QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
--------------
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
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 0-19819
biosys, inc.
(Exact name of registrant as specified in its charter)
Delaware 94-2878645
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10150 Old Columbia Road, Columbia, Maryland 21046
(Address of principal executive offices) (Zip Code)
410-381-3800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the 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 XX No _____.
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the last practicable date: 7,487,298 shares of the Company's
Common Stock (par value $0.001) were outstanding as of April 30, 1996.
<PAGE>
biosys, inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
March 31, December 31,
1996 1995
---- ----
ASSETS
Current assets:
Cash and cash equivalents ........................ $ 4,255 $ 1,755
Accounts receivable .............................. 5,938 3,009
Inventories ...................................... 6,190 4,086
Prepaid expenses and other current assets ........ 715 500
--------- ---------
Total current assets ...................... 17,098 9,350
Property and equipment, net ......................... 6,662 6,421
Other assets, net ................................... 807 586
Goodwill ............................................ 3,681 --
--------- ---------
$ 28,248 $ 16,357
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable ................................. $ 7,128 $ 4,767
Short-term debt .................................. 4,000 5,250
Accrued expenses ................................. 2,047 3,309
Current portion of long-term obligations ......... 1,114 782
Deferred credits ................................. 913 931
--------- ---------
Total current liabilities ................. 15,202 15,039
--------- ---------
Long-term obligations, less current portion ......... 3,091 3,642
--------- ---------
Total liabilities ......................... 18,293 18,681
--------- ---------
Commitments and contingencies
Shareholders' equity (deficit):
Convertible preferred stock, $.001 par value;
5,000,000 shares authorized, 780 shares
issued and outstanding .................... 1 --
Common stock, $.001 par value; 12,000,000 shares
authorized, 7,487,082 and 5,598,828 issued
and outstanding ........................... 7 6
Additional paid-in-capital ....................... 146,548 126,315
Accumulated deficit .............................. (136,542) (128,592)
Cumulative translation adjustment ................ (59) (53)
--------- ---------
Total shareholders' equity (deficit) ...... 9,955 (2,324)
--------- ---------
$ 28,248 $ 16,357
========= =========
See accompanying notes to condensed consolidated financial statements.
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biosys, inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Revenues:
Product sales ................................... $ 7,245 $ 6,020
Contract research and development ............... 224 --
-------- --------
Total revenues ............................... 7,469 6,020
Operating costs and expenses:
Cost of product sales ........................... 5,811 5,230
Research and development ........................ 1,471 2,106
Marketing and selling ........................... 805 1,232
General and administrative ...................... 917 1,011
Purchased research and development .............. 6,000 --
Costs of mergers ................................ 58 2,542
-------- --------
Total operating costs and expenses ........... 15,062 12,121
Loss from operations ............................... (7,593) (6,101)
Interest and other expense ......................... (368) (96)
Interest and other income .......................... 11 92
-------- --------
Net loss ........................................... $ (7,950) $ (6,105)
======== ========
Net loss per share (Note 5) ........................ $ (1.34) $ (1.48)
======== ========
Weighted average common shares outstanding ......... 5,952 4,111
======== ========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
biosys, inc.
Condensed Consolidated Statements Of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Cash flows from operating activities:
Net loss .............................................. $ (7,950) $ (6,105)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ......................... 330 344
Loss on disposal of assets ............................ -- 47
Purchased research and development .................... 6,000 --
Warrants issued for loan modification ................ 56 --
Changes in assets and liabilities:
Accounts receivable .............................. (2,590) (3,033)
Inventories ...................................... (1,428) (1,437)
Prepaid expenses and other current assets ........ 219 64
Other assets ..................................... (318) 23
Accounts payable and accrued expenses ............ 790 5,152
Deferred credits ................................. (18) --
-------- --------
Net cash used in operating activities ....... (4,909) (4,945)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment .................... (425) (144)
Cash acquired in AgriDyne acquisition ................. 2,041 --
Proceeds from sales of assets and short-term
investments .......................................... -- 542
-------- --------
Net cash provided by investing activities ... 1,616 398
-------- --------
Cash flows from financing activities:
Issuance of common stock, net of issuance costs ....... -- 5
Issuance of preferred stock, net of issuance costs .... 7,254 --
Payments on debt ...................................... (1,351) --
Proceeds from issuance of debt ........................ -- 1,910
Principal payments on capitalized lease obligations ... (118) (99)
-------- --------
Net cash provided by financing activities ..... 5,785 1,816
-------- --------
Effect of exchange rate changes on cash .................. 8 (119)
------- -------
Net increase (decrease) in cash and cash equivalents ..... 2,500 (2,850)
Cash and cash equivalents at beginning of period ......... 1,755 8,377
-------- --------
Cash and cash equivalents at end of period ............... $ 4,255 $ 5,527
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest .............. $ 196 $ 195
======== ========
Supplemental disclosure of non-cash investing activity:
Common stock issued for acquisition of AgriDyne ...... $ 12,925 $ --
See accompanying notes to condensed consolidated financial statements
<PAGE>
<TABLE>
biosys, inc.
Condensed Consolidated Statement Of Shareholders' Equity (Deficit)
Three Months Ended March 31, 1996
(in thousands, except share data)
(unaudited)
Additional Cumulative
Preferred Stock Common Stock Paid-In Accumulated Translation
Shares Amount Shares Amount Capital Deficit Adjustment Total
------ ------ ------ ------ ---------- --------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 ............ -- $ -- 5,598,828 $ 6 $126,315 $(128,592) $(53) $2,324)
Issuance of common stock in connection
with acquisition of AgriDyne (Note 3) ... -- -- 1,888,121 1 12,924 -- -- 12,925
Issuance of preferred stock ............. 780 1 -- -- 7,253 -- -- 7,254
Issuance of common stock upon exercise
of options and issuance of common
stock warrants .......................... -- -- 133 -- 56 -- -- 56
Net loss ................................ -- -- -- -- -- (7,950) -- (7,950)
Translation adjustment .................. -- -- -- -- -- -- (6) (6)
----- ----- --------- --- -------- --------- ------ ----
Balance at March 31, 1996 ............... 780 $ 1 7,487,082 $ 7 $146,548 $(136,542) $(59) 9,955
===== ===== ========= ==== ======== ========== ====== =======
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
biosys, inc.
Notes to Condensed Consolidated Financial Statements
Three Months Ended March 31, 1996
(unaudited)
Note 1. The above financial information reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in the
opinion of management of biosys, inc. ("biosys" or the "Company"),
necessary for the fair presentation of the results for the interim
periods presented. The interim results are not necessarily indicative
of results for a full fiscal year. The financial statements and notes
are presented on a condensed basis, as permitted by the Securities and
Exchange Commission, and should be read in conjunction with the
Company's 1995 Annual Report on Form 10-K.
Note 2. Effective March 15, 1996, the Company effected a one for two and
one-half reverse stock split of its common stock (the "Reverse Stock
Split"). All common stock share information in the accompanying
condensed consolidated financial statements and related footnotes have
been adjusted to reflect the Reverse Stock Split.
Note 3. On March 31, 1995, biosys, inc. acquired Crop Genetics
International Corporation ("CGI") in a transaction accounted for as a
pooling of interests. Accordingly, all consolidated financial
information for prior periods has been adjusted to include CGI
financial data. During the three months ended March 31, 1996 and 1995,
merger, severance and relocation costs of $58,000 and 2,542,000,
respectively, were incurred by biosys related to the CGI merger. As of
March 31, 1996, all significant merger, severance and relocation costs
related to the CGI merger have been incurred.
On March 15, 1996, the Company acquired AgriDyne Technologies, Inc.
("AgriDyne"), in a merger whereby AgriDyne became a wholly-owned
subsidiary of the Company. To effect the merger, the Company issued
approximately 1.9 million shares of its common stock in exchange for
all of the outstanding shares of AgriDyne common stock based on a
conversion ratio of 0.28664 of a share of biosys common stock for each
share of AgriDyne common stock. From the initial announcement of the
merger, in April 1995, through September 30, 1995, the Company
anticipated accounting for the merger as a pooling of interests.
During that period the Company charged to expense $452,000 for
printing, professional services and other costs related to the merger.
Subsequent to September 30, 1995, due to changes in facts and
circumstances, the Company determined that purchase accounting was the
appropriate method of accounting for the merger. Thus, all costs
related to the merger incurred subsequent to September 30, 1995 have
been treated as additional purchase consideration. Of the aggregate
purchase price of $13,398,000, $3,717,000 has been allocated to net
tangible assets acquired, $6,000,000 to in-process research and
development and $3,681,000 to goodwill.
Note 4. Inventories consisted of the following:
March 31, December 31,
1996 1995
---- ----
Raw materials ............... $3,787,000 $2,576,000
Work-in-process ............. 338,000 225,000
Deferred growing costs ...... 590,000 471,000
Finished goods .............. 1,475,000 814,000
---------- ----------
$6,190,000 $4,086,000
---------- ----------
Note 5. Net loss per share has been computed using the weighted average
number of common shares outstanding during each period presented.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
reflect the Company's current views with respect to future events and financial
performance, including statements in the following section concerning the timing
and amount of revenues derived from commercial sales, contract manufacturing and
research and development or collaborative arrangements, the level of expenses
incurred and the sufficiency of cash and other resources to fund operations and
maintain certain financial covenants contained in the Company's line of credit
and lease agreements. Actual results could differ materially from those
projected in the forward-looking statements as a result of the Company's ability
to obtain adequate additional financing as needed, the uncertainties of new
product development and introduction, sales growth, commercial acceptance of
products, actions by third party manufacturers, competitive pressures, and other
risks described from time to time in the Company's filings with the Securities
and Exchange Commission.
Overview
biosys commenced commercialization of nematode technologies during
1989, pheromone technologies in 1993, virus-based products in 1994, and has
recognized income from the Kleentek seed cane business since the 1980's.
Revenues from commercial sales and contract manufacturing dominate total
revenues and revenues from nematode and virus research and collaborative product
development agreements are expected to form a small percentage of future total
revenues. biosys has incurred operating losses since its inception and expects
to incur an operating loss for 1996.
On March 31, 1995, biosys completed a merger with CGI whereby a
wholly-owned subsidiary of biosys was merged with CGI and CGI became a
wholly-owned subsidiary of biosys. The transaction has been accounted for as a
pooling of interests. Accordingly, the financial information for prior periods
have been restated to include CGI historical financial data. On March 15, 1996,
biosys and AgriDyne completed a merger whereby a wholly-owned subsidiary of
biosys was merged with AgriDyne, and AgriDyne became a wholly-owned subsidiary
of biosys. AgriDyne develops and commercializes plant-derived compounds for use
in environmentally compatible control of insect pests, and has three products
that have received Environmental Protection Agency registration allowing for
their sale in the U.S. The transaction was effected through the exchange of
0.28664 of a share of biosys Common Stock for each outstanding share of Common
Stock of AgriDyne, which resulted in the issuance to AgriDyne stockholders of
approximately 1.9 million shares of biosys Common Stock. The transaction was
accounted for under the purchase method of accounting.
biosys currently markets its products for use predominantly in the
northern hemisphere, where the growing season generally runs from March to
October. The seasonal nature of agriculture will cause biosys' product revenues
for certain products to be concentrated in these months and will result in
substantial variations in financial results from quarter to quarter. biosys'
product revenues could be adversely affected by unusual weather conditions, or
low insect infestation during this time period. Commercial introduction of
additional products is contingent upon, among other factors, completion of field
testing prior to establishing labeling claims. In the case of baculovirus based
products, registration is required prior to product sales in the U.S. (from the
Environmental Protection Agency) as well as in certain countries abroad. Unusual
weather conditions and other factors may delay field tests, label development
and commercialization. biosys' quarterly operating results may also be affected
by fluctuations in the demand for products by contract manufacturing clientele,
and the timing or amount of revenue to be recognized from potential new contract
manufacturing arrangements. In addition, biosys' quarterly operating results may
be affected by the timing of biosys' entering into research and development or
collaborative arrangements and any payments made to or expenses incurred by
biosys in connection with such arrangements. While biosys anticipates that it
may enter into such arrangements in the future, there can be no assurance that
it will do so, and, if it does, it cannot predict the timing or amount of
revenue derived from such arrangements.
For the pheromone business, the availability of the pheromone Active
Ingredient (A.I.) on a reliable, cost-effective basis has been a significant
factor affecting the viability of the business. On November 7, 1995, biosys
entered into a multiyear supply and marketing agreement with ISP as part of
biosys' strategy for an integrated supply of A.I. biosys' achievement of
acceptable margins for certain pheromone-based products may be precluded if it
is unable to acquire sufficient quantities of A.I. from ISP. biosys has also
established a third party manufacturing relationship with Grant Chemical
Division of Ferro Corporation for the production of certain important
intermediate products. This arrangement has more than satisfied biosys' needs
for A.I. to date. However, to the extent that these arrangements do not result
in the production of sufficient quantities of pheromones, biosys' ability to
provide pheromone-based products would be adversely affected.
Results of Operations
Total revenues for the first quarter of 1996 were $7,469,000 compared
to $6,020,000 for the first quarter of 1995, an increase of 24.1%. Product sales
(after excluding $799,000 of contract manufacturing revenues) continued their
growth at $6,670,000 in the first quarter of 1996, 32.1% ahead of product sales
(after excluding $971,000 of contract manufacturing revenues) of $5,049,000 in
the same period in 1995.
These year-to-date proprietary product gains occurred primarily in
biosys' pheromone business. Strong pheromone sales included partial delivery of
a $5,300,000 order from Egypt and related parties for mating disruption products
aimed at control of the pink bollworm in cotton. The remainder of this sale will
be completed in the second quarter.
biosys achieved a gross margin on product sales of $1,434,000, or
19.8%, for the first quarter ended March 31, 1996, versus a gross margin of
$790,000 or 13.1% for the first quarter of 1995. The increase in gross margin is
attributable to post-merger consolidation of manufacturing at biosys' Decatur,
IL facility, and product sales increases. In March 1996, biosys modified its
long-term manufacturing agreement for the Decatur, IL facility. Under the terms
of the revised agreement, biosys' fixed costs will be reduced 40% while
maintaining adequate availability of current and future capacity to manufacture
the full range of its nematode product line and associated contract
manufacturing businesses. The revised agreement will positively impact biosys'
future gross margins. Because of the seasonality and perishability of biosys'
nematode-based products and other sales mix variables, the required timing to
produce inventory may affect the absorption of production overhead and impact
gross margins, when measured on a quarterly basis, when compared to
manufacturing operations involving different technologies, where production may
occur on a more even basis between periods.
Total operating costs and expenses (excluding costs of product sales,
purchased research and development, write-off of purchase price in excess of net
assets acquired, and costs of mergers) decreased by 26.6% to $3,193,000 in the
first quarter of 1996 compared to $4,349,000 for the same quarter in 1995.
Research and development expenses were $1,471,000 for the first quarter
of 1996, as compared to $2,106,000 for the first quarter of 1995, a decrease of
30.2%. The decrease was primarily due to efficiencies gained from the CGI
merger, completion of certain research projects and other cost control measures.
Marketing and selling expenses for the first quarter of 1996 decreased
34.7% to $805,000 as compared to $1,232,000 for the first quarter of 1995. This
decrease related to the net impact of merger related efficiencies and cost
control measures. This is partially offset by continuing investment in product
commercialization.
General and administrative expenses were $917,000 for the first quarter
of 1996 as compared to $1,011,000 for the first quarter of 1995, a decrease of
9.3%.. This decrease can be attributed to consolidated efficiencies following
the CGI merger, particularly the consolidation into one headquarters facility in
August 1995, and is reflected in reduced expenses for legal services, personnel,
travel and entertainment as well as in other administrative functions.
At the time of the CGI merger announcement in December 1994, the
Company anticipated that an aggregate of approximately $4,100,000 in merger,
severance and relocation costs would be incurred by biosys and CGI related to
their combination. Through March 31, 1996, such costs amounted to $4,524,000. As
of March 31, 1996, all significant merger, severance and relocation costs
related to the CGI merger have been incurred.
At the time of the AgriDyne merger announcement on April 28, 1995, the
Company anticipated accounting for the merger as a pooling of interests. Under
this accounting method the Company was expensing costs related the merger as
incurred. Through September 30, 1995, $452,000 of expense was recorded.
Subsequent to September 30, 1995, due to changes in facts and circumstances, the
Company determined that purchase accounting was the appropriate method of
accounting for the merger. Thus, all costs related to the merger incurred
subsequent to September 30, 1995 have been treated as additional purchase
consideration. Of the aggregate purchase price of $13,398,000, $3,717,000 has
been allocated to net tangible assets acquired, $6,000,000 to in-process
research and development and $3,681,000 to goodwill.
Liquidity and Capital Resources
biosys is experiencing negative cash flow from operations and it is
expected that biosys will continue to experience negative operating cash flow
through the end of the second quarter of 1996 and potentially thereafter. Even
with the cash and cash equivalents of AgriDyne, the net proceeds from the
Preferred Share Financing (defined below), and projected improvements in cash
flow from operations, the funding of future operations may require further
infusion of capital. There can be no assurances that adequate revenue growth and
reduction of operating losses will be achieved, and even if they are, management
of biosys may choose to supplement the Company's cash position. Potential
sources of additional funding include private equity financing, mergers,
collaborative research arrangements or strategic marketing partnerships. Under
the terms of the Line of Credit Facility (defined below), CGI Credit Facility
(defined below), and Lease Financing (defined below), approval is required
before biosys may enter into any merger or acquisition or enter into a major
debt agreement. Under the terms of the Preferred Share Financing, approval is
required before biosys may enter into any preferred shares financing and may be
required under certain circumstances before biosys may enter into any merger or
acquisition. If additional funds are raised by biosys through the issuance of
equity securities or securities convertible into or exercisable for equity
securities, the percentage ownership of the then current stockholders of biosys
will be reduced. biosys may issue an additional series of preferred stock with
rights, preferences or privileges senior to those of the biosys Common Stock.
biosys does not have any commitments or arrangements to obtain any funding and
there can be no assurance that any required financing of biosys will be
available on acceptable terms, if at all. The unavailability of any required
financing, the inability to renegotiate current debt financing arrangements,
required to be renegotiated by the terms thereof (as described below), or the
risks affecting financial performance referenced above could prevent or delay
the continued development and marketing of the products of biosys, may require
curtailment of operations of biosys and could result in the bankruptcy or
insolvency of biosys.
On March 26, 1996, biosys completed the sale of an aggregate of 780
shares of biosys Series A Preferred Stock (the "Preferred Shares") at $10,000
per share or an aggregate purchase price of $7.8 million, which resulted in net
proceeds of $7.25 million after placement fees of approximately $550,000, to a
group of institutional accredited investors in a private placement (the
"Preferred Share Financing"). The Preferred Shares were offered and sold in
reliance on the exemption from registration under the Securities Act set forth
in Regulation D under the Securities Act. In connection with the issuance of the
Preferred Shares, warrants to purchase up to 80,889 shares of biosys Common
Stock were issued to the placement agent and related parties (the "Warrants").
The Warrants are exercisable over a five-year term and have an exercise price of
$6.75. In accordance with the registration rights agreements between biosys and
the purchasers of the Preferred Shares, biosys effected a "shelf" registration
of the Common Stock issuable upon conversion of the Preferred Shares and,
exercise of the Warrants, and will use its best efforts to keep such
registration statement effective for up to three years after the closing.
The Preferred Shares may be converted into biosys Common Stock at a
conversion price which is the lower of (i) $6.75, or (ii) 85% of the average
closing bid price for the five trading days prior to the date the investor gives
notice of conversion. The Preferred Shares shall automatically be converted into
biosys Common Stock, if not previously converted, on March 22, 1999. The
Preferred Shares principal amount accretes at an annual rate of 8%, payable in
stock upon conversion to biosys Common Stock. The Preferred Shares may be
redeemed at the option of the Company at the time of conversion at a price that
would give the investor the same return as he would have received had he
converted on the day the redemption occurs and sold the Common Stock issued upon
conversion. biosys also may, at its option, redeem the Preferred Shares
commencing at any time after March 26, 1997 at a price per share equal to a
specified percentage, commencing at 130% and declining to 115% in 1999, of the
original purchase price plus all accrued and unpaid accretion.
biosys currently has a lease financing arrangement, as amended in
writing on March 29, 1995, May 30, 1995, July 25, 1995, September 26, 1995,
November 14, 1995, January 15, 1996, February 29, 1996 and May 13, 1996 for
existing equipment in the amount of up to $2,500,000, under which biosys had
approximately $1,604,000 outstanding as of March 31, 1996 (the "Lease
Financing"). Extensions of funds under the Lease Financing are subject to
certain lending limit conditions and financial covenants. At March 31, 1996,
biosys was in default of certain of these financial covenants; such default was
subsequently waived by the Lease Financing lender through June 30, 1996. The
Company and the Lease Financing lender have agreed to renegotiate such covenants
to reflect projected 1996 operations. There can be no assurance that the lending
limit conditions and other covenants of the Lease Financing will be met in the
future by biosys. If biosys is in default, and such default is not waived, then
the Lease Financing lender may accelerate biosys' payment obligations and may
exercise other rights and remedies as a secured creditor as granted under the
Lease Financing and by law, including, but not limited to, foreclosure on
substantially all of biosys' assets which were pledged as security for the Lease
Financing. The consequences of exercise by the Lease Financing lender of such
remedies could include prevention or delay of the continued development and
marketing of the products of biosys and require curtailment of the operations of
biosys. In addition, the inability of biosys to comply with the requirements of
the Lease Financing could lead to the insolvency or bankruptcy of biosys.
biosys has a working capital line of credit with a bank entered into
during 1995, as amended on July 21, 1995, September 13, 1995, November 14, 1995,
December 20, 1995, February 9, 1996, March 12, 1996 and May 13, 1996 (the "Line
of Credit Facility") that allows for borrowings of up to $5,250,000. As of March
31, 1996, $4,000,000 was outstanding under the Line of Credit Facility. Of the
allowable borrowings, a portion of borrowings under the Line of Credit Facility
may not exceed the lesser of $4,000,000 or the eligible borrowing base,
calculated as the sum of percentages of the eligible accounts receivable and
domestic inventory, net of reserves. An overline portion of the Line of Credit
Facility in the amount of $1,250,000 was repaid on March 26, 1996 (the "overline
portion"). The remaining $4,000,000 line of credit expires on June 5, 1996, and
must be renewed with the lender for extension of credit beyond this time.
Although not a binding commitment, the bank has agreed to renegotiate the terms
of the Line of Credit Facility in 1996. Funds under the Line of Credit Facility
are subject to certain lending limit conditions and financial covenants unless
otherwise waived heretofore. The Line of Credit Facility also provides for
limitations on biosys' ability to enter into future merger, acquisition or debt
agreements and restrictions on biosys' payment of cash dividends and repurchase
of Common Stock. Borrowings under the Line of Credit Facility are secured by
substantially all of the assets of biosys. Interest on borrowings is charged at
the lender's prime rate plus 3% (11.25% as of March 31, 1996). The Line of
Credit Facility required a commitment fee of $40,000 and issuance to the lender
of a warrant to purchase 4,000 shares of biosys Common Stock at an exercise
price of $5.00 per share. The overline portion of the Line of Credit Facility
required an additional commitment fee of $10,000 and issuance to the lender of a
warrant to purchase 33,333 shares of biosys Common Stock at an exercise price of
$7.50 per share. In connection with the various amendments to the Line of Credit
Facility the Company has paid modification fees of $75,000 and has issued
warrants to purchase 11,159 shares of biosys Common Stock at exercise prices
ranging from $5.15625 to $10.00 per share. Through March 31, 1996, biosys
breached certain covenants under the Line of Credit Facility. Such default has
been waived by the Line of Credit Facility lender. The bank and the Company have
subsequently renegotiated such covenants to reflect projected 1996 operations.
There can be no assurance that biosys will be able to meet such covenants of the
Line of Credit Facility in 1996 and the future. If biosys is in default, and
such default is not waived, then the Line of Credit Facility lender would have
remedies available comparable to those available to the Lease Financing lender
upon a default under the previously mentioned Lease Financing agreements. The
consequences of the exercise by the Line of Credit Facility lender of its rights
upon default would be comparable to those resulting from the exercise by the
Lease Financing lender of its rights upon default.
CGI had a credit facility (the "CGI Credit Facility") pursuant to which
it received $3,400,000 in debt financing. At March 31, 1996 approximately
$2,601,000 was outstanding under this facility. Under the CGI Credit Facility,
CGI was required to maintain a tangible net worth of $3,000,000, and obtain the
prior approval of the First National Bank of Maryland (the "Bank") and the
Maryland Industrial Development Financing Authority ("MIDFA"), the guarantor of
the loan, prior to making any loans or advances to other persons, including
biosys. CGI breached these covenants concurrent with the merger of biosys and
CGI on March 31, 1995. Pursuant to an agreement dated May 26, 1995, as amended
on June 29, 1995, July 31, 1995, August 29, 1995 (the "First Modification
Agreement'), the Bank and MIDFA permanently waived such defaults in return for
(i) reduction of the loan's principal balance by $565,000 through liquidation of
a certificate of deposit required to be held as collateral by the Bank pursuant
to terms of the loan, and (ii) biosys' guarantee of the CGI Credit Facility. A
second modification agreement, dated October 2, 1995, as amended on December 5,
1995, January 31, 1996, March 15, 1996 and April 1, 1996 (the "Second
Modification Agreement") required that (i) CGI maintain a positive shareholders'
equity, (ii) by May 1, 1996, the Bank and biosys agree to the establishment of
financial covenants which would supersede the existing financial covenants,
(iii) commencing on December 1, 1995 and continuing until January 2, 1996,
biosys would prepay loan principal each month by approximately $50,500, plus all
accrued and unpaid interest, (iv) commencing on February 1, 1996 and continuing
on the first day of each month thereafter up to and including December 1, 1996,
biosys prepay loan principal each month by approximately $25,000, plus all
accrued and unpaid interest, (v) commencing on January 2, 1997 and continuing on
the first day of each month thereafter up to and including August 1, 1998,
biosys prepay loan principal each month by approximately $119,700, plus all
accrued and unpaid interest and, (vi) on or before September 1, 1998, biosys pay
all principal and interest that remains outstanding under the CGI Credit
Facility, plus all late charges, expenses and attorneys' fees owned thereunder.
On May 1, 1996, the Bank, MIDFA and biosys executed a third modification
agreement (the "Third Modification Agreement") pursuant to which, (i) biosys and
the Bank met the requirement under the Second Modification Agreement to agree on
the superseding of the existing financial covenants by outlining an acceptable
process by which biosys agrees to disclose to the Bank and MIDFA the financial
covenants or tests it agrees to regarding its Line of Credit Facility and to
automatically become bound to comply substantially with those same financial
covenants or tests for the benefit of the Bank, (ii) the Bank and MIDFA approved
the subleasing of 9,600 square feet of space in biosys' building and biosys
assigned its interest in and to the sub-lease to the Bank and MIDFA as further
collateral under the CGI Credit Facility, and (iii) the Bank and MIDFA
authorized biosys to grant a conditional right of first refusal to Zeneca
Limited plc ("Zeneca") to purchase certain specified equipment assets of the
Company related to the production of viruses pursuant to a joint development
agreement between biosys and Zeneca and biosys executed a Supplemental Security
Agreement in favor of the Bank and MIDFA regarding said assets. There can be no
assurance that all of the foregoing events will have occurred by the dates
required. If all such events do not occur in the time required, default would
occur under the CGI Credit Facility which may entitle the Bank and MIDFA to
accelerate payment of all CGI Credit Facility indebtedness and to exercise the
other rights and remedies under the CGI Credit Facility and by law. A default
and subsequent acceleration of the agreements governing the Line of Credit
Facility, Lease Financing or CGI Credit Facility would result in cross defaults
under the agreements governing the other arrangements. The exercise of rights
and remedies under the Line of Credit Facility, Lease Financing agreement or
Modification Agreements could prevent or delay the continued development and
marketing of biosys' products, require curtailment of the operations of biosys
and could result in the insolvency or bankruptcy of biosys.
During 1995, the Company received notice from Nasdaq indicating that as
a result of biosys' failure to maintain $4 million of net tangible assets, as
required by the NASD bylaws governing continuance on the Nasdaq National Market,
biosys' Common Stock would be delisted if the required net tangible assets
condition were not satisfied. As a consequence of the AgriDyne merger and the
infusion of net equity of approximately $7,250,000 from the Preferred Share
Financing, both of which occurred in March 1996, the Company satisfied the
Nasdaq net tangible assets requirement as of March 22, 1996. It is possible that
1996 losses, if incurred, could cause biosys to again fall below the Nasdaq net
tangible asset requirement. Were such condition to occur and if (a) no temporary
exemption was granted by Nasdaq, and (b) further equity financing or other means
of increasing net tangible assets was not available, biosys' Common Stock would
be delisted from the Nasdaq National Market. In addition, in April 1996 the
Company received an oral inquiry from a Nasdaq representative requesting that
the Company provide assurance to Nasdaq that the issuance of Common Stock upon
conversion of the Preferred Shares sold in the Preferred Share Financing would
comply with the requirement in the NASD bylaws governing continuance on the
Nasdaq National Market that stockholder approval be obtained prior to the
issuance of common stock at a price less than the greater of book or market
value which equals 20% or more of a company's outstanding common stock (the
"Nasdaq 20% Rule"). The Company has submitted a written response to Nasdaq
indicating that, in the event the cumulative number of shares of Common Stock
issued or issuable pursuant to notices of conversion delivered by holders of the
Preferred Shares during the three-year period ending on May 22, 1999 (the date
upon which the Preferred Shares are automatically converted) would exceed 20% of
biosys' Common Stock outstanding immediately prior to the Preferred Share
Financing, it will undertake to redeem the excess Preferred Shares in accordance
with the terms of the Preferred Share Financing. Nasdaq has orally indicated
that such course of action would be sufficient to assure compliance with the
Nasdaq 20% Rule. However, if such redemption becomes necessary in order to
comply with the Nasdaq 20% Rule, there can be no assurance that biosys will have
sufficient cash resources to redeem the excess Preferred Shares in accordance
with the terms of the Preferred Share Financing. In addition, the provisions of
the Delaware General Corporation Law prohibit redemption of the Company's stock
if the capital of biosys is impaired or if such redemption would cause any
impairment of the Company's capital. If biosys was unable to redeem the excess
Preferred Shares in order to assure compliance with the Nasdaq 20% Rule and (a)
if biosys was unable to raise additional funds with which to effect the
redemption or increase the Company's assets or (b) if an alternative was not
approved by Nasdaq, biosys' Common Stock would be delisted from the Nasdaq
National Market. A delisting of biosys from Nasdaq could adversely affect the
value and liquidity of the shares of biosys Common Stock and restrict the
Company's future ability to raise equity capital.
The report of Price Waterhouse LLP on biosys' 1995 consolidated
financial statements contains an explanatory paragraph regarding biosys' ability
to continue as a going concern.
biosys/CGI Merger Expenses
During 1995, biosys' management completed the process of consolidating
biosys and CGI's separate research and development, selling and marketing, and
general and administrative functions in Maryland. Research programs that were
redundant or were deemed strategically unnecessary were rationalized. To
accomplish such consolidation and rationalization, approximately 40 of the
combined companies' employees were terminated as a result of the merger and
certain California employees relocated to Maryland (including certain of biosys'
executive officers).
At the time of the CGI merger announcement in December 1994, the
company anticipated that an aggregate of approximately $4,100,000 in merger,
severance and relocation costs would be incurred by biosys and CGI, related to
their combination. As of March 31, 1996, such costs amounted to $4,524,000. As
of March 31, 1996, management believes all significant merger, severance and
relocation costs related to the CGI merger have been incurred.
biosys' management believes that the future cost savings which are
expected to be realized from the consolidation of the two companies and the
attendant elimination of duplicate employee positions, functions and facilities
ultimately will be greater than the aggregate merger-related costs.
biosys/AgriDyne Merger Expenses
In April 1996, biosys' management completed the process of
consolidating biosys and AgriDyne's separate research and development, selling
and marketing, and general and administrative functions in Maryland. Research
programs that were redundant or deemed strategically unnecessary were
rationalized. To accomplish such consolidation and rationalization,
approximately 10 of AgriDyne's total employees (including all of AgriDyne's
executive officers in their capacity as officers) were terminated and certain
AgriDyne employees have either relocated to Maryland, or, for those employees
who were located in the field, (in the case of marketing employees) remained in
those locations.
At the time of the AgriDyne merger announcement in April 1995, the
company anticipated accounting for the merger as a pooling of interests and
estimated that an aggregate of approximately $725,000 would be incurred by
biosys related to the merger. During the first nine months of 1995, such costs
amounted to $452,000. Subsequent to September 30, 1995, due to changes in facts
and circumstances, biosys determined that purchase accounting was the
appropriate method of accounting for the merger. Thus, all costs related to the
merger subsequent to September 30, 1995, have been treated as additional
purchase consideration. Of the aggregate purchase price of $13,398,000,
$3,717,000 has been allocated to net tangible assets acquired, $6,000,000 to
in-process research and development and $3,681,000 to goodwill.
biosys' management believes that the future cost savings which are
expected to be realized from the consolidation of the two separate companies and
the attendant elimination of duplicate employee positions, functions and
facilities ultimately will be greater than the merger-related costs incurred.
Additionally, biosys' management believes that combining the two separate
companies will enhance the ability to raise permanent equity capital over that
of each separate company, but there can be no assurance that the company will
raise such capital.
Capital Equipment Expenditures
During the quarter ended March 31, 1996, the Company expended
approximately $425,000 for pilot plant, capital equipment, furniture, and
leasehold improvements.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
(a) None
(b) In the event of any liquidation, dissolution or winding up
of the Company, either voluntarily or involuntarily, the
holders of the Company's Series A Preferred Stock are
entitled to receive, prior to and in preference to any
distribution to the holders of the Company's Common Stock,
an amount per share equal to the sum of $10,000 for each
outstanding share of Series A Preferred Stock and an amount
equal to 8% of the original issue price per annum for the
period that has passed since the date of issuance of any
Series A Preferred Stock.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
(a) A special meeting of the stockholders of biosys, inc. was
held on March 15, 1996.
(b) Not applicable.
(c) The following proposals were voted upon and approved at the
meeting:
1. The proposal to approve the issuance of
Common Stock, par value $.001 per share, of biosys
("biosys Common Stock"), pursuant to the Agreement
and Plan of Merger, dated as of April 28, 1995, as
amended, by and among biosys, Ag Merger Co., Inc.,
a Delaware Corporation and a wholly-owned
subsidiary of biosys ("Sub"), and AgriDyne
Technologies Inc., a Delaware Corporation
("AgriDyne") pursuant to which, among other things
(a) Sub will be merged with and into AgriDyne,
which will be the surviving corporation, and
AgriDyne will become a wholly-owned subsidiary of
biosys (the "Merger") and (b) each outstanding
share of Common Stock, par value $.06 per share,
of AgriDyne ("AgriDyne Common Stock") will be
converted into the right to receive 0.28664 of a
share of biosys Common Stock (after
the Reverse Split Proposal was approved):
2,801,693 affirmative, 499,062 negative, and
32,525 abstaining votes were cast with respect to
this proposal, and 1,774,313 votes were withheld;
2. The proposal to approve an amendment to biosys'
Certificate of Incorporation to effect a reverse
stock split of the outstanding shares of biosys
Common Stock, so that each two and one half shares
of biosys Common Stock outstanding immediately
prior to giving effect to the Merger will be
reclassified into one share of biosys Common Stock
(the "Reverse Stock Proposal"): 4,861,474
affirmative, 211,200 negative, and 34,919
abstaining votes were cast with respect to this
proposal.
(d) Not applicable.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
2.1 Asset Purchase Agreement among biosys,inc., AgriSense, Provesta
Corporation and Dow Corning Enterprises, Inc., dated April 30,
1993. (6)
2.2 Agreement and Plan of Merger dated as of December 8, 1994 among
biosys, inc., CGI Merger Co., Inc. and Crop Genetics
International Corporation. (9), (10)
2.3 Agreement and Plan of Merger dated as of April 28, 1995 among
biosys, inc., Ag Merger Company, Inc., and AgriDyne Technologies,
Inc. (13)
2.4 Amendment to Agreement and Plan of Merger, dated August 1, 1995,
among biosys, inc., Ag Merger Company, Inc., and AgriDyne
Technologies, Inc. (16)
2.5 Second Amendment to Agreement and Plan of
Merger, dated October 30, 1995, among biosys, inc., Ag Merger
Company, Inc., and AgriDyne Technologies, Inc. (16)
2.6 Third Amendment to Agreement and Plan of Merger, dated November
16, 1995, among biosys, inc., Ag Merger Company, Inc. and
AgriDyne Technologies, Inc. (16)
2.7 Fourth Amendment to Agreement and Plan of Merger, dated December
29, 1995, among biosys, inc., Ag Merger Company, Inc. and
AgriDyne Technologies, Inc. (16)
3.1 Agreement and Plan of Merger, dated May 11, 1994, containing the
Certificate of Incorporation of biosys, inc. (8)
3.2 Bylaws of biosys, inc. (8)
3.3 Certificate of Amendment of Certificate of Incorporation of
biosys, inc., filed March 30, 1995. (16)
3.4 Certificate of Amendment of Certificate of Incorporation of
biosys, inc., filed March 15, 1996. (17)
3.5 Certificate of Designation of Preferences and Rights of Series A
Preferred Stock of biosys, inc., filed March 22, 1996. (17)
4.1 Series C Preferred Stock Purchase Agreement between biosys, inc.
and certain investors dated December 23, 1991. (1)
10.1 Master Lease Agreement dated August 14, 1991 between biosys, inc.
and Western Technology Investment and various amendments to the
Master Lease Agreement. (1)
10.2 Master Lease Agreement dated December 29, 1988 between biosys,
inc. and John Hancock Leasing and various amendments to the
Master Lease Agreement. (1)
10.3 Private Label Marketing Agreement dated August 7, 1991 between
biosys, inc. and Chevron Chemical Company. (1), (2)
10.4 Private Label Marketing Agreement dated March 26, 1991 between
biosys, inc. and CIBA-GEIGY Corporation. (1), (2)
10.5 Description of biosys' Sales Incentive Compensation Arrangements.
(1)
10.6 Form of Director and Officer Indemnification Agreement. (1)
10.7 Distribution Agreement dated January 14, 1991 between biosys,
inc. and Dr. R. Maag. (1), (2)
10.8 Toll Manufacturing Agreement dated December 9, 1991 between
biosys, inc. and Archer-Daniels-Midland Company. (1), (2)
10.9 Director and Consulting Agreement between biosys, inc. and Thomas
Parton dated July 9, 1991. (1)
10.10 Director and Consulting Agreement between biosys, inc. and Dr.
Alexander Cross, D.Sc. dated January 30, 1990. (1)
10.11 biosys First Amended and Restated 1987 Stock Option Plan. (3)
10.12 Exclusive Marketing Agreement dated April 6, 1992 between biosys,
inc. and CIBA-GEIGY Limited. (4), (5)
10.13 Joint Development Agreement effective October 1, 1992 between
biosys, inc. and Sandoz Agro, Inc. (4), (5)
10.14 Contract Manufacturing Agreement dated December 2, 1993, between
biosys, inc. and Archer-Daniels-Midland Company. (4), (7)
10.15 Master Equipment Lease Agreement dated as of December 21, 1994,
between biosys, inc. and Venture Lending and Leasing, Inc. (10)
10.16 Lease Schedule No. 8-001 to Master Equipment Lease Agreement
dated December 23, 1994 between biosys, inc. and Venture Lending
and Leasing, Inc. (10)
10.17 Warrant dated December 23, 1994 from biosys, inc. to Venture
Lending and Leasing, Inc. (10)
10.18 Security Agreement dated December 21, 1994, by biosys, inc. in
favor of Venture Lending and Leasing, Inc. (10)
10.19 Trademark Collateral Assignment dated December 21, 1994, between
biosys, inc. and Venture Lending and Leasing, Inc. (10)
10.20 Patent Collateral Assignment dated December 21, 1994, between
biosys, inc. and Venture Lending and Leasing, Inc. (10)
10.21 Letter dated December 23, 1994, between Imperial Bank and biosys,
inc. (10)
10.22 Letter dated December 20, 1994 between biosys, inc. and Sandoz
Agro, Inc. (10)
10.23 Letter to biosys, inc. from Joseph W. Kelly dated December 7,
1994. (10)
10.24 Letter to biosys, inc. from Peter S. Carlson dated December 7,
1994. (10)
10.25 Letter to biosys, inc. from James H. Davis dated December 6,
1994. (10)
10.26 Proposal Letter dated March 21, 1995, between biosys, inc. and
Imperial Bank. (11)
10.27 Security and Loan Agreement dated January 30, 1995, between
biosys, inc. and Imperial Bank. (11)
10.28 Warrant to Purchase Stock dated January 26, 1995, between biosys,
inc. and Imperial Bank. (11)
10.29 General Security Agreement dated January 30, 1995, between
biosys, inc. and Imperial Bank. (11)
10.30 biosys, inc. Second Amended and Restated 1987 Stock Option Plan,
as amended December 7, 1994. (11)
10.31 Agreement, dated March 31, 1995, between biosys, inc. and Joseph
W. Kelly. (11) 10.32 Agreement, dated March 31, 1995, between
biosys, inc. and Peter S. Carlson (11).
10.33 Agreement, dated March 31, 1995, between biosys, inc. and James
H. Davis. (11).
10.34 Amendment #1 to Master Equipment Lease Agreement dated March 29,
1995, between biosys, inc. and Venture Lending and Leasing, Inc.
(11)
10.35 Amendment #2 to Master Equipment Lease Agreement dated May 30,
1995, between biosys, inc. and Venture Lending and Leasing, Inc.
(12)
10.36 Modification Agreement dated May 26, 1995, between biosys, inc.,
Crop Genetics International Corporation, Maryland Industrial
Development Financing Authority, and the First National Bank of
Maryland. (12)
10.37 Guaranty Agreement dated May 26, 1995, between biosys, inc., Crop
Genetics International Corporation, Maryland Industrial
Development Financing Authority, and the First National Bank of
Maryland. (12)
10.38 Pledge and Security Agreement dated May 26, 1995, between biosys,
inc., Crop Genetics International Corporation, Maryland
Industrial Development Financing Authority, and the First
National Bank of Maryland. (12)
10.39 Amendment #3 to Master Equipment Lease Agreement dated July 25,
1995, between biosys, inc., and Venture Lending and Leasing, Inc.
(15)
10.40 Amendment #1 to the Security and Loan Agreement dated July 21,
1995 between biosys, inc., and Imperial Bank. (15)
10.41 Amendment #2 to the Security and Loan Agreement dated September
13, 1995 between biosys, inc., and Imperial Bank. (15)
10.42 Warrant dated September 1, 1995, from biosys, inc. to Imperial
Bank. (15)
10.43 Security and Loan Agreement, dated September 15, 1995, between
biosys, inc. and Imperial Bank. (15)
10.44 Second Modification Agreement dated October 2, 1995, between
biosys, inc., Crop Genetics International Corporation, Maryland
Industrial Development Financing Authority, and the First
National Bank of Maryland. (15)
10.45 Agreement, dated September 15, 1995, between biosys, inc. and
Zeneca Limited. (4)(15)
10.46 Amendment #3 to the Security and Loan Agreement and Warrant
Agreement dated November 14, 1995 between biosys, inc. and
Imperial Bank. (16)
10.47 Form of Convertible Promissory Note dated November 10, 1995. (16)
10.48 Placing Agreement dated November 14, 1995, between biosys, inc.
and Index Security S.A. (16)
10.49 Amendment #4 to Master Equipment Lease Agreement dated November
14, 1995 between biosys, inc. and Venture Lending and Leasing,
Inc. (16)
10.50 Supply and Marketing Agreement dated November 7, 1995 between
biosys, inc. and International Specialty Products. (16)
10.51 Common Stock Purchase Agreement dated December 22, 1995 among
biosys, inc. and certain investors. (16)
10.52 Amendment #4 to the Security and Loan and Warrant Agreement dated
December 20, 1995 between biosys, inc. and Imperial Bank. (16)
10.53 Amendment #5 to the Master Equipment Lease Agreement dated
December 20, 1995 between biosys, inc. and Venture Lending and
Leasing, Inc. (16)
10.54 Letter Agreement dated as of November 30, 1995 among Crop
Genetics International Corporation, biosys, inc., Maryland
Industrial Development Financing Authority, and the First
National Bank of Maryland. (16)
10.55 Letter Agreement dated as of December 5, 1995 among Crop Genetics
International Corporation, biosys, inc., Maryland Industrial
Development Financing Authority and the First National Bank of
Maryland. (16)
10.56 Form of Regulation D Subscription Agreements entered into March
22, 1996 between biosys, inc. and the investors executing such
Agreements (the "Investors). (17)
10.57 Form of Registration Rights Agreement, entered into March 22,
1996, among biosys, inc., Swartz Investments, LLC and the
Investors. (17)
10.58 Warrants, dated March 21, 1996 from biosys, inc. to certain
holders named therein. (17)
10.59 Letter Agreement dated as of January 31, 1996 among Crop Genetics
International Corporation, biosys, inc., Maryland Industrial
Development Financing Authority, and the First National Bank of
Maryland. (17)
10.60 Letter Agreement dated as of March 15, 1996, among Crop Genetics
International Corporation, biosys, inc., Maryland Industrial
Development Financing Authority, and the First National Bank of
Maryland. (17)
10.61 Amendment #5 to the Security and Loan and Warrant Agreement dated
February 9, 1996, between biosys, inc. and Imperial Bank. (17)
10.62 Amendment #6 to the Security and Loan and Warrant Agreement dated
March 12, 1996, between biosys, inc. and Imperial Bank. (17)
10.63 Amendment #6 to the Master Equipment Lease Agreement dated
January 15, 1996, between biosys, inc. and Venture Lending and
Leasing, Inc. (17)
10.64 Amendment #7 to the Master Equipment Lease Agreement dated
February 29, 1996, between biosys, inc. and Venture Lending and
Leasing, Inc. (17)
10.65 Letter Agreement dated as of April 1, 1996, among Crop Genetics
International Corporation, biosys, inc., Maryland Industrial
Development Financing Authority, and the First National Bank of
Maryland.
10.66 First Amendment to Contract Manufacturing Agreement between
biosys, inc. and Archer-Daniels-Midland Company.
10.67 Sub-Lease Agreement between biosys, inc., Crop Genetics
International Corporation, and Gene Logic, Inc. dated May 2,
1996.
10.68 Third Modification Agreement dated May 1, 1996, between biosys,
inc., Crop Genetics International Corporation, Maryland
Industrial Development Financing Authority, and the First
National Bank of Maryland.
10.69 Amendment #7 to the Security and Loan and Warrant Agreement dated
May 13, 1996, between biosys, inc. and Imperial Bank.
10.70 Amendment #8 to the Master Equipment Lease Agreement dated May
13, 1996, between biosys, inc. and Venture Lending and Leasing,
Inc.
11.1 Statement regarding computation of net loss per share.
21.1 Subsidiaries of biosys. (17)
- - --------------------
(1) Filed as an exhibit to biosys' Registration Statement on Form S-1 (No.
33-45100 filed January 15, 1992), and incorporated herein by
reference.
(2) Portions of this exhibit have been omitted (which omissions have been
circled in the filed exhibits) and filed separately with the
Commission along with a request for confidential treatment of such
portions pursuant to Rule 406 under the Securities Act of 1933, as
amended.
(3) Compensatory Plan.
(4) Portions of this exhibit have been omitted (which omissions have been
circled in the filed exhibits) and filed separately with the
Commission along with a request for confidential treatment of such
portions pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended.
(5) Filed as an exhibit to biosys' Annual Report on Form 10-K filed with
the Commission on March 31, 1993, and incorporated herein by
reference.
(6) Filed as an exhibit to biosys' current Report on Form 8-K filed with
the Commission on May 13, 1993, and incorporated herein by reference.
(7) Filed as an exhibit to biosys' Annual Report on Form 10-K filed with
the Commission on March 30, 1994, and incorporated herein by
reference.
(8) Filed as an exhibit to biosys' Form 10-Q filed with the Commission on
August 10, 1994, and incorporated herein by reference.
(9 Filed as an exhibit to biosys' Current Report on Form 8-K, filed with
the Commission on December 20, 1994, and incorporated herein by
reference.
(10) Filed as an exhibit to biosys' Registration Statement on Form S-4 (No.
33-89498) filed with the Commission on February 13, 1995, and
incorporated herein by reference.
(11) Filed as an exhibit to biosys' Annual Report on Form 10-K filed with
the Commission on March 31, 1995, and incorporated herein by
reference.
(12) Filed as an exhibit to biosys' Form 10-Q filed with the Commission on
May 12, 1995, and incorporated herein by reference.
(13) Filed as an exhibit to biosys' Current Report on Form 8-K, filed with
the Commission on May 5, 1995, and incorporated herein by reference.
(14) Filed as an exhibit to biosys' Form 10-Q filed with the Commission on
August 14, 1995, and incorporated herein by reference.
(15) Filed as an exhibit to biosys' Form 10-Q filed with the Commission on
November 14, 1995, and incorporated herein by reference.
(16) Filed as an exhibit to biosys' Registration Statement on Form S-4 (No.
33-00496) filed with the Commission on February 13, 1996, and
incorporated herein by reference.
(17) Filed as an exhibit to biosys' Annual Report on Form 10-K filed with
the Commission on April 1, 1996, and incorporated herein by reference.
B. REPORTS ON FORM 8-K:
A report on Form 8-K, dated January 3, 1996, regarding the press
release announcing the sale of 867,114 shares of biosys' Common Stock
in a private placement of shares in reliance on Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, was filed on January 4, 1996. Information respecting Item 5
was reported.
A report on Form 8-K, dated March 8, 1996, regarding the press release
announcing the approval of biosys' Registration Statement on Form S-4
relating to the shares of biosys' Common Stock to be issued in the
proposed merger with AgriDyne Technologies Inc. (the "Merger"), the
special meeting of the stockholders of biosys on March 15, 1996 to
approve the Merger and a one for two and one-half reverse stock split,
and the extension from Nasdaq of the exception to the net tangible
assets requirement for maintenance on the Nasdaq National Market until
March 22, 1996, was filed on March 12, 1996. Information respecting
Item 5 was reported.
A report on Form 8-K, dated March 15, 1996, regarding the merger which
occurred March 15, 1996 among biosys, inc., a Delaware Corporation, Ag
Merger Company, Inc., a Delaware Corporation and wholly-owned
subsidiary of biosys, and AgriDyne Technologies Inc., a Delaware
Corporation, was filed on March 19, 1996. Information respecting Item 2
and Item 7 was reported.
A report on Form 8-K, dated March 22, 1996, regarding the sale of 705
shares of biosys' Series A Preferred Stock in a private placement was
filed on March 22, 1996. Information respecting Item 5 and Item 7 was
reported.
<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.
biosys, inc.
Date: May 15, 1996 By:_____________________________
----------------------------------- Michael R.N. Thomas
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT 11.1
biosys, inc.
COMPUTATION OF NET LOSS PER SHARE (1)
For The Three Months Ended
March 31,
1996 1995
---- ----
Net loss $(7,950,000) $(6,105,000)
============ ============
Weighted average shares
outstanding:
Common stock 5,951,641 4,111,396
Net loss per share $(1.34) $(1.48)
============ ============
- - --------------------------
(1) This Exhibit should be read in conjunction with Note 5 of Notes
to Condensed Consolidated Financial Statements.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the condensed
consolidated financial condition at March 31, 1996 (unaudited) and the condensed
consolidated statement of income for the three months ended March 31, 1996
(unaudited) and is qualified in its entirety by the reference to such financial
statements.
</LEGEND>
<CIK> 0000883076
<NAME> biosys, inc.
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<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
<EXCHANGE-RATE> 1.000
<CASH> 4,255
<SECURITIES> 0
<RECEIVABLES> 5,938
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<INVENTORY> 6,190
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0
1
<COMMON> 7
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</TABLE>
