UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 number: 0-18271
BIOMERIDIAN CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
Utah
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(State or other jurisdiction of incorporation or organization)
87-0467614
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(I.R.S. Employer Identification No.)
12411 South 265 West, Suite F, Draper, Utah 84020
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(Address of principal executive offices)
(Zip Code)
(801) 501-7517
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(Registrant's telephone number, including area code)
Magellan Technology, Inc.
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(Former Name, former address and former fiscal year, if changed
since last report)
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 (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 _____
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Number outstanding at September 30, 2000: 28,826,997 shares
Class: Common Stock, $.0002 par value
<PAGE>
FORM 10-QSB
Financial Statements and Schedules
BioMeridian Corporation
For the Quarter Ended September 30, 2000
The following financial statements and schedules of the registrant and its
consolidated subsidiaries are submitted herewith:
PART I - FINANCIAL INFORMATION
--------------------------------
Item 1. Financial Statements
Condensed consolidated balance sheet for September 30, 2000 3
Condensed consolidated statement of operations for the three
months and nine months ended September 30, 2000 and 1999 4
Condensed statement of cash flows for the nine months ended
September 30, 2000 and 1999 5
Notes to condensed consolidated financial statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II - OTHER INFORMATION
-----------------------------
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other information 11
Item 6(a) Exhibits 11
Item 6(b) Reports on Form 8-K 11
<PAGE>
BIOMERIDIAN CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
30-Sep-00
ASSETS (Unaudited)
-------------
Current Assets:
Cash $ 39,139
Accounts Receivable, net 1,415,396
Investment in Securities 1,600,000
Inventories 143,268
Prepaid Expenses 21,436
Other Current Assets 39,647
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Current Assets 3,258,886
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Property and Equipment, net 230,400
Goodwill, net 444,517
Licenses & Technology, net 1,094,922
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Total Assets $5,028,725
=============
LIABILITIES
Current Liabilities:
Accounts Payable $ 677,280
Accrued Personnel Costs 109,557
Accrued Liabilities 281,113
Accrued Interest Payable 298,879
Note Payable 1,296,158
Related Party Notes Payable 1,611,048
Current Portion of long-term debt 368,175
-------------
Current Liabilities 4,642,210
Long-Term Debt 27,525
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Total Liabilities 4,669,735
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STOCKHOLDERS' EQUITY
Common Stock, par value $.0002 per share;
50,000,000 shares authorized, 28,826,997 shares
issued and outstanding as of September 30, 2000 5,765
Additional Paid-in Capital 14,747,954
Accumulated Deficit (14,394,729)
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Total Stockholders' equity 358,990
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Total Liabilities and Stockholders' Equity $5,028,725
=============
<PAGE>
<TABLE>
<CAPTION>
BIOMERIDIAN CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Nine Months
Ended September 30 Ended September 30
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales $1,441,819 $1,943,504 $4,774,099 $5,616,425
Cost of Sales 134,077 220,850 631,259 895,909
------------- ------------- ------------- -------------
Gross Margin 1,307,742 1,722,654 4,142,840 4,720,516
Variable Selling Costs 211,475 315,303 648,835 1,094,218
------------- ------------- ------------- -------------
Contribution Margin 1,096,267 1,407,350 3,494,005 3,626,298
Operating Expenses:
Administration & Finance 313,890 336,096 1,044,672 967,702
Customer Support 29,317 34,377 103,005 138,996
Marketing 105,462 - 189,532 -
Operations & Engineering 123,540 112,583 332,757 354,755
Sales - Domestic 251,618 440,489 757,690 1,608,069
Sales - International 52,996 109,340 165,480 217,441
Training & Education 147,899 178,985 399,356 539,687
Depreciation Expense 17,158 14,486 48,214 42,058
Amortization of Licenses & Goodwill 156,073 156,073 468,218 464,703
------------- ------------- ------------- -------------
Total Operating Expenses 1,197,953 1,382,430 3,508,924 4,333,410
------------- ------------- ------------- -------------
Income/(Loss) from Operations (101,686) 24,921 (14,919) (707,112)
Other (Income)/Expense:
Other (Income)/Expense (148,000) (1,086) (162,194) (1,952)
Interest Expense 106,180 147,434 346,499 465,643
------------- ------------- ------------- -------------
Net Income/(Loss) before Discontinued Operations (59,866) (121,427) (199,224) (1,170,803)
Loss from Discontinued Operations 370,035 847,211
------------- ------------- ------------- -------------
Net Income/(Loss) before Income Taxes (59,866) (491,462) (199,224) (2,018,014)
Provision for Income Taxes
------------- ------------- ------------- -------------
Net Income/(Loss) $ (59,866) $ (491,462) $ (199,224) $ (2,018,014)
============= ============= ============= =============
Net Income/(Loss) per share $ (0.00) $ (0.02) $ (0.01) $ (0.09)
============= ============= ============= =============
Weighted average shares outstanding 27,811,085 22,329,973 27,811,085 22,329,973
============= ============= ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BIOMERIDIAN CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months
Ended September 30
2000 1999
Cash Flows from Operating Activities: ------------- -------------
<S> <C> <C>
Net Income/(Loss) from continuing operations $ (199,224) $ (1,559,514)
Adjustments to Reconcile Net Income/(Loss)
to Net Cash used in Operating Activities:
Provision for Bad Debt (66,440) 18,400
Stock Compensation 45,362
Issuance of common stock for services 51,000 35,000
Forgiveness of debt (458,500)
Depreciation Expense 48,214 42,058
Amortization of Licenses & Goodwill 468,218 464,703
(Gain)/Loss on sale of assets 151
Net assets of discontinued operations 153,211
(Increase)/Decrease in:
Accounts Receivable (229,491) (526,919)
Inventory (7,537) 155,076
Prepaid Expenses and other assets (15,409) (28,738)
Increase/(Decrease) in:
Accounts Payable (139,334) (48,774)
Accrued Personnel Costs 24,171 (53,099)
Accrued Liabilities 29,636 207,052
Accrued Interest Payable 78,338 147,858
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Net Cash Provided by/(Used in) Operating Activities 42,142 (1,406,673)
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Cash Flows from Investing Activities:
Purchase of Property & Equipment (48,655) (45,031)
Notes Receivable 900,000
Sale of Property & Equipment 3,804
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Net Cash Provided by/(Used in) Investing Activities 851,345 (41,227)
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Cash Flows from Financing Activities:
Issuance of Common Stock 311,838
Proceeds from Related Party Notes 1,032,899 640,000
Principal Payments on Related Party Notes (192,899) (345,000)
Proceeds from Notes Payable 1,000,000
Principal Payments on Notes Payable (1,200,000) (45,000)
Proceeds from Line of Credit 13,843
Principal Payments on Line of Credit (50,000)
Proceeds from Long-term Debt 18,798
Principal Payments on Long-term Debt (774,547) (88,067)
------------- -------------
Net Cash Provided by/(Used in) Financing Activities: (1,134,547) 1,456,412
------------- -------------
Net Decrease in cash (241,060) 8,512
Cash, Beginning of Period 280,199 155,617
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Cash, End of Period $ 39,139 $ 164,129
============= =============
</TABLE>
<PAGE>
BIOMERIDIAN CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months
Ended September 30
2000 1999
Cash paid during the period for: ------------- -------------
Interest $ 268,161 $ 236,079
============= =============
Income Taxes $ - $ -
============= =============
2000 Non-cash Financing and Investing Activities:
During the nine months ended September 30, 2000, the company converted accrued
interest payable to a shareholder and director to a note payable in the amount
of $98,048.
During the nine months ended September 30, 2000, the company issued 100,000
and 2,000 shares of common stock for services to individuals.
During the nine months ended September 30, 2000, the Company applied the
remaining balance of a note payable to an entity to accounts receivable from
that entity in the amount of $4,510.
During the nine months ended September 30, 2000, the Company exchanged a note
receivable due from an entity of $1,600,000 for 290,909 shares of the entity's
preferred stock. (see note 4)
During the nine months ended September 30, 2000, the Company converted notes
payable to a director of the Company and an entity owned by a director totaling
$500,000 in exchange for 1,250,000 shares of the Company's common stock.
During the nine months ended September 30, 2000, the Company purchased an
asset in exchange for a capital lease of $24,121.
1999 Non-Cash Financing and Investing Activities:
During the nine months ended September 1999, the Company converted $1,900,000
of notes payable and $11,033 of accrued interest payable into common stock.
During the nine months ended September 30, 1999, the Company issued 250,000
shares of common stock in exchange for the rights to certain technology known as
the P.I.C.E. Technology. The value of this transaction was $140,625.
During the nine months ended September 30, 1999, the Company converted certain
accounts payable balances to certain vendors to a note payable. The amount
converted was $23,769.
During the nine months ended September 30, 1999, the Company converted an
accounts payable balance to a certain vendor to common stock and a note payable.
The amount converted was $25,000 and $39,313 respectively.
During the nine months ended September 30, 1999, the Company applied an
accounts receivable balance from a customer in the amount of $47,600 to the
outstanding amount of a note payable to this same individual.
<PAGE>
BIOMERIDIAN CORPORATION
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1) The unaudited condensed consolidated financial statements include the
accounts of BioMeridian Corporation. (The "Company") and its wholly owned
subsidiaries, BioMeridian Corporation [formerly known as ProHealth, Inc.
and prior to that known as Satellite Image Systems, Inc. (SIS, Inc.) and
SIS Jamaica, LTD (SIS Jamaica)], BioMeridian International, Inc.
("BioMeridian") (formerly known as BioSource, Inc.) and Bio-Origins, Inc.
("Bio-Origins"). On February 16, 1999, the Company acquired certain assets
known as the P.I.C.E. technology from an individual in exchange for 250,000
shares of common stock. In September 1999 the Company completed the
acquisition of Biological Technologies International, Inc. (BTI) which the
Company acquired effective September 17, 1999 through its wholly-owned
subsidiary BTI Acquisition Corp. The acquisition of BTI included the
issuance of 3,024,024 shares of Magellan common stock for all of the
outstanding shares of BTI common stock. The acquisition was accounted for
as a "pooling of interests" transaction.
2) The unaudited condensed consolidated financial statements include all
adjustments, consisting of normal recurring items, which are, in the
opinion of management, necessary to present fairly the financial position
of the Company as of September 30, 2000 and the results of operations for
the three months and nine months ended September 30, 2000 and 1999 and cash
flows for the nine months ended September 30, 2000 and 1999. The results of
operations for the three months ended September 30, 2000 are not
necessarily indicative of quarterly results to be expected for the
remainder of the year.
3) The amount of the loss per share is based on the weighted average number of
shares outstanding at September 30, 2000 and 1999, respectively.
4) Effective December 31, 1999, the Company completed the disposition and sale
of SkyHook Technologies, Inc. to Envirofoam Technologies, Inc. ("EFT"). The
sale was completed in exchange for $3,000,000. Of this sale amount, a note
payable was issued by EFT in the amount of $2,500,000 and a management fee
for services rendered in the amount of $500,000 would be paid to the
Company. On the closing date of this sale transaction, $500,000 was paid
and received against the note payable and the remaining $2,000,000 was
originally intended to be paid in four consecutive payments of $500,000
over the next four months, with the first payment due on or before January
31, 2000. On March 9, 2000, the terms of repayment of the note were
amended. The January 31, 2000 payment was received in the amount of
$500,000 and the remaining balance was intended to be received over 3
monthly payments in the amounts of $100,000, $500,000 and $900,000,
respectively, beginning March 31, 2000. The management fee of $500,000
remained due and payable on or before May 31, 2000. On May 5, 2000, the
terms of repayment of the note were again amended. The March 31, 2000
payment was received in the amount of $100,000 and a payment in the amount
of $300,000 was received on April 30, 2000 leaving a total remaining
balance due of $1,600,000. Effective June 30, 2000, this remaining balance
due was converted to 290,909 shares of EFT Series B Convertible Preferred
Stock. As interest payments, EFT is obligated to issue to the Company a
specified number of additional shares of Series B Convertible Preferred
Stock at the end of each of the next eleven months beginning on July 31,
2000 if all of these preferred shares have not been sold by the Company.
5) On May 19, 1998 the Company entered into a $3,000,000 revolving line of
credit agreement. Obligations under prior separate line of credit
agreements for $750,000 and $745,000 were retired with proceeds from the
new revolving line of credit. During the six months ended June 30, 1999 the
Company made no additional borrowings under this revolving line of credit.
This revolving line of credit is secured by the Company's inventory and
receivables and by the personal guarantees of the Company's Chief Executive
Officer, a director, and a major shareholder. On December 15, 1999, this
line of credit was converted to a term loan whereby 5 monthly payments in
the amount of $500,000 commencing December 31, 1999 and concluding on April
30, 2000 followed by a final payment of $496,158 on May 31, 2000 would be
made. On May 22, 2000, a modification agreement was entered into whereby
the monthly payments to be received pursuant to this term loan were
changed. Under the new agreement, three payments in the amount of $100,000
each followed by one in the amount of $1,196,158 commencing May 31, 2000
would replace the monthly payments under the previous agreement. As of
September 30, 2000 the Company had an outstanding balance of $1,296,158.33
under this term loan. The Company is current in its obligations under this
loan.
6) During the nine months ended September 30, 2000, the Company borrowed a net
amount of $840,000 from the Company's Chief Executive Officer, or from
entities controlled by this individual, under three separate $100,000
unsecured note payable agreements, one $40,000 unsecured note payable
agreement, two $50,000 unsecured note payable agreements, one $150,000
unsecured note payable agreement, and one $250,000 unsecured note payable
agreement. Each note payable bears interest at 12% and is payable upon
demand. Interest has been accrued, but unpaid and the outstanding principal
and interest payable totals $1,390,328 at September 30, 2000.
7) During the nine months ended September 30, 2000, the Company paid $40,000
in consulting expense to an entity controlled by an officer of the Company.
The company also paid consulting expense to a shareholder in the amount of
$18,333.
8) On October 16, 2000, the Company entered into an agreement to sell certain
assets to a related party, including certain intangibles, valued at
$578,000 in exchange for a forgiveness of a note payable of $338,000,
accrued interest of $125,000, and a technology license and product
distribution rights.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Nine-month period ended September 30, 2000 compared to the Nine-month period
ended September 30, 1999.
The BioMeridian Corporation mission is to develop and market state-of-the-art
methods for delivering integrative healthcare to the marketplace. BioMeridian
manufactures and sells the MSA/IMAG and BEST systems to healthcare practitioners
throughout the world. This equipment is used to assess stress and assist
healthcare practitioners in the analysis and treatment of certain conditions. If
stress or imbalance is detected in a patient, the systems assist the
practitioner in recommending a course of treatment or therapy to alleviate the
stress or to restore balance to the body's meridian systems. BioMeridian also
provides training classes and support services for health care practitioners
that utilize these systems. The MSA/IMAG system is registered with the U.S. Food
and Drug Administration as a stress-monitoring device.
Beginning January 1, 2000, the operations of BioMeridian and BTI were combined
and integrated into the Company. For the nine months ended September 30, 2000,
the Company achieved sales revenues of $4,774,099, which resulted in operating
loss of $14,919, compared with sales revenues of $5,616,425, which resulted in
an operating loss of $707,112 for the nine months ended September 30, 1999. The
decrease in sales was the result of the transition process from independent
sales representatives to hiring and training several new sales personnel within
the Company. The decrease in operating loss was primarily due to slightly
improved margins and substantially reduced costs. Most notably, during the nine
months ended September 30, 2000 approximately $660,000 less expense was incurred
for domestic selling expenses verses the same period in 1999 when additional
personnel and travel-related expenses were incurred.
Three-month period ended September 30, 2000 compared to the three-month period
ended September 30, 1999.
For the three months ended September 30, 2000, the Company achieved sales
revenues of $1,441,819, which resulted in an operating loss of $101,686,
compared with sales revenues of $1,943,504, which resulted in operating income
of $24,921 for the three months ended September 30, 1999. The decrease in sales
was the result of the transition process from independent sales representatives
to hiring and training several new sales personnel within the Company. Expense
containment resulted in operating expenditures for the three months ended
September 30, 2000 of approximately $185,000 less than those of the same period
in the prior year. However, lower gross margin dollars on lower sales (as
discussed above) for the 3-months ended September 30, 2000 accounted for the
increase in operating loss for the period.
Liquidity and Capital Resources
On May 19, 1998 the Company entered into a $3,000,000 revolving line of credit
agreement. Obligations under prior separate line of credit agreements for
$750,000 and $745,000 were retired with proceeds from the new revolving line of
credit. During the nine months ended September 30, 2000 the Company made no
additional borrowings under a $3,000,000 revolving line of credit. This
revolving line of credit is secured by the Company's inventory and receivables
and by the personal guarantees of the Company's Chief Executive Officer, a
director, and a major shareholder. On December 15, 1999, this line of credit was
converted to a term loan whereby 5 monthly payments in the amount of $500,000
commencing December 31, 1999 and concluding on April 30, 2000 followed by a
final payment of $496,158 on May 31, 2000 would be made. On May 22, 2000, a
modification agreement was entered into whereby the monthly payments to be
received pursuant to this term loan were changed. Under the new agreement, three
payments in the amount of $100,000 each followed by one in the amount of
$1,196,158 commencing May 31, 2000 would replace the monthly payments under the
previous agreement. As of September 30, 2000 the Company had an outstanding
balance of $1,296,158.33 under this term loan. The Company is current in its
obligations under this loan.
During the nine months ended September 30, 2000, the Company borrowed a net
amount of $840,000 from the Company's Chief Executive Officer, or from entities
controlled by this individual, under three separate $100,000 unsecured note
payable agreements, one $40,000 unsecured note payable agreement, two $50,000
unsecured note payable agreements, one $150,000 unsecured note payable
agreement, and one $250,000 unsecured note payable agreement. Each note payable
bears interest at 12% and is payable upon demand. Interest has been accrued, but
unpaid and the outstanding principal and interest payable totals $1,390,328 at
September 30, 2000.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings:
The Company is party to one proceeding, which is considered by
Management to be routine litigation incidental to the
business, and which is not product related.
Item 2. Changes in Securities: None.
Item 3. Defaults upon Senior Securities: None.
Item 4. Submission of Matters to a Vote of Security Holders: None.
Item 5. Other information: None.
Item 6. Exhibits and Reports on Form 8-K
A report on Form 8-K, which reported the Company's name change
from Magellan Technology, Inc. to BioMeridian Corporation and
also the new trading symbol of "BIDN" (replacing "MGLN") for
the Company's common stock, was filed on August 21, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BIOMERIDIAN CORPORATION
-------------------------
(Registrant)
\s\William A. Fresh November 15, 2000
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William A. Fresh Date
Chairman and Chief Executive Officer
