kits is approximately $650
million worldwide. Such products are used to:
- diagnose patients who have suffered thrombotic
(clot-forming) circulatory diseases such as myocardial
infarction, stroke, embolism, or deep vein thrombosis;
- diagnose patients who are suffering from certain bleeding
disorders; and
- monitor patients undergoing therapy for such diseases and
disorders.
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o VASCULAR OCCLUSION
These tests are, to some degree, the same as those used in
hemostasis/fibrinolysis but have growing importance in identifying individuals
at risk for developing vascular occlusion, such as myocardial infarction,
stroke, deep vein thrombosis, and embolisms.
o TOXICOLOGY
Toxicology products include drugs-of-abuse (DOA) controls to
effectively monitor the analyzer and technician variables associated with
identifying abused substances, such as cocaine, marijuana, amphetamines, etc.,
in patient samples. Biopool's key strength is developing and manufacturing
customized DOA controls for OEM accounts such as Biosite Diagnostics, a leader
in point-of-care (POC) DOA testing.
PRODUCTS
TEST KITS USED FOR MEASURING VARIOUS COMPONENTS OF THE FIBRINOLYTIC SYSTEM
The fibrinolytic (clot dissolving) system consists of a number of
enzymes and other proteins that participate in limiting the size of blood clots
and in the dissolution of blood clots that form when the blood vessel wall is
damaged. The clot forms around clumped or aggregated blood platelets forming a
temporary "plug" to prevent blood loss. When the fibrinolytic system is
hypoactive, the blood clot can become oversized and disrupt blood flow,
resulting in tissue damage. The principal enzyme involved in fibrinolysis is
plasmin. Plasmin is formed from its inactive precursor, plasminogen, by the
action of the naturally occurring enzymes, tissue plasminogen activator ("tPA"),
and urokinase plasminogen activator ("uPA"). A high plasma level of the
principal inhibitor of plasminogen activators, PAI-1 (plasminogen activator
inhibitor, type 1), has been described in the scientific literature as an
important risk factor in developing venous and arterial thrombosis. Hyperactive
fibrinolysis, including decreased levels of inhibitors, may result in bleeding
problems. Some of the fibrinolytic products we manufacture include:
MINUTEX(R) D-DIMER measures the D-dimer breakdown product of a fibrin
clot, indicating that clot formation has occurred and that the fibrinolytic
system has been activated. The Minutex(R) D-dimer test is useful in the
diagnosis of deep vein thrombosis (DVT), pulmonary embolism, and disseminated
intravascular coagulation (DIC). Recent studies have confirmed the ability of
the Minutex(R) D-dimer test to provide information that can avoid expensive and
invasive procedures for confirmation of DVT. Biopool is recognized as a world
leader by virtue of its highly sensitive and accurate D-dimer test.
CHROMOLIZE(TM) TPA measures the level of tissue plasminogen activator
(tPA), the body's most potent activator of the fibrinolytic system. Decreased
release of active tPA has been shown to be a risk indicator for myocardial
infarction.
CHROMOLIZE(TM) PAI-1 measures plasminogen activator inhibitor-1 (PAI-1)
levels in plasma. PAI-1 is a major modulator of tPA activity, and elevated
levels are also indicative of the risk of recurrent heart attacks, recurrent
deep vein thrombosis, and post-operative thrombosis.
STABILYTE(TM) is a unique patented blood collection device that
stabilizes tPA activity and other serine proteases in blood after collection,
greatly simplifying their measurement and leading to a more accurate assessment
of these key fibrinolytic enzymes.
TEST KITS FOR MEASURING RISK OF VASCULAR OCCLUSION
Cardiovascular disease, which includes coronary artery disease and
stroke, is currently the nation's leading cause of death. Inappropriate
formation of thrombi (clots) by biochemical processes is behind these disease
states. Several of our products are used in the diagnosis and evaluation of
patients who may be suffering from cardiovascular disease, including the
following products:
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AUTO-DIMER(R) is a second generation, quantitative D-dimer kit that
can be used on automated clinical chemistry analyzers to measure the D-dimer
breakdown product of a fibrin clot. D-dimer is a key indicator of thrombotic
disorders such as deep vein thrombosis (DVT) in which potentially
life-threatening blood clots form in the legs.
MINIQUANT(TM) D-dimer is a D-dimer assay specifically formulated for
use on the MiniQuant(TM) reader, our new point-of-care analyzer for quantitative
D-dimer identification. The MiniQuant(TM) D-dimer test system was submitted to
the U.S. Food and Drug Administration (FDA) via the 510(k) pre-market
notification process in January 2000.
BIOCLOT(R) APC Sensitivity Kit is Biopool's new test kit for
determining sensitivity to activated protein C (APC). The most common reason for
resistance to APC is a genetic mutation in the (clotting) factor V gene (factor
V Leiden), which is the leading cause of thrombotic (clot-forming) diseases.
Other physiological states that can lead to resistance to APC include pregnancy,
malignancy, and oral contraceptive use.
BIOCLOT(R) Protein C and Bioclot(R) Protein S measure key enzymes and
regulatory proteins controlling the clotting process. Both tests are approaching
routine use in test panels screening for thrombotic risk. The Bioclot(R) tests
are easy to perform and are compatible with all routine hemostasis analyzers.
BIOCLOT(R) LA is another of the easy to perform Bioclot(R) assays, in
this case used to detect the presence of lupus-like anticoagulants (LA).
Elevated levels of LA present a considerable risk factor for thrombosis and
recurrent spontaneous abortion.
SPECTROLYSE(R) AT III measures antithrombin III (AT III) levels in
plasma, the most important inhibitor of clotting activity within the hemostasis
system. Decreased levels of this key protein are prognostic of thrombotic risk.
TEST KITS FOR MEASURING VARIOUS COMPONENTS OF THE BLOOD COAGULATION (CLOTTING)
SYSTEM
The coagulation system consists of a number of clotting factor proteins
that interact in a complex way to cause the polymerization of fibrinogen to
fibrin, resulting in clot formation. The clotting factors, identified by Roman
numerals (e.g., factor II, factor VIII, etc.), also have inhibitors present in
the circulation which limit their activity. Congenital or acquired deficiencies
of any of the clotting factors may result in bleeding, while deficiencies in the
inhibitors are associated with thrombotic (clot-forming) complications.
FACTOR DEFICIENT PLASMAS are human plasmas synthetically depleted of
individual clotting factors using specific monoclonal and polyclonal antibodies.
These plasmas are used as substrate plasmas in the clinical laboratory for the
determination of clotting factor deficiency in patients.
HEMOSTASIS REFERENCE PLASMA is a freeze-dried reference plasma that has
been assayed against international plasma standards (obtained from the World
Health Organization) for 24 hemostasis analytes and marketed as a universal
control in the performance of many hemostasis tests.
PRODUCTS USED IN THE ROUTINE SCREENING OF THE COAGULATION SYSTEM, MONITORING
PATIENTS ON ORAL ANTICOAGULANT OR HEPARIN THERAPY, AND ASSESSING PLATELET
FUNCTION
Test systems, such as those manufactured by Biopool, are routinely used
to provide global information on the status of the blood "clotting system" prior
to surgery in order to identify individuals who might be at risk for excess
bleeding during invasive procedures. These global tests are also commonly used
to monitor the status of anticoagulant treatment because anticoagulants have a
direct impact on clotting activity. Typical tests include:
THROMBOPLASTIN is used for monitoring patients on oral anticoagulant
therapy (i.e., coumadin), for routine coagulation system assessment, and in
specific clotting factor assays.
APTT REAGENT is used in the monitoring of patients on therapeutic
heparin, presurgical screening, routine coagulation system screening, and in
coagulation factor assays.
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FIBRINOGEN KIT is used in the routine determination of fibrinogen when
assessing bleeding disorders. There is an increasing interest in the performance
of fibrinogen assays as an abnormally high level of plasma fibrinogen is
considered a risk factor for thrombotic disease.
COAGULATION CONTROL PLASMAS are freeze-dried, stabilized human plasmas
used in the day-to-day control of routine coagulation tests.
FDP COLLECTION TUBE is a specialized system of blood collection
designed for use in fibrin degradation product ("FDP") assays and compatible
with a variety of commercially available FDP kits.
PLATELET AGGREGATION REAGENTS are used in the determination of blood
platelet abnormalities and may prove quite useful in monitoring the efficacy of
new FDA-approved anti-platelet drugs offered by certain pharmaceutical
suppliers.
RISTOCETIN COFACTOR ASSAY is used in the diagnosis of von Willebrand
disease, one of the most common hereditary bleeding disorders in the human
population.
MISCELLANEOUS PRODUCTS
DRUGS-OF-ABUSE CONTROLS are a system of multi-level, multi-analyte,
liquid-stable controls used as quality control checks when testing for drugs of
abuse (e.g., barbiturates, opiates, amphetamines, etc.) in clinical laboratory
and forensic lab settings. SURE-Urine(TM) is our unique synthetic-based
(non-human) drugs-of-abuse control, which eliminates the biohazard concerns of
commonly used human-based materials.
PRODUCTS UNDER DEVELOPMENT AND R&D
We carry out product development activities at each of our two
facilities. Most product development is aimed at broadening our product
offerings in the market niches we already serve, introducing updated versions
(quicker, more user-friendly, more accurate, etc.) of current products, and
conducting research aimed at evaluating technology applicable to new methods of
diagnostic testing.
We received 510(k) clearance to market one new product in 1999, the
Bioclot(R) aPC Sensitivity Kit, a new test for determining sensitivity to
activated protein C (APC). The most common reason for resistance to APC is a
genetic mutation in the (clotting) factor V gene, which is the leading cause of
thrombotic (clot- forming) diseases. Other physiological states that can lead to
resistance to APC include pregnancy, malignancy, and oral contraceptive use.
We submitted a 510(k) pre-market notification to the FDA in January
2000 for the MiniQuant(TM) D- dimer assay system, a rapid, quantitative method
for determining the fibrin degradation product D-dimer in plasma. The assay is
performed using our MiniQuant(TM) latex agglutination reagent and the
MiniQuant(TM)-1, a compact, two-channel LED photo-optical detection system for
use in laboratory and emergency care environments.
We developed a new product, tPA/PAI Complex in 1998, which was
introduced to the research market in the U.S. and Europe in 1999 and is
undergoing clinical trials. Two studies have been completed thus far. One study
published in the January 2000 issue of Stroke concludes that tPA/PAI-1 Complex,
a novel fibrinolytic marker, is independently associated with the development of
a first-ever stroke. The second study, which has been accepted for publication
in the journal Atherosclerosis, Thrombosis and Vascular Biology, indicates that
tPA-PAI Complex is potentially a very significant marker for determining the
risk of a second heart attack. Additional studies will be conducted before this
product is submitted to the FDA for market clearance.
During 1999 and 1998, we spent $322,000 and $315,000, respectively, for
research and development. We expect to spend slightly more in 2000.
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We maintain an active liaison with university and other research-based
technology transfer groups and frequently evaluate various product concepts and
core technologies that could be applicable to our hemostasis product lines and
logical extensions thereof. In connection with these efforts, we utilize the
expertise of two clinical advisors, Dr. Denis O. Rodgerson and Dr. Bjorn Wiman.
Dr. Rodgerson is a Professor Emeritus at the University of California, Los
Angeles, and was most recently Professor and Vice Chairman of the Department of
Pathology & Laboratory Medicine and Head of Clinical Chemistry at the School of
Medicine. Dr. Wiman is currently a Professor in Blood Coagulation Research at
Karolinska Institute and Senior Physician at the Department of Clinical
Chemistry, Karolinska Hospital, Stockholm, Sweden. Dr. Wiman was formerly Head
of the Department of Clinical Chemistry at Karolinska Hospital. Dr. Wiman
co-authored the article on tPA/PAI Complex that has been accepted for
publication in the journal Atherosclerosis, Thrombosis and Vascular Biology.
MANUFACTURING AND QUALITY CONTROL
We currently manufacture our reagents and assemble our test kits at our
facilities in Ventura, California and Umea, Sweden. We also manufacture many of
the raw materials used in the manufacture of our test kits, including polyclonal
antibodies, monoclonal antibodies, and purified proteins. In cases where raw
materials are obtained from outside sources, we try to avoid dependence on any
one source where possible. Human plasma, an important starting material for many
of our products, is sourced from licensed blood banks and plasmapheresis
centers. We believe that the available sources of materials are adequate for its
present and anticipated needs.
All of our products are manufactured in accordance with Good
Manufacturing Practices for Medical Devices as promulgated by the FDA. We are
registered as a Device Manufacturing Establishment with the FDA. We are also
registered with the U.S. Drug Enforcement Administration to handle Schedules I-V
controlled substances. We perform our own vial-filling, freeze-drying,
microtiter plate-filling, and processing. Both of our facilities are currently
undergoing preparations to become ISO certified.
Many of our technical employees hold advanced degrees or certifications
in medical technology. Three individuals hold Ph.D. degrees in the biological
sciences.
MARKETING AND DISTRIBUTION
Our products are sold worldwide. The U.S. typically accounts for some
35% of the total worldwide diagnostics market, Europe approximately 35%, Japan
10%, and 20% for the rest of the world ("ROW").
Within the U.S., we market and sell our products directly and through
regional and national distributors. Our sales force consists of four outside
sales representatives, a corporate accounts manager, and a strategic support
specialist. Our sales personnel are highly experienced in the technical aspects
of the product line and include some individuals with advanced degrees in
medical technology. Our sales and marketing activities are supported by a
director of marketing, an applications specialist, and a technical support
specialist.
We sell our products outside of the U.S. through more than 50
independent dealers in 40 countries. We augment our direct sales activities
through active participation in a number of key regional, national, and
international industry trade shows, such as the American Association of Clinical
Chemistry, the American Society of Hematology, Clinical Laboratory Management
Association, and Medica (Dusseldorf, Germany).
In addition to direct sales activities, our products are distributed in
the U.S. through Columbia Diagnostics (acquired by Fisher HealthCare), LABSCO,
Perigon, Tech-Neal Scientific, Scientific Supplies & Equipment, and other
regional distributors that collectively cover all 50 states with over 180 sales
representatives.
We manufacture products for private label and Original Equipment
Manufacturer businesses in the hemostasis and drugs-of-abuse testing markets.
Our private label and OEM customers accounted for approximately 56% of our sales
in 1999, and include sales to Biosite Diagnostics, Dade Behring, Instrumentation
Laboratory, Organon Teknika (a division of Akzo Nobel), Ortho Diagnostic Systems
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(a division of Johnson & Johnson; this hemostasis business unit was recently
acquired by Instrumentation Laboratory), Pacific Hemostasis (a division of
Fisher Scientific), and Sigma Diagnostics (Sigma/Aldrich).
Sales to two customers, Instrumentation Laboratory (including the
former Ortho Diagnostic Systems, a division of Johnson & Johnson) and Sigma
Chemical Company, slightly exceeded 10% of total 1999 sales.
COMPETITION
We compete on a worldwide basis against a number of companies, some of
which are subsidiaries of large pharmaceutical, chemical, and biotechnology
firms whose financial resources and research and development facilities are
substantially greater than ours. In the hemostasis area, these companies include
BioMerieux, Dade Behring, Instrumentation Laboratory, Organon Teknika (a
division of Akzo Nobel), and Sigma Diagnostics (Sigma/Aldrich). Consolidation
within the industry continues to make these competitors even larger; for
example, the acquisition of the "Hemoliance" business of Ortho by
Instrumentation Laboratory.
A number of smaller companies also compete with us in the research and
development of diagnostic test kits relating to the niche
hemostasis/fibrinolysis market, including Diagnostica Stago S.A. (France) and
Agen, Inc. (Australia). We currently have approximately a 2% worldwide market
share in total hemostasis products and up to a 20-30% share in certain specialty
hemostasis/fibrinolysis products.
Competition is based upon a number of factors, including product
quality, customer service, price, continuous availability of product, breadth of
product range, and the strength and effectiveness of the sales and marketing
organization. We believe our test kits and reagents compete on the basis of
price, relative ease of use, quality, accuracy, and precision.
SUPPLIERS
We obtain raw materials from numerous outside vendors. Key raw
materials include plasma, antisera, platelets, enzymes, and monoclonal
antibodies. We generally have more than one source for our key raw materials. We
continually evaluate additional suppliers with a view towards reducing our
dependence on any single vendor.
PATENTS, TRADEMARKS, AND PROPRIETARY INFORMATION
We consider the protection of discoveries in connection with our
research and development on test kits important to our business. We seek patent
protection for technology when deemed appropriate and, to date, have filed (or
have been assigned) applications for United States and foreign patents covering
several general product areas.
We are also reliant on trade secrets, unpatented proprietary know-how,
and continuing technological innovation to develop our competitive position.
Many of our key employees and consultants have entered into confidentiality
agreements and have agreed to assign to us any inventions relating to our
business made by them while in our employ, or in the course of services
performed on our behalf. We perform an ongoing assessment of the value of our
intangible assets.
We have established rights in the trademark "MiniQuant." The marks
Biopool(R), Bioclot(R), TintElize(R), Minutex(R), and Auto-Dimer(R) have been
registered with the United States Patent and Trademark Office and in many
foreign territories.
GOVERNMENT REGULATIONS
The manufacture and sale of diagnostic products are subject to
regulation by the FDA in the United States and by comparable regulatory agencies
in certain foreign countries in which our diagnostic products are sold. The FDA
has established guidelines and safety standards that are applicable to the
preclinical evaluation and clinical investigation of diagnostic products and
regulations that govern the manufacture and sale of such products. The FDA and
similar agencies in foreign countries have substantial regulations that
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apply to the testing, marketing (including export), and manufacturing of
products to be used for the diagnosis of disease. In the United States, many
diagnostic products may be accepted by the FDA pursuant to a 510(k)
notification, which must contain information that establishes that the product
in question is "substantially equivalent" to similar diagnostic products already
in general use. 60 of our products have received marketing approval utilizing
this 510(k) process. 31 of our products have also received market approval from
the regulatory agency in France, AFSSAPS (formerly l'Agence du Medicament).
Our manufacturing facilities in the U.S. and Sweden, as well as any
additional manufacturing operations that may be established within or outside
the United States, are subject to compliance with Good Manufacturing Practices
regulations. We are registered as a medical device manufacturer with the FDA and
as a manufacturer with the U.S. Drug Enforcement Administration. We may also be
subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substance Control Act, Export Control
Act, and other present and future laws of general application.
We believe that the manufacture and use of our products have no
material adverse environmental impact.
RISK FACTORS
WE RELY ON RAW MATERIALS FOR OUR MANUFACTURING. Our manufacturing
process relies on the continued availability of high-quality raw materials, many
of which we currently receive from specific vendors. It is possible that a
change in vendors, or in the quality of the raw materials supplied to us, could
have an adverse impact on our manufacturing process and, ultimately, on the sale
of our finished products. We have from time to time experienced a disruption in
the quality or availability of certain key raw materials, which has created
minor delays in our ability to fill orders for certain test kits. This could
occur again in the future, resulting in significant delays, and could have a
detrimental impact on the sale of our products.
WE ARE ENGAGED IN A COMPETITIVE INDUSTRY. We are engaged in a segment
of the human health care products industry that is highly competitive. Many of
our competitors, both in the United States and elsewhere, are major
pharmaceutical, chemical, and biotechnology companies, and many of them have
substantially greater capital resources, marketing experience, research and
development staffs, and facilities than we do. Any of these companies could
succeed in developing products that are more effective than any that we have or
may develop, and may also be more successful than us in producing and marketing
their products. Not only do we face intense competition in the marketplace
against our competitors, but we also must compete with these same companies for
the services of personnel.
We expect competition to continue and intensify in the future.
Increased competition could result in price reductions for our products, reduced
margins and loss of market share, any of which could adversely impact our
business.
Our industry has also seen substantial consolidation in recent years.
We believe that the success that others have had in our industry will attract
new competitors. Some of our current and future competitors may join forces to
better compete against us. We may be not be able to compete effectively against
current or future competitors, and competitive pressures may have an adverse
effect on our business, financial condition and results of operations.
WE RELY ON INTERNATIONAL SALES. International sales accounted for
approximately 42% and 44% of our revenues in 1999 and 1998, respectively.
International sales can be subject to certain inherent risks, including
unexpected changes in regulatory requirements and tariffs, difficulties in
staffing and managing foreign operations, longer payment cycles, problems in
collecting accounts receivable, and potentially adverse tax consequences. We
also depend on third-party distributors for a material portion of our
international sales. If we lose or suffer any significant reduction in sales to
any material distributor, our business could be materially adversely affected.
In addition, approximately 26% of our sales are made in Swedish Krona.
In the past, gains and losses on the conversion of our accounts receivable
arising from international operations have contributed to fluctuations in our
results of operations, although the impact of foreign exchange conversions were
not
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significant during 1999. In general, increases in the exchange rate of the
United States dollar to foreign currencies cause our products to become
relatively more expensive to customers in those countries, leading to a
reduction in sales or profitability in some cases.
WE DEPEND ON KEY MANAGEMENT. Our success will continue to depend to a
significant extent on the members of our management team. We do not maintain
insurance on the lives of anyone at the Company. As is the case with any
company, we may not be able to retain the services of our executive officers and
key personnel or attract additional qualified members to management in the
future. The loss of services of any key employee could have a material adverse
effect upon our business.
OUR STOCK PRICE HAS BEEN VOLATILE. Our common stock is quoted on the
OTC Bulletin Board(R), and there can be volatility in the market price of our
common stock. The trading price of the common stock has been, and is likely to
continue to be, subject to significant fluctuations in response to variations in
quarterly operating results, the gain or loss of significant contracts, changes
in management, announcements of technological innovations or new products by us
or our competitors, legislative or regulatory changes, general trends in the
industry, recommendations by securities industry analysts, and other events or
factors. In addition, the stock market has experienced extreme price and volume
fluctuations which have affected the market price of our common stock, as well
as the stock of many technology companies. Often, price fluctuations are
unrelated to operating performance of the specific companies whose stock is
affected.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION. We operate in a
highly regulated industry. Our business is subject to extensive regulation,
supervision and licensing by federal, state and local governmental authorities.
Also, from time to time we must expend significant resources to comply with
newly adopted regulations as well as changes in existing regulations. If we fail
to comply with these regulations, we could be subject to certain disciplinary
actions or administrative enforcement actions. Such actions could result in
penalties, including fines.
WE HAVE RISKS RELATED TO PRODUCT DEFECTS. Despite product testing prior
to sale, our products have from time to time experienced performance problems
discovered after we sold the products. If a customer experiences performance
problems, errors in shipment or product defects, it could result in:
o injuries to persons;
o loss of sales;
o delays in or elimination of market acceptance;
o damage to our brand or reputation;
o product returns
Although our distributors and manufacturers have return policies, if we
accept a product returned by a customer but it is not accepted for return by the
distributor, we will incur the cost. Because we depend on third parties for
certain of the components of our products, if those components are defective,
the performance of our products would be reduced or undermined. Any increase in
the rate of returns would affect our financial condition, operating results and
cash flows.
PROTECTION OF OUR TRADEMARKS AND PROPRIETY RIGHTS IS UNCERTAIN. We
regard our trademarks, trade secrets and similar intellectual property as
important to our success. We rely on trademark law and trade secret protection
and confidentiality and/or license agreements with employees, customers,
partners and others to protect our proprietary rights. We have pursued the
registration of our trademarks in the U.S. and internationally. Effective
trademark and trade secret protection may not be available in every country in
which our products are available. We cannot be certain that we have taken
adequate steps to protect our proprietary rights, especially in countries where
the laws may not protect our rights as fully as in the United States. In
addition, third parties may infringe or misappropriate our proprietary rights,
and we could be required to incur significant expenses in preserving them.
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YEAR 2000 ISSUES. We have experienced no significant adverse effects as
a result of the Year 2000 issue.
EMPLOYEES
At the end of 1999, we had 65 regular (full- and part-time) employees,
46 of whom were located in the U.S. and 19 who were located in Sweden. Certain
of our Swedish employees are members of national unions.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The information is disclosed in Note 7 to the consolidated financial
statements included herein under Item 13.
ITEM 2. PROPERTIES
We lease a 20,000 square-foot facility in Ventura, California,
providing administrative, laboratory, manufacturing, and warehouse space. Our
corporate offices are also located in our Ventura facility. Key manufacturing
facilities include clean rooms, high-speed vial filling and capping
capabilities, and a freeze- drying capacity. Under the terms of the three-year
lease agreement expiring in 2002, the base rent for this facility is
approximately $110,000 per year with annual increments tied to the Consumer
Price Index.
Our Swedish subsidiary, Biopool AB, leases a 12,500 square-foot
facility in Umea, Sweden, providing administrative, laboratory, warehouse, and
manufacturing space. The laboratories are particularly suited for the
preparation of high-quality biochemicals for use in our test kits. Annual rent
is approximately $137,000 pursuant to the terms of a five-year lease expiring in
2004.
ITEM 3. LEGAL PROCEEDINGS
On March 10, 2000, we were served with a complaint filed in U.S.
District Court by Agen Biomedical Ltd. claiming that Biopool infringed an Agen
patent. We have prepared and filed an answer. We believe the complaint to be
without merit and that it will have no material impact to our financial position
or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
There were no matters submitted during the fourth quarter of the fiscal
year covered by this Report to a vote of stockholders, through the solicitation
of proxies, or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
On June 3, 1998, our Board of Directors declared a dividend of one
common stock purchase right for each of our issued and outstanding shares of
common stock. The purchase rights are subject to the terms and conditions of,
the Right Agreement dated June 12, 1998, filed with the Securities and Exchange
Commission on June 26, 1998, on Form 8-A. The purchase rights are not
represented by separate certificates, but, instead, initially will be evidenced
by the certificates representing our outstanding common stock.
Pursuant to our stock repurchase program announced June 5, 1998, we
repurchased a total of 253,900 and 146,100 shares of common stock on the open
market during 1999 and 1998, respectively, at average purchase prices of $0.83
and $0.81 per share, respectively.
11
<PAGE>
Our common stock currently trades on the OTC Bulletin Board(R) (OTCBB)
under the symbol BIPL. The following sets forth the high and low trade prices
for our common stock for the periods indicated as reported by Nasdaq and the
OTCBB. We have not paid any dividends since our inception and do not contemplate
payment of dividends in the foreseeable future.
<TABLE>
<CAPTION>
1999 1998
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
First quarter $ 1.375 $ 0.594 $ 2.375 $ 1.625
Second quarter 1.000 0.563 2.938 1.125
Third quarter 0.906 0.750 1.375 0.688
Fourth quarter 1.000 0.719 1.125 0.500
</TABLE>
(a) On March 20, 2000, the closing trade price of our common stock, as
reported by the OTCBB, was $1.0625.
(b) As of March 20, 2000, we had 221 holders of record of our common stock.
A large number of shares are held in nominee name. Based upon
information provided by our transfer agent, American Stock Transfer and
Trust Company, we had approximately 2,400 shareholders on the same
date.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 we 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 only. The sale of BCA
reduced the Company's sales by approximately 50%; however, the impact on pre-tax
income was negligible.
1999 VERSUS 1998
SALES
Sales were $8.8 million for the year ended December 31, 1999, compared
with $7.9 million for the year ended 1998. This represents an increase of sales
equal to $1 million or 12%. This increase was the direct result of a renewed
emphasis to market our core hemostasis products. The bulk of this increase was
primarily realized in our domestic markets. We anticipate that continued
investment in sales and marketing efforts, domestic and international, will
provide continuing revenue gains in 2000 and beyond.
Our customers are dispersed over wide geographic areas. Sales in the
United States and Western Europe accounted for 58% and 27%, respectively, of
total sales during 1999. Sales to two customers, Instrumentation Laboratory
(including the former Ortho Diagnostic Systems, a division of Johnson & Johnson)
and Sigma Chemical Company, slightly exceeded 10% of total 1999 sales.
We expect that future sales will continue to be influenced by many
additional factors, including the introduction of new diagnostic test kits,
success in marketing our test kits to the clinical market, increased awareness
and demand for testing by physicians, expansion of our products into new
geographic areas through distributors and OEM relationships, and direct sales
through Company-employed sales representatives. Rapid changes in technologies,
demand level for certain diagnostic tests, price competition, continued efforts
worldwide to reduce health care costs (including diagnostic testing), and the
availability of high-quality raw materials may also have a material impact on
our short- and long-term sales.
12
<PAGE>
COSTS AND EXPENSES
Cost of sales increased by $465,000, or 11%, to $4.7 million in 1999,
primarily as the result of increased sales. As a percentage of sales, cost of
goods sold fell 1% to 53% in 1999 compared with 54% in 1998. This percentage
decrease is due primarily to the fixed nature of certain overhead costs relative
to growing sales.
Selling, general and administrative expenses increased by $362,000, or
13%, to $3.1 million in 1999. This increase was primarily due to increased sales
and marketing efforts to improve domestic sales of our hemostasis products. We
expect to continue our emphasis to invest in our sales and marketing efforts.
Research and development expenses were relatively unchanged from the
previous year. We expect to increase research and development activities in 2000
to improve our product lines, develop new diagnostic reagents in hemostasis, and
evaluate newer technologies that may be applicable to current and future
diagnostic test kits.
Restructuring costs in 1998 relate to the closure of our Canadian
operations.
INCOME TAXES
Our effective tax rate for 1999 was 46%. The difference between our
effective tax rate for 1999 and the 34% federal statutory tax rate was primarily
due to the effects of state and foreign income taxes, non- deductible goodwill
amortization as well as the taxable dividend treatment of the transfer of
certain assets from our former Canadian operations. Our 1998 income tax benefit
primarily represents state franchise and foreign government income tax expense,
which was offset by the estimated future benefit of deferred taxes generated
during 1998, and a decrease in deferred taxes payable, which resulted from
changes in the Company's estimates as to certain tax liabilities.
FINANCIAL CONDITION
Our already strong liquidity and capital resources were further
enhanced by the sale of certain BCA assets. Effective April 30, 1999, we sold
our BCA product lines and certain working capital assets for $4,452,000. The
proceeds of the sale were used to pay off a note payable of $1.8 million and
various closing costs of approximately $1.1 million. The balance, approximately
$1.6 million, was invested in a short-term certificate of deposit. Net assets of
discontinued operations consist primarily of the BCA property and plant
amounting to $2.1 million. The property and plant are currently in escrow, which
is expected to close by April 30, 2000. Working capital as of December 31, 1999,
was $7.9 million, with a current ratio of 8.4 to 1.0. Our current availability
of cash, unused lines of credit, working capital, cash flow from operations and
the anticipated sale of the remaining BCA assets are adequate to meet our needs
for at least the next twelve months. We continue to seek potential acquisitions
and sources of capital to finance such acquisitions, although we have no
commitments for either at this time.
Pursuant to our stock repurchase program announced June 5, 1998, we
repurchased a total of 253,900 and 146,100 shares of common stock on the open
market during 1999 and 1998, respectively, at average purchase prices of $0.83
and $0.81 per share, respectively.
On October 8, 1998, we received a letter from Nasdaq stating that we do
not meet the minimum bid price requirement of $1.00 per share for continued
listing on the Nasdaq SmallCap Market. On March 12, 1999, we had a hearing
before the Nasdaq SmallCap Market in order to obtain an exemption from the
minimum bid price requirement. The subsequent decision of the Nasdaq Panel was
to delist our common stock, which became effective April 19, 1999.
13
<PAGE>
YEAR 2000 READINESS
Our Year 2000 Readiness Plan was implemented prior to year end, and we
have experienced no failures or problems to date with our own or third party
systems. We are unable to assess potential future problems, but we do not
anticipate any at this time.
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
our expectations 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 our previous Report on Form
10-KSB.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data have been included
under Item 13.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each
director, nominee and other officers of the Company as of April 20, 2000.
<TABLE>
<CAPTION>
DIRECTOR/
OFFICER
NAME AGE POSITION SINCE
- ---------------------- ----- -------------------------- -------------
<S> <C> <C> <C>
Michael D. Bick, Ph.D. 55 President, Chief Executive
Officer, Director 1991
Douglas L. Ayer 62 Director 1993
N. Price Paschall 51 Director 1997
James H. Chamberlain 52 Director 1998
OTHER OFFICERS:
Robert K. Foote 55 Chief Financial Officer,
Corporate Secretary 1996
Clayton H. Duke 58 Vice President Marketing
and Business Development 1998
</TABLE>
All officers are appointed by and serve at the discretion of the Board
of Directors. There are no family relationships between any directors or
officers of the Company.
14
<PAGE>
Michael D. Bick, Ph.D. was elected Chief Executive Officer in August
1991, Chairman of the Board in July 1993 and President in January 1996. In 1988,
Dr. Bick founded the Company's former subsidiary, MeDiTech, and was President
and Chief Executive Officer thereof until it was acquired by the Company in
January 1992. Prior to that date, he was co-founder and president of a
privately-held medical device firm for ten years. Dr. Bick received a Ph.D. in
molecular biology from the University of Southern California in 1971 and was
affiliated with the Harvard Medical School and Children's Hospital Medical
Center in Boston carrying out research in human genetics from 1971 to 1974. Dr.
Bick was a staff member of the Roche Institute of Molecular Biology from 1974 to
1978. Dr. Bick currently serves on the Board of Counselors of the School of
Pharmacy, University of Southern California. Dr. Bick is also on the Board of
Directors of Biotech.com, a privately-held company that supplies goods and
services to the biotech/biopharma industry.
Douglas L. Ayer is currently President and Managing Partner of
International Capital Partners of Stamford, CT. Mr. Ayer was previously Chairman
and Chief Executive Officer of Cametrics, a manufacturer of precision metal
components, and has held executive positions at Paine Webber and McKinsey & Co.,
Inc. Mr. Ayer also serves as a director of Mission Critical Software, Inc., a
developer of enterprise-scale Windows NT systems administration and management
software products.
N. Price Paschall is the founder and Managing Partner of Context
Capital Group (formerly HealthCare Capital Advisors) since 1993. Context Capital
Group provides merger and acquisition advice to middle market companies,
focusing on the medical service industry. Prior to Context Capital Group, Mr.
Paschall was a Vice Chairman and founder of Shea, Paschall and Powell-Hambros
Bank (SPP Hambros & Co.), a firm specializing in mergers and acquisitions. Mr.
Paschall holds a degree in business administration from California Polytechnic
University in Pomona. Since 1994, Mr. Paschall has served on the Board of
Directors and provided certain corporate financial services to Advanced
Materials Group, a manufacturer and fabricator of specialty foams, foils, films
and pressure-sensitive adhesive components.
James H. Chamberlain is the founder of Biosource International, Inc., a
California-based, Nasdaq- listed company dedicated to the research, development,
manufacturing, and marketing of biomedical products to the diagnostic and
research markets. Mr. Chamberlain is a director of Biosource and currently
serves as its Chairman, President, and Chief Executive Officer. Prior to
Biosource, Mr. Chamberlain was the Manager of Business Development for Amgen,
Inc. Mr. Chamberlain received a B.S. degree in biology and chemistry from West
Virginia University in 1969 and completed an MBA Executive Program at Pepperdine
University in 1981.
Robert K. Foote, CPA, joined the Company as Chief Financial Officer on
November 1, 1996. He was appointed Corporate Secretary on January 14, 1997.
Prior to joining the Company, he was the CFO and Corporate Secretary of H&H Oil
Tool Co., Inc., traded on the NASDAQ National Market System. Mr. Foote received
a B.S. degree in accounting and business administration from Brigham Young
University in 1974.
Clayton H. Duke joined the Company as Vice President Marketing and
Business Development on August 1, 1998. Prior to joining the Company, he was
Vice President of Braun Medical. He has also held executive positions at Cymed,
Abbott Laboratories, and E.R. Squibb & Sons. Mr. Duke received a B.S. degree in
microbiology and business administration from California State University, San
Francisco.
During the fiscal year ended December 31, 1999, the Board of Directors
met 7 times. Each director attended in excess of 75% of all meetings of the
Board of Directors held during the year. The Board of Directors has an Audit
Committee that met once during 1999. This committee oversees the work of the
Company's auditors with respect to financial and accounting matters. Messrs.
Ayer, Paschall, and Chamberlain are members of the Audit Committee. The Board of
Directors also has a Compensation Committee, which met once during fiscal 1999.
The function of the Compensation Committee is to review and make recommendations
with respect to compensation of executive officers and key employees. Messrs.
Ayer, Paschall, and Chamberlain were members of the Compensation Committee.
15
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following tables set forth certain information as to the Company's
Chief Executive Officer, Vice President Marketing and Business Development, and
Chief Financial Officer. No other executive officer of the Company had
compensation in excess of $100,000 during the period:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
NAME AND PRINCIPAL
POSITION ANNUAL COMPENSATION
- -------------------------- ----------------------------------------
YEAR SALARY BONUS OTHER(1) OPTIONS
------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Michael D. Bick, Ph.D. 1999 $ 160,000 $ 12,000
Chief Executive Officer 1998 160,000 10,800 32,465
1997 135,700 $25,000 10,000 35,000
Clayton H. Duke
Vice President Marketing 1999 125,000 7,950
and Business Development 1998(2) 45,700 2,100 200,000
Robert K. Foote 1999 100,000 7,200
Chief Financial Officer 1998 100,000 7,200
1997 85,000 15,000 5,300
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted to executive officers in fiscal 1999.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT YEAR- OPTIONS AT
NAME EXERCISE REALIZED END YEAR-END(3)
- ---------------- ----------- -------- ---------------- ----------------
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
---------------- ----------------
<S> <C> <C>
Michael D. Bick, 83,699 / 42,766 $ 0 / 0
Ph.D.
Clayton H. Duke 50,000 / 160,000 0 / 0
Robert K. Foote 123,330 / 76,670 0 / 0
- ------------------------
</TABLE>
(1) Represents payment of a car allowance and contributions to the
Company's 401(k) profit sharing plan.
(2) Mr. Duke's hire date was August 1, 1998.
(3) Determined as the difference between the closing trade price on
December 31, 1999 ($0.75/share) and the aggregate price of the options
covering such shares.
16
<PAGE>
COMPENSATION OF DIRECTORS
Non-employee directors receive $6,000 per calendar year, plus $500 for
each Board of Directors meeting attended. The Company pays all out-of-pocket
fees of attendance. In addition, non-employee directors receive 15,000
non-qualified stock options to purchase the Company's Common Stock under the
1993 Incentive Stock Option Plan per year. In addition, Price Paschall earned a
broker's fee of $145,000 in 1999 for services rendered in connection with the
sale of the BCA Division.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
In July 1999, we entered into an Executive Employment Agreement with
our Chairman, President and Chief Executive Officer, Michael D. Bick, Ph.D. The
agreement does not become effective until the earlier to occur of (i) the date
upon which a new Chief Executive Officer satisfactory to the Board of Directors
of the Company commences employment with the Company, or (ii) the date of a
change of control of the Company. When the agreement becomes effective, Dr. Bick
will no longer serve as our President and Chief Executive Officer, but will
continue to be our Chairman for a term of three years. The agreement provides
for compensation to Dr. Bick of $150,000 during each year of the term, inclusive
of a car allowance and dues to a club. Under the agreement, Dr. Bick is not
required to provide more than 50 hours of services per month, and may terminate
the agreement and receive all consideration due to him thereunder if there is a
change in control of the Company that results in a material modification to Dr.
Bick's duties under the agreement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 2000, certain
information regarding the ownership of the Company's Common Stock by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each of the Company's directors, (iii)
each named executive and (iv) all of the Company's executive officers and
directors as a group. Unless otherwise indicated, the address of each person
shown is c/o the Company, 6025 Nicolle Street, Ventura, California 93003.
References to options to purchase Common Stock are either currently exercisable
or will be exercisable within 60 days of March 31, 2000.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PERCENT OF CLASS
------------------ ----------------
<S> <C> <C>
Michael D. Bick, Ph.D. 1,079,366(1) 13.0
Biotech International, Ltd. 744,200(2) 9.0
Douglas L. Ayer 197,329(3) 2.4
Robert K. Foote 161,996(4) 2.0
N. Price Paschall 93,749(5) 1.1
Clayton H. Duke 50,000(6) *
James H. Chamberlain 32,749(7) *
All executive officers and directors
as a group (6 persons) 1,615,189(8) 19.5
- ------------------------
* Less than 1%
</TABLE>
(1) Includes 56,366 shares of Common Stock subject to options.
(2) Biotech International Limited, P.O. Box 391, Acacia Ridge Qld 4110,
Australia.
(3) Includes 197,329 shares of Common Stock subject to options held by ICP,
Inc., of which Mr. Ayer is a stockholder.
(4) Includes 136,996 shares of Common Stock subject to options.
(5) Includes 10,000 shares of Common Stock subject to a currently
exercisable warrant and 43,749 shares of Common Stock subject to
options.
17
<PAGE>
(6) Represents 10,000 shares of Common Stock subject to warrants and 40,000
shares of Common Stock subject to options.
(7) Includes 4,000 shares of Common Stock held in the Chamberlain Family
Trust, for which Mr. Chamberlain serves as trustee, and 28,749 shares
of Common Stock subject to options.
(8) Includes 503,139 shares of Common Stock subject to options and 60,000
shares of Common Stock subject to currently exercisable warrants.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no related party transactions during 1999.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) The following consolidated financial statements
of Biopool International, Inc., and subsidiaries are hereby included by
reference to Item 7:
PAGE NO.
--------
Report of Independent Auditors 21
Consolidated balance sheets as of
December 31, 1999 and 1998 22
Consolidated statements of income for the
years ended December 31, 1999 and 1998 24
Consolidated statements of stockholders'
equity for the years ended December 31,
1999 and 1998 25
Consolidated statements of cash flows for
the years ended December 31, 1999 and 1998 26
Notes to consolidated financial statements 28
(3) Listing of Exhibits
EXHIBIT NO. PAGE NO.
----------- --------
3.1 Certificate of Incorporation (1)
3.2 By Laws (1)
4.1 Shareholder Rights Plan (3)
10.1 Executive Employment Agreement of
Michael D. Bick, Ph.D. 36
10.2 1987 Stock Option Plan (1)
10.2 1993 Stock Incentive Plan (2)
21 Subsidiaries of the Registrant 43
-----------------------------------------------------------------------
(1) Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (File No. 33-20584).
(2) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994.
(3) Incorporated by reference to Registrant's Form 8-A filed June
26, 1998.
(b) Reports on Form 8-K filed during the fourth quarter of 1999:
None.
18
<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.
Biopool International, Inc.
Date: March 29, 2000 BY: /s/ Michael D. Bick
--------------------------
Michael D. Bick, Ph.D.
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Michael D. Bick
- ---------------------------- Chairman and March 29, 2000
Michael D. Bick, Ph.D. Chief Executive Officer
/s/ Robert K. Foote
- ---------------------------- Chief Financial Officer March 29, 2000
Robert K. Foote
/s/ Douglas L. Ayer
- ---------------------------- Director March 29, 2000
Douglas L. Ayer
/s/ N. Price Paschall
- ---------------------------- Director March 29, 2000
N. Price Paschall
/s/ James H. Chamberlain
- ---------------------------- Director March 29, 2000
James H. Chamberlain
19
<PAGE>
ANNUAL REPORT ON FORM 10-KSB
ITEM 13(A)(1) AND (2)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES
YEAR ENDED DECEMBER 31, 1999
BIOPOOL INTERNATIONAL, INC.
VENTURA, CALIFORNIA
20
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Biopool International, Inc.
We have audited the accompanying consolidated balance sheets of Biopool
International, Inc., as of December 31, 1999 and 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Biopool
International, Inc., at December 31, 1999 and 1998, and the consolidated results
of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
Woodland Hills, California
March 16, 2000
21
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................... $ 2,749 $ 1,012
Accounts receivable, net of
allowance for doubtful accounts
of $11,000 and $41,000 in 1999
and 1998, respectively ................... 1,770 1,332
Inventories ................................. 1,941 1,961
Prepaid expenses and other current
assets ................................... 198 320
Deferred tax benefits ....................... 109 46
Net assets of discontinued
operations ............................... 2,256 3,383
-------- --------
TOTAL CURRENT ASSETS ............................. 9,023 8,054
PROPERTY AND EQUIPMENT
Leasehold improvements ...................... 646 851
Processing and lab equipment ................ 2,493 1,934
Furniture and fixtures ...................... 414 652
-------- --------
TOTAL PROPERTY AND EQUIPMENT ..................... 3,553 3,437
Less accumulated depreciation ............... (2,427) (2,235)
-------- --------
PROPERTY AND EQUIPMENT, NET ...................... 1,126 1,202
OTHER ASSETS
Deferred tax benefits ....................... 254 511
Intangible assets, net ...................... 630 680
-------- --------
TOTAL ASSETS ..................................... $ 11,033 $ 10,447
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
22
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(continued)
<CAPTION>
December 31,
1999 1998
- --------------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .......................... $ 478 $ 355
Accrued expenses .......................... 570 627
Income taxes payable ...................... 29 --
-------- --------
TOTAL CURRENT LIABILITIES ...................... 1,077 982
DEFERRED TAX LIABILITY ......................... 122 108
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
50,000,000 shares authorized;
8,286,986 and 8,540,886 shares
issued and outstanding at
December 31, 1999 and 1998,
respectively ........................... 83 85
Additional paid-in capital ................ 10,593 10,803
Accumulated deficit ....................... (547) (1,261)
Accumulated other comprehensive
loss ................................... (295) (270)
-------- --------
TOTAL STOCKHOLDERS' EQUITY ..................... 9,834 9,357
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY .................................... $ 11,033 $ 10,447
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
23
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Year Ended December 31,
1999 1998
- --------------------------------------------------------------------------------
(in thousands except share data)
<S> <C> <C>
SALES ............................................. $ 8,842 $ 7,870
Cost of sales ..................................... 4,681 4,216
------- -------
GROSS PROFIT ...................................... 4,161 3,654
Operating expenses:
Selling, general and administrative .......... 3,113 2,751
Research and development ..................... 322 315
Restructuring costs .......................... -- 144
------- -------
TOTAL OPERATING EXPENSES .......................... 3,435 3,210
------- -------
Other (income) expenses, net ...................... (14) 9
------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES ................................. 740 435
Income tax expense (benefit) ...................... 340 (1)
------- -------
INCOME FROM CONTINUING OPERATIONS ................. 400 436
DISCONTINUED OPERATIONS:
Income (loss) from discontinued
operations - net of income tax
effect ................................... 118 (22)
Gain on disposal - net of income
tax effect ............................... 196 --
------- -------
NET INCOME ........................................ $ 714 $ 414
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic ........................................ 8,375 8,650
Effect of dilutive shares .................... 24 113
------- -------
Diluted ...................................... 8,399 8,763
======= =======
BASIC AND DILUTED EARNINGS PER SHARE
Continuing operations ........................ $ 0.05 $ 0.05
Discontinued operations ...................... 0.04 --
------- -------
Net income ................................... $ 0.09 $ 0.05
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
24
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands except share data)
<CAPTION>
Accumulated
Additional other com-
Common Stock paid-in Accumulated prehensive
Shares Amount capital deficit income (loss) Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1998 ..... 8,648,828 $ 86 $ 10,855 $ (1,675) $ (221) $ 9,045
Net income ................. -- -- -- 414 -- 414
Foreign currency translation -- -- -- -- (49) (49)
----------
Comprehensive income .... 365
Issuance of common stock ... 38,158 -- 64 -- -- 64
Repurchase of common stock . (146,100) (1) (116) -- -- (117)
- -------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 ... 8,540,886 85 10,803 (1,261) (270) 9,357
Net income ................. -- -- -- 714 -- 714
Foreign currency translation -- -- -- -- (25) (25)
----------
Comprehensive income .... 689
Repurchase of common stock . (253,900) (2) (210) -- -- (212)
- -------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999 ... 8,286,986 $ 83 $ 10,593 $ (547) $ (295) $ 9,834
===================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
25
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31,
1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations ........... $ 400 $ 436
Adjustments to reconcile income
from continuing operations to
net cash provided by continuing
operating activities:
Depreciation ............................. 467 366
Amortization ............................. 59 49
Loss on disposal ......................... 19 29
Deferred tax benefit ..................... 208 66
Changes in operating assets and
liabilities:
Accounts receivable ...................... (438) (73)
Inventories .............................. 20 (65)
Prepaid expenses and other
current assets ........................ 122 (101)
Accounts payable and accrued
expenses .............................. 95 (203)
------- -------
Net cash provided by continuing
operating activities .................. 952 504
Net cash (used in) provided by
discontinued operating
activities ............................ (1,224) 325
------- -------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES ............................ (272) 829
INVESTING ACTIVITIES
Proceeds from sale of discontinued
operations ............................ 4,452 --
Additions to property and equipment ......... (253) (239)
Proceeds from sale of equipment ............. 36 6
------- -------
Net cash provided by (used in)
continuing investing
activities ............................ 4,235 (233)
Net cash used in discontinued
investing activities .................. -- (20)
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES .................................. 4,235 (253)
Table continued next page.
</TABLE>
26
<PAGE>
<TABLE>
BIOPOOL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<CAPTION>
Year Ended December 31,
1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
FINANCING ACTIVITIES
Repayment of long-term debt ................. -- (47)
Repurchase of common stock .................. (212) (117)
Issuance of common stock .................... -- 64
------- -------
Net cash used in continuing
financing activities .................... (212) (100)
Net cash used in discontinued
financing activities .................... (1,989) (801)
------- -------
NET CASH USED IN FINANCING ACTIVITIES ............ (2,201) (901)
Effect of exchange rates ......................... (25) (49)
------- -------
NET INCREASE (DECREASE) IN CASH .................. 1,737 (374)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR ..................................... 1,012 1,386
------- -------
CASH AND CASH EQUIVALENTS, END OF YEAR ........... $ 2,749 $ 1,012
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR CONTINUING
OPERATIONS:
Interest ................................. $ 1 $ 1
Income taxes ............................. 86 104
</TABLE>
27
<PAGE>
BIOPOOL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Biopool International, Inc. ("Biopool") was incorporated in 1987 in the
state of Delaware. Biopool and its wholly-owned subsidiary, Biopool AB ("Biopool
Sweden"), a Swedish corporation, are currently engaged in the research,
development, production, and sale of test kits used to assess and diagnose
disorders of the vascular system.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include the
accounts of Biopool and its wholly-owned subsidiary. All significant
intercompany balances and transactions are eliminated in consolidation.
RECLASSIFICATION
Certain data in the prior year consolidated financial statements have
been reclassified to conform to the 1999 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.
REVENUES
Revenues are recorded on the day products are shipped from the
Company's facilities.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent highly liquid investments and which
mature within three months of date of purchase.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is generally
provided on a straight-line basis over their estimated useful lives. Leasehold
improvements are generally depreciated over their estimated useful lives or over
the period of the lease, whichever is shorter. All other assets are depreciated
over three to ten years.
28
<PAGE>
INTANGIBLES
Intangible assets primarily consist of the excess of cost over net
assets of acquired companies and is being amortized using the straight-line
method over a period of twenty years. Accumulated amortization of the Company's
intangible assets at December 31, 1999 and 1998 totaled $535,000 and $476,000,
respectively.
The Company periodically reviews its long-lived and intangible assets
to determine recoverability of these assets.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed when incurred and include
both internal research and development costs and payments to third parties.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (see Footnote 9).
FOREIGN CURRENCY TRANSLATION
Biopool Sweden assets and liabilities are translated into U.S. dollars
at the year-end exchange rate. The amounts in the consolidated statements of
income are translated at the weighted average exchange rate during the year.
Cumulative translation adjustments are shown separately in stockholders' equity
and, accordingly, do not impact the results of operations.
Exchange adjustments resulting from the foreign currency transactions
are recognized in net earnings and are generally insignificant.
CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of temporary cash investments
and trade receivables. At December 31, 1999, substantially all cash and cash
equivalents were on deposit with two financial institutions. Concentrations of
credit risk with respect to trade receivables are limited due to the large
number of customers comprising the Company's customer base and their dispersion
across many different geographic areas. Two customers, Instrumentation
Laboratory and Sigma Chemical, had accounts receivable slightly greater than 10%
of the net balance due at December 31, 1999. Generally, the Company does not
require collateral or other security to support customer receivables.
The Company is dependent upon third party distributors for a material
portion of our international sales. If we lose any material distributor, our
business could be materially adversely affected.
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.
Options and warrants to purchase 1,245,391 and 984,365 shares with
exercise prices greater than the average market prices of common stock were
outstanding during the years ended December 31, 1999 and 1998, respectively.
These options and warrants were excluded from the respective computations of
diluted earnings per share because their effect would be anti-dilutive.
29
<PAGE>
ACCOUNTING FOR STOCK BASED COMPENSATION
Stock option grants are set at the closing price of the Company's
common stock on the day prior to the date of grant. Therefore, under the
principles of APB Opinion No. 25, the Company does not recognize compensation
expense associated with the grant of stock options. SFAS No. 123, "Accounting
for Stock- Based Compensation," requires the use of option valuation models to
provide supplemental information regarding options granted after 1994. Proforma
results of operations which would have resulted as a result of recognizing the
fair value of such grants are disclosed under Footnote 7.
2. DISCONTINUED OPERATIONS
In April 1999, the Company decided to discontinue its blood serology
business, BCA, Division of Biopool International ("BCA"). The Company decided to
sell this business in order to concentrate on its core businesses that
manufacture hemostasis and fibrinolysis products. On April 30, 1999, the Company
consummated the sale of certain business assets of BCA for $4.45 million in
cash. These assets consisted primarily of inventory and accounts receivable. BCA
ceased operations to the Company's benefit effective May 1, 1999, but continued
to convert certain inventory items on behalf of the buyer through June 30, 1999.
The Company recorded a gain on the disposal of BCA of $265,000, or $196,000
after applicable income taxes. In connection with the sale of certain assets of
BCA, the Company paid brokers fees of $145,000 to a company owned by a member of
the Board of Directors and such expense is included in the net gain on disposal
of discontinued operations. At December 31, 1999, net assets of discontinued
operations consisted primarily of the BCA property and plant amounting to $2.1
million. The property and plant are currently in escrow, which is expected to
close by April 30, 2000.
<TABLE>
A summary of the results of discontinued operations and net gain on
disposal is as follows (in thousands):
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998
-------- --------
<S> <C> <C>
Revenues $ 2,489 $ 7,114
======== ========
Income (loss) before taxes 15 (27)
Income tax benefit 103 5
-------- --------
Income (loss) from discontinued
operations 118 (22)
Net gain on disposal, net of income
tax effect 196 --
-------- --------
Net income (loss) from discontinued
operations $ 314 $ (22)
======== ========
</TABLE>
The income tax benefit for discontinued operations relates to local tax
credits taken in the years indicated.
A portion of the proceeds of the sale were used to pay off a note
payable of $1.8 million.
3. INVENTORIES (in thousands)
<TABLE>
Inventories consist of the following:
<CAPTION>
DECEMBER 31,
1999 1998
-------- --------
<S> <C> <C>
Raw materials $ 710 $ 580
Work-in-process 646 678
Finished goods 585 703
-------- --------
$ 1,941 $ 1,961
======== ========
</TABLE>
30
<PAGE>
4. REVOLVING LINE OF CREDIT
As of December 31, 1999, the Company had a line of credit totaling
$500,000, which was unused and available.
5. COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases certain equipment and facilities under
non-cancellable operating leases. Lease expense for 1999 and 1998 was
approximately $240,000 and $236,000, respectively. At December 31, 1999,
approximate minimum annual lease commitments were $247,000 in 2000 and 2001,
$238,000 in 2002, $137,000 in 2003 and 2004, and none thereafter.
ROYALTIES
The Company has various agreements requiring royalty payments on
certain products the Company currently commercializes. Royalties range from 3%
to 25% of sales of the related products. Royalty expense amounted to $62,000 and
$93,000 in 1999 and 1998, respectively.
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.
6. EQUITY
SHAREHOLDER RIGHTS PLAN
On June 3, 1998, the Company declared a dividend of one common stock
purchase right for each of the Company's issued and outstanding shares of common
stock. The purchase rights are subject to the terms and conditions of the Right
Agreement dated June 12, 1998, filed with the Securities and Exchange Commission
on June 26, 1998, on Form 8-A. The purchase rights are not represented by
separate certificates, but, instead, initially will be evidenced by the
certificates representing outstanding common stock.
REPURCHASE OF COMMON STOCK
Pursuant to the Company's stock repurchase program announced June 5,
1998, the Company repurchased a total of 253,900 and 146,100 shares of common
stock on the open market during 1999 and 1998, respectively, at average purchase
prices of $0.83 and $0.81 per share, respectively.
7. STOCK OPTION PLANS
The Company has two stock option plans (the "Plans") for the benefit of
employees, officers, directors, and consultants of the Company. Under the Plans,
a total of 2,282,549 shares of the Company's common stock were reserved for
issuance. Options granted under the Plans are generally exercisable for a period
of ten years from the date of grant at an exercise price that is not less than
the last trade value of the common stock on the day preceding the date of grant.
Options granted under the Plans generally vest over a one- to four-year period
from the date of the grant.
31
<PAGE>
<TABLE>
Stock option activity for 1998 and 1999 was as follows:
<CAPTION>
SHARES WEIGHTED AVERAGE
OUTSTANDING PRICE RANGE EXERCISE PRICE
----------- ------------ ----------------
<S> <C> <C> <C>
BALANCE AT JANUARY 1, 1998 1,410,821 $0.94 - 3.13 1.78
Granted 621,693 0.63 - 2.25 1.22
Exercised (29,611) 0.94 - 1.44 1.27
Cancelled (294,652) 0.94 - 3.13 2.04
----------
BALANCE AT DECEMBER 31, 1998 1,708,251 0.63 - 2.68 1.54
Granted 156,634 0.94 - 0.94 0.94
Exercised -- -- --
Cancelled (599,494) 0.72 - 2.50 1.49
----------
BALANCE AT DECEMBER 31, 1999 1,265,391 0.63 - 2.68 1.49
==========
</TABLE>
At December 31, 1999, 672,000 shares were available for future grants
under the Plans.
The weighted average remaining contractual life of outstanding options
at December 31, 1999, was 7.2 years. At December 31, 1999 and 1998,
respectively, there were 773,717 and 833,718 options exercisable with weighted
average exercise prices of $1.53 and $1.50.
Pro forma information regarding net income and earnings per share shown
below was determined as if the Company had accounted for its employee stock
options under the fair value method of that statement. The fair value of the
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted average assumptions: risk-free interest rates
of 5% for 1999 and 5.5% in 1998; dividend yields of 0% for 1999 and 1998;
volatility factors of the expected market price of the Company's common stock of
66% for 1999 and 61% for 1998; and expected life of the options of one to five
years as grouped by specific employee classifications. These assumptions
resulted in weighted average fair values of $0.37 and $0.27 per share for stock
options granted in 1999 and 1998, respectively.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options. The Company's employee stock
options have characteristics significantly different from those of traded
options such as vesting restrictions and extremely limited transferability.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized over the option vesting periods. The pro forma effect on
net income through 1998 is not representative of the pro forma effect on net
income in future years because it does not take into consideration pro forma
compensation expense related to grants made prior to 1995. In 1999, however, the
pro forma results include a full four years worth of option grants. The
Company's pro forma information is as follows (in thousands except share data):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998
------- -------
<S> <C> <C>
Pro forma net income $ 586 $ 270
Pro forma earnings per share
Basic 0.07 0.03
Diluted 0.07 0.03
</TABLE>
As of December 31, 1999, the Company had 110,000 warrants to purchase
common stock outstanding and exercisable for prices ranging from $1.30 to $3.00
with a weighted average exercise price of $1.95 per share.
32
<PAGE>
8. 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, while 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 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>
Eliminations
Biopool Biopool and Consoli-
International Sweden Corporate dated
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Sales ....................... $ 6,979 $ 3,023 $ (1,160) $ 8,842
Less intercompany ........... (461) (699) 1,160 --
-------- -------- -------- --------
Sales to unafilliated
customers ............... 6,518 2,324 -- 8,842
Interest revenue ............ 64 -- 64
Depreciation and
amortization ............ 348 178 526
Income from continuing
operations .............. 177 241 (18) 400
Total assets ................ 8,772 2,369 (108) 11,033
Long-lived assets ........... 783 343 1,126
Expenditures for long-
lived assets ............ 65 188 253
- --------------------------------------------------------------------------------
1998
Sales ....................... 6,273 2,822 (1,225) 7,870
Less intercompany ........... (685) (540) 1,225 --
-------- -------- -------- --------
Sales to unaffiliated
customers ............... 5,588 2,282 -- 7,870
Depreciation and
amortization ............ 315 100 415
Income from continuing
operations .............. 169 281 (14) 436
Total assets ................ 8,381 2,066 10,447
Long-lived assets ........... 849 353 1,202
Expenditures for long-
lived assets ............ 127 112 239
- --------------------------------------------------------------------------------
</TABLE>
Product sales to affiliates are generally priced at cost plus 30%.
<TABLE>
Information regarding the Company's sales by geographic locations is as
follows:
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
United States $ 5,127 $ 4,385
Western Europe 2,355 2,479
Latin America 513 371
Asia/Pacific Region 428 341
Other 419 294
--------- ---------
Total $ 8,842 $ 7,870
========= =========
</TABLE>
33
<PAGE>
9. INCOME TAXES
<TABLE>
The provision for income taxes is composed of the following (in
thousands):
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998
--------- ---------
<S> <C> <C>
Current:
Federal $ 11 $ (21)
State 11 10
Foreign 78 83
--------- ---------
100 72
Deferred 240 (73)
--------- ---------
Net expense (benefit) $ 340 $ (1)
========= =========
</TABLE>
<TABLE>
The reconciliation of income tax computed at the U.S. Federal Statutory
rates to the income tax provision is as follows:
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998
--------- ---------
<S> <C> <C>
Tax at U.S. statutory rate (34%) $ 252 $ 148
State income tax 31 7
Permanent differences 43 (44)
Foreign tax effect (19) (6)
Other 33 (106)
--------- ---------
Net expense (benefit) $ 340 $ (1)
========= =========
</TABLE>
<TABLE>
The components of the Company's deferred tax assets and liabilities at
December 31, are as follows:
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carry-
forwards $ 224 $ 474
Valuation reserve 51 9
Other 88 74
--------- ---------
363 557
Deferred tax liabilities:
Foreign (122) (108)
--------- ---------
Deferred taxes, net benefit $ 241 $ 449
========= =========
</TABLE>
Our effective tax rate for 1999 was 46%. The difference between our
effective tax rate for 1999 and the 34% federal statutory tax rate was primarily
due to the effects of state and foreign income taxes, non- deductible goodwill
amortization as well as the taxable dividend treatment of the transfer of
certain assets from our former Canadian operations, the effect of which is
included in "Other" above. Our 1998 income tax benefit primarily represents
state franchise and foreign government income tax expense, which was offset by
the estimated future benefit of deferred taxes generated during 1998, and a
decrease in deferred taxes payable, which resulted from changes in the Company's
estimates as to certain tax liabilities.
Biopool Sweden files separate income tax returns in Sweden. At December
31, 1999, the Company had available net operating loss carryforwards of
approximately $657,000 in the United States. The United States carryforwards
expire in varying amounts through 2010. Under section 382 of the Internal
Revenue Code, the utilization of the federal net operating loss carryforwards
may be limited based on changes in the percentage of ownership in the Company.
The pretax income of the Company's foreign subsidiaries was
approximately $327,000 and $268,000 at December 31, 1999 and 1998, respectively.
34
<PAGE>
Undistributed earnings of the Company's foreign subsidiaries amounted
to approximately $927,000 at December 31, 1999. Those earnings are considered to
be indefinitely reinvested and, accordingly, no provision for U.S. federal and
state income taxes has been provided thereon.
10. RETIREMENT PLAN
The Company has a defined contribution plan for its domestic operations
under which employees who have satisfied minimum age and service requirements
may defer compensation pursuant to Section 401(k) of the Internal Revenue Code.
Participants in the plan may contribute between 1% and 12% of their pay, subject
to the limitations placed by the IRS. The Company, at its discretion, may match
a portion of the amount contributed by the employee. The Company contributions
are offset by forfeitures of unvested balances for terminated employees. The net
Company contributions were $33,000 and $11,000 in 1999 and 1998, respectively.
11. RESTRUCTURING CHARGES
In December 1997, the Company announced the restructuring of its
operations by closing its facilities in Canada and consolidating the operations
of its subsidiary, Biopool Canada, with its operations conducted at the
Company's facilities in Ventura, California. During 1998, the Company incurred
$144,000 relating to transition costs and made cash payments of $340,000
($106,000 for termination benefits) and disposal of $113,000 in assets. At
December 31, 1998, the remaining restructuring liability of $33,000 related to
lease termination costs. During 1999, the Company made cash payments of $33,000
and no further amounts were incurred in connection with the closure of its
facilities in Canada.
35
EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "AGREEMENT") is made and
entered into by and between Biopool International, Inc., a Delaware corporation
(the "COMPANY") and Michael D. Bick, Ph.D. ("EXECUTIVE"), as of this 7th day of
July, 1999, to be effective on the earlier to occur of (i) the date upon which a
Chief Executive Officer satisfactory to the Board of Directors of the Company
commences employment with the Company, or (ii) the date of a Change of Control
(as defined in Section 2(f), below) (the "EFFECTIVE DATE"). Prior to the
Effective Date, the terms and conditions of Executive's employment shall
continue on the same basis as that which existed prior to the date of this
Agreement.
1.1 Upon the terms and subject to the conditions set forth in
this Agreement, the Company hereby engages and employs Executive as an officer
of the Company, with the title and designation of Chairman of the Board.
Executive hereby accepts such engagement and employment.
1.2 Executive shall report directly to the Chief Executive
Officer of the Company, or in the absence of a Chief Executive Officer, to the
Board of Directors (the "Board"), and Executive's duties and responsibilities
shall be those which are normally and customarily vested in the office of
Chairman of the Board of a corporation, subject to the supervision, direction
and control of the Chief Executive Officer of the Company. In particular,
Executive's duties shall include the following services and performance:
(a) Chair all Board meetings, and work together
with the CEO to develop an agenda for Board meetings;
(b) Attend meetings, and engage in discussions
at the reasonable request of the Chief Executive Officer relating to strategic
initiatives of the Company, including but not limited to, capital raising
transactions, partnering, reorganizations, mergers or business combinations,
strategic planning, research and product development, etc.
(c) If requested, appear and speak at Annual
Meetings of Shareholders;
(d) Assist in the transition of management to
the new Chief Executive Officer;
(e) Refrain from engaging in any Company
business activity which the Chief Executive Officer reasonably requests; and
(f) At the reasonable request of the Board,
perform any special project, which is mutually agreeable to the Board and the
Executive.
1.3 Executive agrees to devote such amount of his business
time, energies, skills, efforts and attention to his duties hereunder as
Executive reasonably believes are required to fulfill such duties. During the
term hereof, Executive shall not, without the prior written consent of the
Company, which consent may be withheld for any reason or for no reason, render
any services to any other person or business entity who or which is engaged in
any segment of the hemostasis business which, in the reasonable judgment of the
Board, competes with any part of the Company's business. Notwithstanding the
foregoing, Executive shall not be obligated to devote more than 50 hours per
month to the performance of services hereunder. Executive will use his best
efforts and abilities faithfully and diligently to carry out his obligations
hereunder and to act in accordance with the Company's business interests.
36
<PAGE>
1.4 Except for routine travel incident to the business of the
Company, Executive shall perform his duties and obligations under this Agreement
principally in Ventura, California, or such other location in Ventura or Los
Angeles County, California, as the Board may from time to time determine.
2. TERM OF EMPLOYMENT AND TERMINATION. Executive's employment
pursuant to this Agreement shall be for a three-year period commencing on the
Effective Date, and shall terminate on the earliest to occur of the following:
(a) The close of business on the date which is three
years from the Effective Date;
(b) The death of Executive;
(c) Delivery to Executive of written notice of termination by
the Company if Executive shall suffer a physical or mental disability, which
renders Executive, in the reasonable judgment of the Board, unable to perform
his duties and obligations under this Agreement for 90 days in any 12-month
period;
(d) Delivery to Executive of written notice of termination by
the Company "for cause," by reason of: (i) any act or omission knowingly
undertaken or omitted by Executive with the intent of causing damage to the
Company, its properties, assets or business or its stockholders, officers,
directors or employees; (ii) any act of Executive involving a material personal
profit to Executive, including, without limitation, any fraud, misappropriation
or embezzlement, involving properties, assets or funds of the Company or any of
its subsidiaries; (iii) Executive's consistent failure to perform his normal
duties or any obligation under any provision of this Agreement, in either case,
as directed by the Board following written notice of such failure and an
opportunity of not less than 30 days to cure such breach; or (iv) conviction of,
or pleading NOLO CONTENDERE to, (A) any crime or offense involving monies or
other property of the Company; (B) any felony offense; or (C) any crime of moral
turpitude;
(e) Delivery to Executive of written notice of termination by
the Company "without cause, " in which case the Company shall pay Executive the
balance of compensation owed under this Agreement, as specified in Section 3
below;
(f) Delivery to the Company of written notice of termination
by Executive upon the occurrence of a "change of control; " but only if such
change of control results in Executive having to perform services for the
Company that are materially different from the services performed by Executive
prior to the change of control. Promptly following any change of control, the
Company shall provide written notice of such fact to Executive. Executive shall
have a period of 90 days following his receipt of such notice to elect to notify
the Company that Executive is treating such change of control as requiring a
material change in his duties, and therefore, a termination of this Agreement.
For purposes of this Agreement, the following events
shall constitute a "change of control":
(i) Any person or entity (or group of related
persons or entities acting in concert) shall acquire shares of capital stock of
the Company entitled to exercise 50% or more of the total voting power
represented by all shares of capital stock of the Company then outstanding; or
(ii) The Company shall sell or otherwise transfer
all or substantially all of its assets or merge, consolidate or reorganize with
any other corporation or entity, as the result of which less than 50% of the
total voting power represented by the capital stock or other equity interests of
the corporation or entity to which the Company's assets are sold or transferred
or surviving such merger, consolidation or reorganization shall be held by the
persons and entities who were holders of common stock of the Company immediately
prior to such transaction; or
(iii) The Company shall issue or otherwise than on
a pro rata basis additional shares of capital stock representing (after giving
effect to such issuance) more than 50% of the total voting power of the Company;
or
37
<PAGE>
(iv) The persons who were the directors of the
Company as of the Effective Date shall cease to comprise a majority of the Board
of Directors of the Company.
3. COMPENSATION; EXECUTIVE BENEFIT PLANS.
3.1 The Company shall pay to Executive a base salary at an
annual rate of $140,400 during each contract year of this Agreement. The base
salary shall be payable in installments throughout the year in the same manner
and at the same times the Company pays base salaries to other executive officers
of the Company. In the event that Executive's employment is terminated pursuant
to Section 2(e) or Section 2(f), above, the Company shall continue to pay to
Executive all of the compensation provided for in this Section 3 until the
expiration of the term of this Agreement.
3.2 Executive shall be entitled to reimbursement from the
Company for the reasonable costs and expenses which he incurs in connection with
the performance of his duties and obligations under this Agreement in a manner
consistent with the Company's practices and policies as adopted or approved from
time to time by the Board for executive officers. Executive shall be entitled to
reimbursement for business-class travel expenses for any flight in excess of
1,000 miles.
3.3 The Company shall provide Executive with a monthly
automobile allowance of $420, and shall pay an aggregate of $380 per month for
Executive's membership in one or more country, professional or social clubs.
3.4 The Company may deduct from any compensation payable to
Executive the minimum amounts sufficient to cover applicable federal, state
and/or local income tax withholding, old-age and survivors' and other social
security payments, state disability and other insurance premiums and payments.
4. OTHER BENEFITS. During the term of his employment hereunder,
Executive shall be eligible to participate in all operative employee benefit and
welfare plans of the Company then in effect from time to time and in respect of
which all executive officers of the Company generally are entitled to
participate ("COMPANY EXECUTIVE BENEFIT PLANS"), including, to the extent then
in effect, 401(k), group life, medical, disability and other insurance plans,
all on the same basis applicable to employees of the Company whose level of
management and authority is comparable to that of Executive.
5. CONFIDENTIALITY OF PROPRIETARY INFORMATION AND MATERIAL.
5.1 INDUSTRIAL PROPERTY RIGHTS. For the purpose of this
Agreement, "INDUSTRIAL PROPERTY RIGHTS" shall mean all of the Company's patents,
trademarks, trade names, inventions, copyrights, know- how or trade secrets, now
in existence or hereafter developed or acquired by the Company or for its use,
relating to any and all products which are developed, formulated and/or
manufactured by the Company.
5.2 TRADE SECRETS. For the purpose of this Agreement, "TRADE
SECRETS" shall mean any formula, pattern, device, or compilation of information
which is used in the Company's business which gives the Company an opportunity
to obtain an advantage over its competitors who do not know and/or do not use
it. This term includes, but is not limited to, information relating to the
marketing of the Company's products, including price lists, pricing information,
customer lists, customer names, the particular needs of customers, information
relating to their desirability as customers, financial information, intangible
property and other such information which is not in the public domain.
5.3 TECHNICAL DATA. For the purpose of this Agreement,
"TECHNICAL DATA" shall mean all information of the Company in written, graphic
or tangible form relating to any and all products which are developed,
formulated and/or manufactured by the Company, as such information exists as of
the date of this Agreement or is developed by the Company during the term
hereof.
38
<PAGE>
5.4 PROPRIETARY INFORMATION. For the purpose of this
Agreement, "PROPRIETARY INFORMATION" shall mean all of the Company's Industrial
Property Rights, Trade Secrets and Technical Data. Proprietary Information shall
not include any information which (i) was lawfully in the possession of
Executive prior to Executive's employment with the Company, (ii) may be obtained
by a reasonably diligent businessperson from readily available and public
sources of information, (iii) is lawfully disclosed to Executive after
termination of Executive's employment by a third party which does not have an
obligation to the Company to keep such information confidential, or (iv) is
independently developed by Executive after termination of Executive's employment
without utilizing any of the Company's Proprietary Information.
5.5 AGREEMENT NOT TO COPY OR USE. Executive agrees, at any
time during the term of his employment and for a period of ten years thereafter,
not to copy, use or disclose (except as required by law after first notifying
the Company and giving it an opportunity to object) any Proprietary Information
without the Company's prior written permission. The Company may withhold such
permission as a matter within its sole discretion during the term of this
Agreement and thereafter.
6. RETURN OF CORPORATE PROPERTY AND TRADE SECRETS. Upon any termination
of this Agreement, Executive shall turn over to the Company all property,
writings or documents then in his possession or custody belonging to or relating
to the affairs of the Company or comprising or relating to any Proprietary
Information.
7. DISCOVERIES AND INVENTIONS.
7.1 DISCLOSURE. Executive will promptly disclose in writing to
the Company complete information concerning each and every invention, discovery,
improvement, device, design, apparatus, practice, process, method, product or
work of authorship, whether patentable or not, made, developed, perfected,
devised, conceived or first reduced to practice by Executive, whether or not
during regular working hours (hereinafter referred to as "Developments"), either
solely or in collaboration with others, (a) prior to the term of this Agreement
while working for the Company, (b) during the term of this Agreement or (c)
within six months after the term of this Agreement, if relating either directly
or indirectly to the business, products, practices, techniques or confidential
information of the Company.
7.2 ASSIGNMENT. Executive, to the extent that he has the legal
right to do so, hereby acknowledges that any and all Developments are the
property of the Company and hereby assigns and agrees to assign to the Company
any and all of Executive's right, title and interest in and to any and all of
such Developments; PROVIDED, HOWEVER, that, in accordance with California Labor
Code Sections 2870 and 2872, the provisions of this Section 7.2 shall not apply
to any Development that the Executive developed entirely on his own time without
using the Company's equipment, supplies, facilities or trade secret information
except for those Developments that either:
(a) Relate at the time of conception or
reduction to practice of the Development to the Company's business, or actual or
demonstrably anticipated research or development of the Company; or
(b) Result from any work performed by Executive
for the Company.
7.3 ASSISTANCE OF EXECUTIVE. Upon request and without further
compensation therefor, but at no expense to Executive, and whether during the
term of this Agreement or thereafter, Executive will do all reasonable lawful
acts, including, but not limited to, the execution of papers and lawful oaths
and the giving of testimony, that, in the reasonable opinion of the Company, its
successors and assigns, may be necessary or desirable in obtaining, sustaining,
reissuing, extending and enforcing United States and foreign Letters Patent,
including, but not limited to, design patents, on any and all Developments and
for perfecting, affirming and recording the Company's complete ownership and
title thereto, subject to the proviso in Section 7.2 hereof, and Executive will
otherwise reasonably cooperate in all proceedings and matters relating thereto.
39
<PAGE>
7.4 RECORDS. Executive will keep complete and accurate
accounts, notes, data and records of all Developments in the manner and form
requested by the Company. Such accounts, notes, data and records shall be the
property of the Company, subject to the proviso in Section 7.2 hereof, and, upon
request by the Company, Executive will promptly surrender the same to it or, if
not previously surrendered upon its request or otherwise, Executive will
surrender the same, and all copies thereof, to the Company upon the conclusion
of his employment.
7.5 OBLIGATIONS, RESTRICTIONS AND LIMITATIONS. Executive
understands that the Company may enter into agreements or arrangements with
agencies of the United States Government and that the Company may be subject to
laws and regulations which impose obligations, restrictions and limitations on
it with respect to inventions and patents which may be acquired by it or which
may be conceived or developed by employees, consultants or other agents
rendering services to it. Executive agrees that he shall be bound by all such
obligations, restrictions and limitations applicable to any such invention
conceived or developed by him during the term of this Agreement and shall take
any and all further action, which may be required to discharge such obligations
and to comply with such restrictions and limitations.
8. NON-SOLICITATION COVENANT.
8.6 NONSOLICITATION AND NONINTERFERENCE. During the term of
this Agreement and for a period of two years thereafter, Executive shall not (a)
induce, attempt to induce any employee of the Company to leave the employ of the
Company or in any way interfere adversely with the relationship between any such
employee and the Company, (b) induce or attempt to induce any employee of the
Company to work for, render services or provide advice to or supply confidential
business information or trade secrets of the Company to any third person, firm
or corporation, (c) hire any employee of the Company to work for, render
services or provide advice to any third person, firm or corporation, or (d)
induce or attempt to induce any customer, supplier, licensee, licensor or other
business relation of the Company to cease doing business with the Company or in
any way interfere with the relationship between any such customer, supplier,
licensee, licensor or other business relation and the Company.
8.7 INDIRECT SOLICITATION. Executive agrees that, during the
term of this Agreement and the period covered by Section 8.1 hereof, he will
not, directly or indirectly, assist or encourage any other person in carrying
out, directly or indirectly, any activity that would be prohibited by the
provisions of Section 8.1 if such activity were carried out by Executive, either
directly or indirectly; and, in particular, Executive agrees that he will not,
directly or indirectly, induce any employee of the Company to carry out,
directly or indirectly, any such activity.
9. INJUNCTIVE RELIEF. Executive hereby recognizes, acknowledges and
agrees that in the event of any breach by Executive of any of his covenants,
agreements, duties or obligations contained in Sections 5, 6, 7 and 8 of this
Agreement, the Company would suffer great and irreparable harm, injury and
damage, the Company would encounter extreme difficulty in attempting to prove
the actual amount of damages suffered by the Company as a result of such breach,
and the Company would not be reasonably or adequately compensated in damages in
any action at law. Executive therefore covenants and agrees that, in addition to
any other remedy the Company may have at law, in equity, by statute or
otherwise, in the event of any breach by Executive of any of his covenants,
agreements, duties or obligations contained in Sections 5, 6, 7 and 8 of this
Agreement, the Company shall be entitled to seek and receive temporary,
preliminary and permanent injunctive and other equitable relief from any court
of competent jurisdiction to enforce any of the rights of the Company, or any of
the covenants, agreements, duties or obligations of Executive hereunder, and/or
otherwise to prevent the violation of any of the terms or provisions hereof, all
without the necessity of proving the amount of any actual damage to the Company
or any affiliate thereof resulting therefrom; PROVIDED, HOWEVER, that nothing
contained in this Section 9 shall be deemed or construed in any manner
whatsoever as a waiver by the Company of any of the rights which the Company may
have against Executive at law, in equity, by statute or otherwise arising out
of, in connection with or resulting from the breach by Executive of any of his
covenants, agreements, duties or obligations hereunder.
40
<PAGE>
10. MISCELLANEOUS.
10.8 NOTICES. All notices, requests and other communications
(collectively, "Notices") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service or by United States first class,
registered or certified mail (return receipt requested), postage prepaid,
addressed to the party at the address set forth below:
If to Company:
Biopool International
6025 Nicolle Street
Ventura, California 93003
Attn: Board of Directors
If to Executive:
Michael D. Bick, Ph.D.
1341 Beachmont
Ventura, California 93001
Any Notice shall be deemed duly given when received by the addressee thereof,
provided that any Notice sent by registered or certified mail shall be deemed to
have been duly given three days from date of deposit in the United States mails,
unless sooner received. Either party may from time to time change its address
for further Notices hereunder by giving notice to the other party in the manner
prescribed in this section.
10.9 ENTIRE AGREEMENT. This Agreement contains the sole and
entire agreement and understanding of the parties with respect to the entire
subject matter of this Agreement, and any and all prior discussions,
negotiations, commitments and understandings, whether oral or otherwise, related
to the subject matter of this Agreement are hereby merged herein. No
representations, oral or otherwise, express or implied, other than those
contained in this Agreement have been relied upon by any party to this
Agreement.
10.10 ATTORNEYS' FEES. If any action, suit or other proceeding
is instituted to remedy, prevent or obtain relief from a default in the
performance by any party of its obligations under this Agreement, the prevailing
party shall recover all of such party's costs and reasonable attorneys' fees
incurred in each and every such action, suit or other proceeding, including any
and all appeals or petitions therefrom.
10.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
10.12 CAPTIONS. The various captions of this Agreement are for
reference only and shall not be considered or referred to in resolving questions
of interpretation of this Agreement.
10.13 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
10.14 BUSINESS DAY. If the last day permissible for delivery
of any Notice under any provision of this Agreement, or for the performance of
any obligation under this Agreement, shall be other than a business day, such
last day for such Notice or performance shall be extended to the next following
business day (PROVIDED, HOWEVER, under no circumstances shall this provision be
construed to extend the date of termination of this Agreement).
41
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
COMPANY: EXECUTIVE:
BIOPOOL INTERNATIONAL, INC.
By: /S/ N. PRICE PASCHALL /S/ MICHAEL D. BICK, PH.D.
------------------------------------- --------------------------
N. Price Paschall, Michael D. Bick, Ph.D.
Director
By: /S/ DOUGLAS AYER
-------------------------------------
Douglas Ayer,
Director
By: /S/ JAMES H. CHAMBERLAIN
-------------------------------------
James H. Chamberlain,
Director
42
EXHIBIT 21
BIOPOOL INTERNATIONAL, INC.
Subsidiary of the Registrant
Biopool AB ("Biopool Sweden")
S-903 47 Umea, Sweden
43
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