<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
ACT OF 1934
For the transition period from ___________ to __________
Commission File Number: 0-19606
AMERICAN BIOMED, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0136574
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
10077 Grogan's Mill Road, Suite 100, The Woodlands, Texas 77380
---------------------------------------------------------------
(address of principal executive offices) (Zip Code)
(281) 367-3895
-------------
(Registrant's telephone number, including area code)
N.A.
----
(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 and 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. X Yes No
--- ---
The total number of shares outstanding of common stock, $.001 par value as of
July 30, 1997 is 14,942,309.
<PAGE> 2
AMERICAN BIOMED, INC. AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements of Operations 4
Consolidated Condensed Statements of Cash Flows 5
Notes to Consolidated Condensed Financial Statements 6
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 6 Exhibits and Reports on Form 8-K 12
</TABLE>
SIGNATURES 13
INDEX TO EXHIBITS 14
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,484,640 $ 1,183,613
Accounts receivable, trade, net of allowance for doubtful accounts
of $57,500 in 1996 156,695 168,359
Accounts receivable, other 21,257 19,848
Inventories 624,362 462,097
Prepaid expenses 226,727 277,195
----------- ------------
Total current assets 2,513,681 2,111,112
----------- ------------
Property and equipment, net 102,006 81,315
Patents, net of accumulated amortization of $877,112 and
$870,014 in 1997 and 1996, respectively 175,274 164,655
Goodwill, net of accumulated amortization of $635,933
and $574,391 in 1997 and 1996, respectively 594,903 656,444
Other assets 39,711 55,625
----------- ------------
Total assets $ 3,425,575 $ 3,069,151
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to stockholders and others $ 272,424 $ 1,278,485
Current maturities of long-term debt 40,015 38,404
Current maturities of capital lease obligations 482,666 266,078
Accounts payable 331,601 301,184
Accrued liabilities 496,904 483,167
----------- ------------
Total current liabilities 1,623,610 2,367,318
Long-term debt, net of current maturities 91,561 110,472
Capital lease obligations, net of current maturities -- 302,766
Deferred revenue 130,000 160,000
Commitments and contingencies:
Stockholders' equity:
Preferred stock, $.001 par value, 2,000,000 shares authorized,
Series A: Convertible preferred stock, 1,390 shares authorized,
issued and outstanding at June 30, 1997 and December 31, 1996, respectively,
$1,000 per share or $1,390,000 aggregate liquidation preference 1 1
Series B: Convertible preferred stock, 2,500 shares authorized, 1,300 shares and
1,500 shares issued and outstanding at June 30, 1997 and December 31, 1996,
respectively, $1,000 per share or $1,300,000 and $1,500,000 aggregate liquidation
preference respectively, plus an additional 10% per year from the date of issuance 2 2
Series C: Convertible preferred stock, 125 shares authorized, 125 shares issued
and outstanding at June 30, 1997, $20,000 per share or $2,500,000 aggregate
liquidation preference plus an additional 7% per year from the date of issuance
Common stock, $.001 par value, 50,000,000 shares authorized, 14,857,378 and
13,544,019 shares issued at June 30, 1997 and December 31, 1996, respectively 14,857 13,544
Additional paid-in capital 27,395,370 24,741,670
Deficit accumulated during the development stage (25,578,226) (24,375,022)
Less treasury stock at cost, 68,323 shares (251,600) (251,600)
----------- ------------
Total stockholders' equity 1,580,404 128,595
----------- ------------
Total liabilities and stockholders' equity $ 3,425,575 $ 3,069,151
=========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
--------------------- ----------------------
<S> <C> <C> <C> <C>
Sales, net $ 135,982 $ 122,699 $ 253,329 $ 229,436
Cost of Sales (35,284) (105,660) (160,018) (206,473)
------------ ------------ ------------ ------------
Gross profit 100,698 17,039 93,311 22,963
------------ ------------ ------------ ------------
Operating expenses:
Selling, general and administrative (426,907) (429,958) (894,957) (760,888)
Research and development (228,674) (238,698) (374,962) (352,686)
Distributor settlement
------------ ------------ ------------ ------------
(655,581) (668,656) (1,269,919) (1,113,574)
------------ ------------ ------------ ------------
Loss from operations (554,883) (651,617) (1,176,608) (1,090,611)
------------ ------------ ------------ ------------
Other income (expense):
Interest income 15,331 208 20,372 691
Interest expense (34,302) (127,037) (76,911) (197,683)
Other income 14,943 50,847 29,943 60,207
------------ ------------ ------------ ------------
Other income (expense), net (4,028) (75,982) (26,596) (136,785)
------------ ------------ ------------ ------------
Net loss (558,911) (727,599) (1,203,204) (1,227,396)
Less preferred stock dividends (540,556)
------------ ------------ ------------ ------------
Net loss available to common shareholders $ (558,911) $ (727,599) $ (1,203,204) $ (1,767,952)
============ ============ ============ ============
Net loss per common share $ (.04) $ (0.07) $ (.08) $ (.18)
============ ============ ============ ============
Weighted average number of common shares
outstanding 14,565,103 10,214,725 14,278,688 9,873,928
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Inception,
September 4, 1984,
To
June 30, 1997
---------------
<S> <C>
Sales, net $ 3,567,976
Cost of Sales (3,392,924)
------------
Gross profit 175,052
------------
Operating expenses:
Selling, general and administrative (16,351,892)
Research and development (7,624,955)
Distributor settlement (1,080,915)
------------
(25,057,762)
------------
Loss from operations (24,882,710)
------------
Other income (expense):
Interest income 130,106
Interest expense (2,772,349)
Other income 1,946,727
------------
Other income (expense), net (695,516)
------------
Net loss (25,578,226)
Less preferred stock dividends (1,183,413)
------------
Net loss available to common shareholders $(26,761,639)
============
Net loss per common share
Weighted average number of common shares
outstanding
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
AMERICAN BIOMED, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Inception,
Six Months Ended September 4, 1984,
June 30, to
1997 1996 June 30, 1997
--------------------------- -----------------
<S> <C> <C> <C>
Net cash used by operating activities $(1,087,831) $ (630,227) $(18,421,950)
Cash flows from investing activities:
Capital expenditures (10,080) (11,003) (445,306)
Investment in patents (17,717) (8,735) (454,705)
Other investing activities 245,080
----------- ----------- ------------
Net cash used by investing activities (27,797) (19,738) (654,931)
----------- ----------- ------------
Cash flows from financing activities:
Proceeds from notes payable to banks 2,333,880
Proceeds from notes payable to stockholders 34,750 1,225,921
Proceeds from notes payable to others 5,742,337
Repayments of notes payable to banks (5,000) (2,070,000)
Repayments of notes payable to stockholders (38,238) (822,992)
Repayments of notes payable to others (1,023,361) (194,954) (5,798,378)
Principal payments under capital lease obligations (86,178) (13,996) (716,345)
Proceeds from patent assignment and leaseback 500,000
Proceeds from equipment assignment and leaseback 305,000
Proceeds from sale of debentures 640,000
Proceeds from sale of preferred stock 2,500,000 1,217,493 8,436,502
Proceeds from sale of common stock and exercise of
unregistered warrants 310,034 351,923 9,044,351
Proceeds from exercise of stock options 3,750 96,000 339,917
Proceeds from issuance of registered stock purchase warrants 100,000
Proceeds from exercise of registered stock purchase warrants 2,801,018
Treasury stock acquired (500,000)
Offering costs (287,590) (940,243)
Other financing activities (59,447)
----------- ----------- ------------
Net cash provided by financing activities 1,416,655 1,447,978 20,561,521
----------- ----------- ------------
Net increase in cash and cash equivalents 301,027 798,013 1,484,640
Cash and cash equivalents at beginning of period 1,183,613 9,177
----------- ----------- ------------
Cash and cash equivalents at end of period $ 1,484,640 $ 807,190 $ 1,484,640
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE> 6
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the requirements of Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of management, the
unaudited consolidated condensed financial statements reflect all adjustments
that are necessary for a fair statement of the results of the periods
presented, and all such adjustments are of a normal recurring nature.
The unaudited consolidated condensed financial statements include the
accounts of American BioMed, Inc. and its wholly-owned subsidiary, Cathlab
Corporation, (jointly referred to as the "Company") after elimination of all
intercompany transactions and accounts.
These unaudited consolidated condensed financial statements should be read
in connection with the financial statements for the year ended December 31,
1996 included in the Company's Annual Report filed on Form 10-K/A-1. Results
for the period are not necessarily indicative of year-end results.
2. CAPITAL STOCK
During the first quarter of 1997, 762,583 shares of the Company's common
stock were issued in connection with the exercise of warrants. An additional
88,222 shares were issued in payment of debt.
In March 1997, the Company issued options to purchase 5,000 shares of
common stock at $1.50 per share, the fair market value at date of grant, in
connection with the employment of a quality assurance manager who has since
been promoted to plant manager.
Pursuant to Section 4(2) of the Securities Act, in March 1997 the Company
issued 125 shares of its Series C convertible preferred stock, par value $.001
per share (the "Series C Preferred") to Nelson Partners, an unaffiliated
investor, for a total purchase price of $2,500,000 or $20,000 per share. The
proceeds of the sale will be used to fund clinical trials, research and
development projects and general working capital. The Series C Preferred, which
bears no dividends and confers no voting rights, is of equal rank with shares
of the Series A Preferred and the Series B Preferred and senior to the
Company's other equity securities (except with the consent of the majority of
the holders of Series C Preferred). The Series C Preferred is convertible at
any time on or after 120 days after the inital date of issuance at the option
of the holder into a number of shares of common stock (the "Series C Conversion
Shares") based on a formula as defined in the purchase agreement.
The Series C conversion price is the lesser of (i) $1.75 (adjusted if
there is a lock up in effect) or (ii) the average of the closing bid price for
the common stock for the five consecutive trading days immediately preceding
the date the election to convert is made (the "Series C Conversion Price"). The
number of Series C Conversion Shares is subject to adjustment from time to time
upon the occurrence of stock splits, reverse stock splits, and similar events.
On March 1, 2000 any outstanding shares of the Series C Preferred will be
automatically converted based on the Series C Conversion Price then in effect.
Registration rights were conferred upon the Series C Preferred requiring
the Company to file an S-3 Registration Statement covering the resale of the
Series C Conversion Shares on or before the ninetieth day following the
issuance date.
The Company may at its option at any time after the 180th day and prior to
the 361st day following the issuance of the Series C Preferred, prohibit
holders of the Series C Preferred from exercising any conversion rights granted
(the "Lock-Up") when certain conditions are met. In the event the Company
effects a lock-up, each holder of the Series C Preferred will be entitled to a
warrant (the "Lock-Up Warrant") exercisable for that number of shares of common
stock equal to (1/2) one-half of the number of shares of common stock which
would have been issuable had such holder converted, and on the last day of the
lock-up period will be entitled to an additional Lock-Up Warrant exercisable
for that number of shares of common stock equal to one-half of the number of
shares of common stock which would have been issuable had such holder
converted. The exercise price of the Lock-Up Warrant is the fixed conversion
price ($1.75) that is in effect at the time of issuance of the Lock-Up warrant,
but not subject to any adjustments.
6
<PAGE> 7
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
2. CAPITAL STOCK - Continued
The Company has reserved 7,642,857 shares of common stock for issuance (i)
upon conversion of the Series C Preferred, (ii) upon exercise of the warrants
and (iii) the placement warrants.
During the second quarter of 1997, the Company issued 367,554 shares of
common stock as a result of the conversion of 200 shares of Series B preferred
stock. In addition the Company also issued 75,000 shares of common stock in
payment of certain liabilities and services.
Effective May 19, 1997, the Company, upon recommendation by the
compensation committee, granted its president options from the 1996 Incentive
Stock Plan to purchase 900,000 shares of the Company's common stock at $.6875
per share which was greater than or equal to the fair market value at the date
of grant. The stock options will vest evenly on December 31, 1997, 1998 and
1999.
3. SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Inception
Six Months Ended September 4, 1984
June 30, to
1997 1996 June 30, 1997
-------------------------------- --------------
<S> <C> <C> <C>
Interest Paid $ 68,163 $ 69,754 $ 1,215,041
Noncash investing and financing activities:
Equipment acquired through capital lease 266,539
agreements
Equipment and leasehold improvements
acquired through notes payable 35,775
Conversion of accrued interest
payable to principal on notes
payable to stockholders 105,170
Conversion of Series A and Series B
preferred stock to common stock 444
Conversion of 1996 Series B preferred stock
to common stock 200,000 200,000
Conversion of debentures to common stock 640,000
Deferred offering costs incurred in prior
year charged against offering proceeds 41,000
Issuance of common stock in connection
with purchase of assets of VMS, Inc. 124,999
Issuance of common stock in connection
with purchase of assets of Superstat, Inc. 81,819
Conversion of notes payable to common stock 538,671
Common stock and warrants issued in lieu of
interest expense 16,875 1,387,300
Patent assignment and leaseback 500,000
Issuance of common stock in connection with
Therex settlement 77
Transfer of note receivable from officer 25,000
Writeup of property and equipment on Cathlab
due to sale and leaseback agreement 221,616
Issuance of common stock and warrants
for services 29,958 367,500 1,037,385
Issuance of common stock for certain liabilities 98,861 376,781 1,098,560
</TABLE>
7
<PAGE> 8
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - Continued
(Unaudited)
4. INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is
determined using the first-in, first-out (FIFO) method.
Inventories consisted of the following:
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
----------- ----------
<S> <C>
Raw materials..................... $ 260,305 $ 178,762
Work in process................... 182,478 157,114
Finished goods..................... 181,579 126,221
----------- ----------
$ 624,362 $ 462,097
=========== ==========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
The Company is a party to litigation arising in the ordinary course
of business. Management regularly analyzes current information and, as
necessary, provides accrual for probable liabilities for the eventual
disposition of the matter. In the opinion of management, the ultimate outcome
of these matters will not materially affect the Company's financial position,
results of operations or cash flows.
The Company has resolved the litigation regarding the December 1995
American Arbitration Association award to a consultant of $50,000 plus interest
at prime plus three percent from May 1, 1995. The award and related interest
was paid in full July 1, 1997.
In May 1997, a former officer and director of the Company filed a
lawsuit alleging oppressive action towards a minority shareholder. The Company
intends to vigorously contest this lawsuit; however, given the early stage of
the litigation, the Company is unable at this time to make a meaningful analysis
of possible or likely damages, if any.
Other litigation referred to in the Company's report on Form 10-K was
resolved during the year ended December 31, 1996.
6. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). SFAS 128 specifies the computation, presentation and
disclosure requirements for earnings per share. SFAS 128 is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods. The Company has not yet determined the impact that
the adoption of SFAS 128 will have on its disclosure of earnings per share.
8
<PAGE> 9
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company is in the development stage and has had limited operating
revenues since its inception on September 4, 1984. From September 4, 1984
through June 30, 1997, the Company had an accumulated deficit of $25,578,226.
During the six months ended June 30, 1997, the Company's sales
increased 10.4% to $253,329 compared with sales of $229,436 for the same period
in 1996. Foreign export sales increased 81.1% while domestic sales decreased
60.7%. Other revenues for services and projects increased to $42,863 from
$3,890. The Company added several new international distributors in 1996. The
products registered in these international markets resulted in increased
foreign export sales. The decrease in domestic sales is due to the
ineffectiveness of the Company's principal domestic distributor and to the
decrease in government orders caused by a change in their purchasing
methodology.
Cost of sales represented 63.2% and 90.0% of sales for the six months
ended June 30, 1997 and 1996, respectively. The lower percentage in 1997 is due
to productivity improvements initiated during the second quarter 1997. The
Company focused on building inventory during the second quarter 1997 in
anticipation of Original Equipment Manufacturing Orders ("OEM"). As a result,
inventory has increased approximately $162,000 since December 31, 1996. Although
there can be no assurances, the Company expects the OEM contracts to begin in
the fourth quarter.
Selling, general and administrative expenses increased 17.6% to
$894,957 during the first six months of 1997, compared to $760,888 for the same
period in 1996. However, the second quarter 1997 reflected a decrease of .7%
compared to the second quarter 1996. Because the Vice President of Sales and
Marketing was not hired until the second quarter of 1996, sales and marketing
expenses for the six months increased 67.9% to approximately $83,300 in 1997
from approximately $49,600 in 1996. The second quarter 1997 reflected a
decrease in selling expense of $3,000 or 6.8% compared to the second quarter
1996. Other salaries and payroll-related expenses increased approximately
$32,000 and $84,000 for the quarter and six months due to the hiring of two
additional corporate personnel, as well as salary and benefit increases. Legal
and accounting expenses were elevated during the first six months of 1997 due
to expenses incurred regarding preparation of Form S-3 and S-8 Registration
Statements. The Company began the ISO 9001 certification process in the fourth
quarter of 1996. The Company will continue to incur costs until certification
is received, which is presently anticipated in the fourth quarter of 1997. No
assurances can be given that the certification will be granted. Expenses related
to the ISO 9001 and CE Mark certification process for the first six months of
1997 were approximately $23,000.
Research and development expenses totaled $374,962 during the first
six months of 1997, an increase of 6.3% from the 1996 six months total of
$352,686. This is due to the Company initiating research and development on a
new line of 100%-silicone balloon catheters for thrombectomy and thrombolysis,
which will expand the Company's existing product lines. Clinical trials have
begun on these products. In addition, the Company is focusing on completing the
OmniCath(R) clinical trials. During the second quarter of 1997, the Company
expanded the number of sites authorized to conduct the trials to eight sites.
Interest expense decreased 61.1% to $76,911 for the first six months
of 1997, compared to $197,683 for the first six months of 1996 due to the
decrease of over $1 million in notes payable and capital lease obligations.
9
<PAGE> 10
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its research and development activities to
date principally through private sales of common and preferred stock, an
initial public offering of common stock, and sales of products and engineering
services. The Company expects to incur research and development expenditures as
it designs and develops products related to its core technology. The Company
anticipates that operating expenses will continue to increase during 1997 and
subsequent years due to the continuation of clinical trials and will continue
to be significant through the FDA approval process. These costs will include,
among other things, hiring additional personnel to direct and carry out all
operations related to the clinical trials, paying for hospital and procedural
costs, upgrading operating equipment and other costs related to the manufacture
of products in sufficient quantities to meet the Company's research and
development needs. In addition, the Company anticipates that the administrative
costs associated with this effort will be significant. The amounts and timing
of expenditures will depend on the progress of ongoing research and clinical
development and product launch costs.
During the first six months of 1997, the Company initiated a quality
assurance department, hired a manufacturing manager and made initial cash
outlays for automated manufacturing equipment to increase productivity and
manufacturing efficiencies. In addition, some changes were made to production
sequences and intensive cross training of employees was established. As a
result, the Company's production capacity has increased by over 200%. Resources
are also being expended on product development and clinical programs to further
the advancement of the Company's core product technologies. The Company raised
additional equity capital of $2.5 million via private placements and continues
to negotiate debt to equity instruments to improve the Company's financial
position and cash flows. As a result, the Company had working capital as of June
30, 1997 of $890,071, an improvement of $1,146,277 as compared to December 31,
1996.
The net cash used by operating activities of $1,087,831 was
approximately $458,000 greater than during the same period in 1996. During the
first six months of 1997 the cash flow was favorably impacted by the
negotiations of debt to equity conversions and issuance of stock for services
of approximately $129,000. Financing activities provided cash of approximately
$1.5 million. Warrants to purchase common stock were exercised, providing the
Company with approximately $310,000. The sale of Series C Preferred provided
approximately $2.2 million, net of offering costs. In addition, the Company
repaid the 30-day note of $1 million due in January 1997.
At June 30, 1997, the Company had cash and cash equivalents of
$1,484,640 compared to $1,183,613 at December 31, 1996. The Company anticipates
that cash from current cash balances will be adequate to meet the Company's
cash requirements through the next eight to ten months. As a part of its effort
to meet such requirements, management has undertaken to identify healthcare
companies with similar technologies or companies seeking new proprietary
products to strengthen their existing market position. This strategy is directed
toward the formation of strategic alliances, joint venture arrangements,
licensing and distribution agreements, and research and development agreements.
The Company will need to raise substantial funds for future
operations and is actively seeking such funding through possible collaborative
arrangements, public or private financings, including equity financings, and
other arrangements. The Company expects that additional expenditures will be
required if additional product candidates enter clinical trials, such as
expenditures for laboratory space, scientific and administrative personnel, and
additional manufacturing costs. There can be no assurance that the Company will
be able to obtain additional financings on acceptable terms or in time to fund
any necessary or desirable expenditures. In the event such financings are not
obtained, the Company's research and development projects will be delayed or
scaled back.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). SFAS 128 specifies the computation, presentation and
disclosure requirements for earnings per share. SFAS 128 is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods. The Company has not yet determined the impact that
the adoption of SFAS 128 will have on its disclosure of earnings per share.
10
<PAGE> 11
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to litigation arising in the ordinary course
of business. Management regularly analyzes current information and, as
necessary, provides accrual for probable liabilities for the eventual
disposition of the matter. In the opinion of management, the ultimate outcome
of these matters will not materially affect the Company's financial position,
results of operations or cash flows.
In May 1997, a former officer and director of the Company filed a
lawsuit alleging oppressive action towards a minority shareholder. The Company
intends to vigorously contest this lawsuit; however, given the early stage of
the litigation, the Company is unable at this time to make a meaningful analysis
of possible or likely damages, if any.
The Company has resolved the litigation regarding the December 1995
American Arbitration Association award to a consultant of $50,000 plus interest
at prime plus three percent from May 1, 1995. The award and related interest
was paid in full July 1, 1997.
Other litigation referred to in the Company's report on Form 10-K was
resolved during the year ended December 31, 1996.
11
<PAGE> 12
AMERICAN BIOMED, INC. AND SUBSIDIARY
(A Development Stage Enterprise)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits. The following documents are filed as exhibits to this Report.
<S> <C>
11.1 Computation of Loss Per Common Share
27.1 Financial Data Schedule
</TABLE>
REPORTS ON FORM 8-K
None
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BIOMED, INC.
Date: August 14, 1997 /s/ Steven B. Rash
----------------------------
Steven B. Rash
President and
Chief Executive Officer
Date: August 14, 1997 /s/ Colene F. Blankinship
--------------------------------
Colene F. Blankinship, CPA
Controller
Chief Accounting Officer
13
<PAGE> 14
INDEX TO EXHIBITS
The following documents are filed as part of this Report:
<TABLE>
<CAPTION>
Exhibit
<S> <C>
11.1 Computation of Income (Loss) Per Common Share
27.1 Financial Data Schedule
</TABLE>
14
<PAGE> 1
EXHIBIT 11.1
AMERICAN BIOMED, INC. AND SUBSIDIARY
COMPUTATION OF LOSS PER COMMON SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Computation of loss per common share:
Net Loss $ (558,911) $ (727,599) $ (1,203,204) $(1,227,396)
Less preferred stock dividends
(540,556)
------------- ------------- ------------- -----------
Net loss available to common shareholders $ (558,911) $ (727,599) $ (1,203,204) $ 1,767,952)
============= ============= ============= ===========
Weighted average number of common
shares outstanding 14,565,103 10,214,725 14,278,688 9,873,928
============= ============= ============= ===========
Loss per common share $ (.04) $ (.07) $ (.08) $ (.18)
============= ============= ============= ===========
Computation of loss per common share assuming full dilution (A):
Weighted average number of shares
outstanding 14,565,103 10,214,725 14,278,688 9,873,928
============= ============= ============= ===========
Loss per common share assuming full
dilution $ (.04) $ (.07) $ (.08) $ (.18)
============= ============= ============= ===========
</TABLE>
- -------------------
(A) This calculation is submitted in accordance with Securities and
Exchange Act of 1934 Release No. 9083 although it is contrary to APB
Opinion 15 because it does not result in any dilution.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,484,640
<SECURITIES> 0
<RECEIVABLES> 156,695
<ALLOWANCES> 0
<INVENTORY> 624,362
<CURRENT-ASSETS> 2,513,681
<PP&E> 750,765
<DEPRECIATION> 648,759
<TOTAL-ASSETS> 3,425,575
<CURRENT-LIABILITIES> 1,623,610
<BONDS> 0
0
3
<COMMON> 14,857
<OTHER-SE> 1,565,544
<TOTAL-LIABILITY-AND-EQUITY> 3,425,575
<SALES> 253,329
<TOTAL-REVENUES> 253,329
<CGS> 160,018
<TOTAL-COSTS> 160,018
<OTHER-EXPENSES> 1,269,919
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,911
<INCOME-PRETAX> (1,203,204)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,203,204)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,203,204)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
