<PAGE> 1
FORM 10-Q SB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JULY 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ________
Commission File No. 33-245-66-A
BIO-LOK INTERNATIONAL INC.
--------------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 65-0317138
(State or other jurisdiction of (IRS Employee
incorporation or organization) Identification No.)
312 S. MILITARY TRAIL
DEERFIELD BEACH, FLORIDA 33442
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code (954) 698-9998
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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 preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock.
Class of Common Stock Outstanding at July 31, 1998
--------------------- ----------------------------
$.01 par value 4,099,802 shares
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BIO-LOK INTERNATIONAL INC.
Index
Part I. Financial Information
<TABLE>
<CAPTION>
Page #
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income
Three and Nine months ended July 31, 1998 and 1997 3
Condensed Consolidated Balance Sheets for
July 31, 1998 and October 31, 1997 4
Condensed Consolidated Statements of Cash Flows
Nine months ended July 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 6
Results of Operations 6
Financial Condition 7
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIO-LOK INTERNATIONAL INC.
Condensed Operating Results (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
($ in `000) July 31, July 31,
----------------------------- -----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 342 $ 403 $ 1,114 $ 1,102
Cost of Goods Sold 117 147 351 357
----------- ----------- ----------- -----------
GROSS PROFIT 225 256 763 745
Selling 62 84 238 222
Admin. & General Exp 144 171 446 461
----------- ----------- ----------- -----------
206 255 684 685
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 19 1 79 62
Other (Income) & Expense 22 (102) 71 (731)
----------- ----------- ----------- -----------
Income before Taxes (3) 103 8 793
Income Taxes 0 0 1 0
----------- ----------- ----------- -----------
NET INCOME (loss) $ (3) $ 103 $ 7 $ 793
=========== =========== =========== ===========
Net Income Available to
Common Share Owners $ (3) $ 103 $ 7 $ 793
=========== =========== =========== ===========
Net Income per Common Share $ $ $ $
=========== =========== =========== ===========
Dividends per Common Share $ -0- $ -0- $ -0- $ -0-
=========== =========== =========== ===========
Average Common Shares
Outstanding (re-cast
for 10 to 1 reverse split) 4,099,802 1,695,102 3,849,596 1,526,997
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
BIO-LOK INTERNATIONAL INC.
Condensed Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
July 31, October 31,
1998 1997
-------- -----------
ASSETS ('000's) ('000's)
<S> <C> <C>
Current Assets
Cash $ 9 $ 4
Accounts Receivable (Net) 511 490
Inventory 1,145 1,163
Other Current Assets 0 20
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Total Current Assets 1,665 1,677
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Net Machinery & Equipment 266 321
Investment 74 -0-
Other Assets 57 15
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Total Other Assets 397 336
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TOTAL ASSETS $ 2,062 $ 2,013
======= =======
LIABILITIES & EQUITY
Current Liabilities
Revolving Loan Payable $ 365 $ 247
Accounts Payable 88 141
Other Payables 71 0
Accrued Expenses 2 15
Current Portion of LTD 170 171
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Total Current Liabilities 696 574
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A/P Plan Pymts 436 567
Other Long Term Debt 127 76
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Long Term Debt 563 643
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Total Liabilities 1,259 1,217
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Equity
Common Stock - authorized
7,000,000 par value $.01;
outstanding 4,099,802 and
3,474,287 shares respectively; 41 35
Paid-in Capital 1,962 1,962
Retained Earnings (1,207) (1,201)
Retained Earnings - CY 7 0
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Total Equity 803 796
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TOTAL LIABILITIES & EQUITY $ 2,062 $ 2,013
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
BIO-LOK INTERNATIONAL INC.
Condensed Statement of Cash Flow (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
July 31,
---------------------
1998 1997
-------- -------
(000's) (000's)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 7 $ 793
Depreciation 62 78
Change in Operating Assets & Liabilities (25) (1,519)
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Net Cash Provided by Operating 44 (658)
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FROM INVESTING ACTIVITIES:
Property, Plant & Equipment (6) 136
Decrease in Long Term Debt (79) 189
Invest. in Subsidiaries (73) 0
Proceeds from Issue of Common Stock (62) 0
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Net Cash Used for Investing Activities (220) 325
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FROM FINANCING ACTIVITIES:
Revolving Loan 119 136
Issuance of Debt to Shareholder -0- 175
Common Stock Issued 62 12
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Net Cash Used for Financing Activities 181 323
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NET INCREASE (DECREASE) IN CASH $ 5 $ 0
Cash - Beginning of Period 4 1
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Cash - End of Period $ 9 $ 1
======= =======
Interest Paid $ 71 $ 31
Income Taxes Paid $ -0- $ -0-
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
BIO-LOK INTERNATIONAL INC.
Notes to Condensed Financial Statements
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The financial statement for 1998 consists of all the accounts of Bio-Lok
International Inc. ("BLII"). Information provided for common stock shares
outstanding have been recast to reflect the 10 to 1 reverse split effected
7/20/98 as approved by the Board of Directors and Shareholders vote as a part of
the 1998 Annual Stockholders Meeting held on April 22, 1998.
NOTE B - NATURE OF BUSINESS
BLII is a manufacturer and distributor both domestic and internationally of
precision dental implants, related prosthetics, associated tools, devices,
irrigated drills, and purchased equipment for resale to the dental market.
Revenues are attributable to the manufacturing operation, distribution
agreements negotiated, marketing efforts of the Company, and are recorded when
the goods are shipped.
NOTE C - INVENTORIES
Inventories are stated at average cost. Inventories at July 31, 1998 and October
31, 1997 consisted of the following:
<TABLE>
<CAPTION>
July 31, 1998 October 31, 1997
------------- ----------------
<S> <C> <C>
Raw Materials & Supplies $ 10,543 $ 31,748
Consumable Tools 35,000 35,000
Work in Process 355,147 445,340
Finished Goods 744,418 650,957
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$ 1,145,108 $ 1,163,045
============= ================
</TABLE>
Inventory reflects a net decrease for the period of $18k. The decrease is
attributed to the change of surgical motors marketed - return of old motors
carried as inventory and restocking of new motors which has not yet been
affected.
NOTE D - CHANGE IN BUSINESS ACTIVITY
Effective February 12, 1997, the Plan of Reorganization filed by the Company was
approved by the Court. The plan was fully adopted as of March 14, 1997 with all
initial payments to debtors have been issued and disbursed.
The Chapter XI was finalized and closed effective January 23, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
VOLUME
Net sales/revenue for the quarter decreased by $61K or 15% from the comparable
period prior year and $65K or 16% from prior quarter. Year-to-date net sales
continued to show an increase from the comparable period prior year and totaled
$12K or reflected a 1% increase. The decrease for the quarter is attributable to
changes in the international markets, the existing Russian and Argentinean
Distributor have been terminated due to lack of performance. A new Distributor
has been brought on board in Argentina but sales will not materialize until the
fourth quarter. Additionally, the financial problems in the Far East markets
have affected sales with our S. Korean and Taiwan Distributor.
COST OF GOODS SOLD
Cost of goods sold for the quarter reflected a reduction from the same period
prior quarter of $10K or 8% and decreased $30K or 20% for the quarter from prior
years quarter. Year-to-date results continued to reflect an improvement of $6k
or 2% over the prior years period. The reduction of cost of goods sold is
attributable to the decrease in sales and the change in surgical motor vendor -
product returned and new vendor purchases will not be recorded until the 4th
quarter.
6
<PAGE> 7
GROSS PROFIT
Gross Profit for the quarter decreased by $31k or 12% over the same quarter
prior year, and decreased $55k or 20% from prior quarter results. Year-to-date
the Company still reflected an improvement of $18K or 2% over prior years
results.
SELLING, ADMINISTRATIVE & GENERAL EXPENSES
Selling expenses for the period reflected a reduction of $26K or 30% from prior
quarter and reflect a decrease of $22k or 26% over prior years quarter results.
The decrease over prior year results reflect the elimination of two (2) sales
personnel and the temporary reduction by one (1) employee for plant operations.
Administrative and general expenses for the period similarly resulted in a
decrease over the prior quarter of $7K or 5%. Results for the period to the same
period prior year totaled a decrease of $22k or 16%. For the nine months
year-to-date results where $15k or 3% lower. The lower expenses incurred are
attributable to select lower costs incurred in 1998 for continued consulting and
professional services, and lower travel expenses.
RESULTS FROM OPERATIONS
Results from operation for the quarter decreased to $19k from prior quarter or
54%, but reflect a higher result over the comparable prior years quarter of
$18K. Year-to-date results where up by $17K or 27%. The results are attributable
to expense controls effected due to lower sales results.
OTHER (INCOME) & EXPENSES
The costs incurred continue to be attributable to interest expense incurred for
the increase in the revolving loan outstanding and the interest recorded as a
part of the Plan payments resulting from the reorganization recorded in early
1997.
NET INCOME
Net income for the quarter totaled a loss of $3k and a $7k profit year-to-date.
Due to the continued impact of the reorganization the Results from Operations
reflects a more realistic result for the Company.
FINANCIAL CONDITION
NET CASH FLOW PROVIDED BY OPERATIONS
Cash flow provided from operations increased by $12k for the period.
FINANCING
No new financing arrangements have been entered into during the past quarter.
The company has not materially changed its borrowing on its Revolving Loan
Agreement.
SIGNATURE
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.
BIO-LOK INTERNATIONAL INC.
(Registrant)
Date: September 14, 1998 By: /s/ Ingo K. Kozak
-------------------------------
Ingo K. Kozak
Chief Financial Officer and
on behalf of the Registrant
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BIOLOK INTERNATIONAL, INC. FOR THE NINE MONTH PERIOD
ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1997
<PERIOD-END> JUL-31-1998
<CASH> 9,531
<SECURITIES> 0
<RECEIVABLES> 538,328
<ALLOWANCES> 27,679
<INVENTORY> 1,145,108
<CURRENT-ASSETS> 1,665,288
<PP&E> 1,006,649
<DEPRECIATION> 740,897
<TOTAL-ASSETS> 2,061,822
<CURRENT-LIABILITIES> 525,806
<BONDS> 546,844
0
0
<COMMON> 40,998
<OTHER-SE> 762,074
<TOTAL-LIABILITY-AND-EQUITY> 2,061,822
<SALES> 1,113,913
<TOTAL-REVENUES> 1,113,913
<CGS> 351,139
<TOTAL-COSTS> 237,220
<OTHER-EXPENSES> 447,776
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70,755
<INCOME-PRETAX> 7,020
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,020
<EPS-PRIMARY> .002
<EPS-DILUTED> .002
</TABLE>
