U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) Quarterly report under Section 13 of 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended MAY 31, 2000 or
------------
( ) Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ____________ to ___________.
Commission file number 0-19866
----------------
CELOX LABORATORIES, INC.
(Exact name of small business issuer
as specified in its charter)
MINNESOTA 36-3384240
------------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1311 HELMO AVENUE, SAINT PAUL, MINNESOTA 55128
---------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Issuers telephone number, including area code: (651) 730-1500
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or
for such shorter periods that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes ___X___ No ________
State the number of shares outstanding of each the issuer's classes of common
equity, as of the latest practicable date.
THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OUTSTANDING ON
JUNE 30, 2000 WAS 3,683,169.
Transitional small business format disclosure:
Yes _______ No ___X___
1
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Table of Contents
CELOX LABORATORIES, INC.
Report on Form 10-QSB
for fiscal quarter ended
May 31, 2000
PART I -- FINANCIAL INFORMATION Page
----
ITEM 1. Financial Statements
Balance Sheet as of August 31, 1999
and May 31, 2000 3
Statement of Operations -- Three months ended May 31,
2000 and May 31, 1999, and nine months
ended May 31, 2000 and May 31, 1999 5
Statement of Changes in Shareholders' Equity
for the year ended August 31, 1999 and the
nine months ended May 31, 2000 6
Statement of Cash Flows -- Nine months ended
May 31, 2000 and May 31, 1999 7
Notes to Financial Statements 8
ITEM 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 9
PART II -- OTHER INFORMATION 14
2
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PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
CELOX LABORATORIES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
May 31, August 31,
ASSETS 2000 1999
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 127,147 $ 150,824
Certificates of deposit 558,556 378,514
Trade receivables 14,072 20,653
Officer note receivable 9,124 9,124
Accrued interest receivable 9,947 4,218
Inventories 53,932 57,906
Prepaid expenses 3,396 1,583
------------ ------------
Total current assets 776,174 622,822
------------ ------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Laboratory and production equipment 225,242 219,724
Office furniture and equipment 94,822 93,359
Leasehold improvements 138,426 138,426
------------ ------------
458,490 451,509
Less accumulated depreciation (346,131) (321,410)
------------ ------------
112,359 130,099
OTHER ASSETS
Patents, net 52,729 55,356
------------ ------------
TOTAL ASSETS $ 941,262 $ 808,277
============ ============
</TABLE>
See Notes to Financial Statements.
3
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CELOX LABORATORIES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
May 31, August 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2000 1999
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 3,920 $ 12,828
Accrued liabilities 37,939 28,066
Bank note payable - current 74,382 75,745
------------ ------------
Total current liabilities 116,241 116,639
------------ ------------
SHAREHOLDERS' EQUITY
Common stock 36,832 29,092
Additional paid-in capital 5,691,646 5,312,486
------------ ------------
5,728,478 5,341,578
Accumulated deficit (4,903,457) (4,649,940)
------------ ------------
Total shareholders' equity 825,021 691,638
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 941,262 $ 808,277
============ ============
</TABLE>
See Notes to Financial Statements.
4
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CELOX LABORATORIES, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
May 31, May 31,
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Net sales $ 33,018 $ 56,826 $ 127,835 $ 149,176
Cost of products sold 19,793 22,505 57,674 65,006
----------------------------------------------------------------------------------------------------------------
GROSS MARGIN 13,225 34,321 70,161 84,170
----------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Research and development 37,418 39,056 109,366 132,147
Marketing and sales 23,965 34,835 71,231 89,082
Administration 44,384 58,575 163,214 164,536
----------------------------------------------------------------------------------------------------------------
Total operating expenses 105,767 132,466 343,811 385,765
OPERATING LOSS (92,542) (98,145) (273,650) (301,595)
OTHER INCOME (EXPENSE)
Interest and investment income 7,467 7,112 16,641 23,667
Other income 6,400 375 6,752 8,429
Interest expense (1,027) (1,074) (3,260) (3,413)
----------------------------------------------------------------------------------------------------------------
Total other income, net 12,840 6,413 20,133 28,683
NET LOSS $ (79,702) $ (91,732) $ (253,517) $ (272,912)
================================================================================================================
BASIC AND DILUTED LOSS PER
COMMON SHARE $ (0.02) $ (0.03) $ (0.08) $ (0.10)
----------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,535,126 2,895,691 3,132,997 2,795,689
================================================================================================================
</TABLE>
See Notes to Financial Statements
5
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CELOX LABORATORIES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Common Stock Additional
------------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT AUGUST 31, 1997 2,742,169 $ 27,422 $ 5,251,756 $(3,983,371) $ 1,295,807
Options exercised 2,000 20 2,980 3,000
Net loss for the year (302,604) (302,604)
-------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 31, 1998 2,744,169 $ 27,442 $ 5,254,736 $(4,285,975) $ 996,203
Shares issued in
private placement 165,000 1,650 57,750 59,400
Net loss for the year (363,965) (363,965)
-------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 31, 1999 2,909,169 $ 29,092 $ 5,312,486 $(4,649,940) $ 691,638
Shares issued in
private placement 774,000 7,740 379,160 386,900
Net loss for the period (253,517) (253,517)
-------------------------------------------------------------------------------------------------------------
BALANCE AT MAY 31, 2000 3,683,169 $ 36,832 $ 5,691,646 $(4,903,457) $ 825,021
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
CELOX LABORATORIES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Nine months ended
May 31,
----------------------------
2000 1999
----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period $ (253,517) $ (272,912)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 27,348 37,606
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 6,581 (8,953)
Accrued interest receivable (5,729) (5,594)
Inventories 3,974 (4,627)
Prepaid expenses (1,813) (1,244)
Officer note receivable 0 (10,168)
Increase (decrease) in:
Accounts payable (8,908) 6,930
Accrued liabilities 9,873 2,846
----------------------------------------------------------------------------------------------------
Net cash used in operating activities (222,191) (256,116)
----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity (Purchase) of bank certificates of deposit, net (180,042) 94,563
Capital expenditures (6,981) (5,229)
----------------------------------------------------------------------------------------------------
Net cash from (used in) investing activities (187,023) 89,334
----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING:
Issuance of common stock 386,900 59,400
Principal payments on bank note payable (1,363) (5,388)
----------------------------------------------------------------------------------------------------
Net cash from financing activities 385,537 54,012
Net decrease in cash
and cash equivalents (23,677) (112,770)
CASH AND CASH EQUIVALENTS:
Beginning of period 150,824 350,120
----------------------------------------------------------------------------------------------------
End of period $ 127,147 $ 237,350
====================================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
CELOX LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS -- MAY 31, 2000
NOTE A - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair presentation have been
included.
The organization and business of the Company, accounting policies followed
by the Company and other information are contained in the notes to the Company's
financial statements filed as part of the Company's August 31, 1999 Form 10-KSB.
This quarterly report should be read in connection with such annual report.
NOTE B - CASH AND CASH EQUIVALENTS
For purposes of reporting the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
NOTE C - SHORT-TERM INVESTMENTS
As of May 31, 2000 the Company had investments of $558,556 in certificates
of deposit. Certificates of deposit are made only with the highest rated banks.
The Company also utilizes a money market fund, which is restricted by its
charter to Tier 1 instruments, for a portion of its investments. At times
throughout the year, the Company's cash, cash equivalents and certificates of
deposit in financial institutions may exceed FDIC insurance limits. The Company
has not experienced any losses in such accounts.
NOTE D - NOTES PAYABLE BANK
During April, 1997 the Company borrowed $100,000 from a local bank with the
proceeds used for financing a portion of the tenant improvements in the
Company's new facility. In February, 2000 the loan was renegotiated with a
different Bank. The new loan is secured by a certificate of deposit at this
bank. The interest rate for this loan, currently 5.5%, is tied to the
certificate of deposit rate.
NOTE E - LOSS PER COMMON SHARE
Basic loss per share is computed based upon the weighted average number of
common shares outstanding during the period. Stock options for 292,000 shares
were not included in the computation of diluted loss per share as the results
were antidilutive.
8
<PAGE>
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
a. BACKGROUND AND PRODUCTS
Celox Laboratories, Inc. ("Celox" or the "Company") is a cell technology
company formed in 1985 that researches, develops, manufactures and markets cell
biology products used in the propagation of cells derived from mammals,
including humans, and other species. These specialized cell growth products are
used primarily in academic, pharmaceutical, diagnostic and other commercial
laboratories to improve the growth condition, productivity and quality of
cell-derived medical and other biological products such as vaccines, monoclonal
antibodies, interferons and human growth factor. The Company focuses primarily
on solving the fundamental problems associated in culturing cells with the use
of serum, which is derived from the whole blood of animals and humans. The
Company's research activities have resulted in proprietary technology which has
been used to commercialize its non-serum growth media, cell freezing solutions
and other cell biology products.
The Company markets over 25 different products. The Company's proprietary
products consist of six different serum-free supplements: TCM(TM), TM-235(TM),
TCH(TM), Nephrigen(TM), HemaPro(TM) and VaxMax(TM)and two cell freezing
solutions, Cellvation(TM) and a newly introduced product, pZerve(TM).
VaxMax(TM), introduced in September of 1993, was developed specifically for use
in the production of veterinary vaccines. Nephrigen(TM) was introduced in fiscal
1998 and is a serum-free growth medium developed specifically for the culturing
of Human Embryonic Kidney (293) cells. As part of the Nephrigen(TM) system, the
Company also introduced a non-enzymatic dissociation solution that is used
instead of an enzyme such as trypsin. HemaPro(TM) was also introduced in fiscal
1998 and is a low protein, serum-free medium for clonogenic assays or EX VIVO
expansion of human progenitor cells. The Company intends to obtain IN VITRO
diagnostic status for HemaPro(TM). pZerve(TM) was introduced in 1999 and is used
primarily for cryopreserving human cells. pZerve(TM) is used as a research
product only, it is not for human use. An additional proposed clinical product,
ViaStem(TM), has completed preclinical testing. This product was developed to
improve the preservation of critical cells (e.g., stem cells), which are
required for bone marrow transplantation.
The Company has received a Drug Master File classification from the Food
and Drug Administration (FDA) for TCM(TM). This classification will expedite the
FDA approval process for customers who want to use the Company's TCM(TM) product
for manufacturingpurposes.
The Company also manufactures eleven basal media formulations, a series of
buffered saline solutions, other cell biology reagents, and a variety of custom
formulations.
During the third quarter of fiscal 2000, the Company entered into an
agreement to manufacture specialized solutions for the processing of pancreatic
islet cells for transplants.
In February, 1999 the Company announced the formation of Protide
Pharmaceuticals, Inc., (Protide), a wholly owned subsidiary. Celox owns four
million shares of Protide. Protide was formed in connection with the further
development of ViaStem(TM) and other clinically related cell therapy and
transfusion products.
9
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b. VIASTEM(TM)
In March 1995, the Company filed a patent application for ViaStem(TM) with
the U.S. Patent and Trademark Office. The Company received the U.S. Patent in
early December 1996. This patent provides protection of the Company's
ViaStem(TM) technology through March of 2015. A second U.S. Patent was received
in August, 1998. This second patent broadened the patented uses of ViaStem(TM)
in bone marrow transplantation and related therapies. The Company has also filed
the documents needed for an International Patent Application as required by the
Patent Cooperation Treaty. In October, 1998 the Company received notice from the
New Zealand and Australia Patent Office that a patent on ViaStem(TM) had been
granted by each of the respective countries. In May, 2000 the Company received
notice from the Russian Patent Office of the official issue date for the Russian
patent. In March, 2000 notice was received from the Patent Office in Canada that
a patent had been issued for ViaStem(TM). Initial reports from other countries
that have reviewed the International Patent Application have been positive. Due
to the unique nature of ViaStem(TM)and its applications, the Company pursued the
patent process for this product.
On March 31, 2000, Protide Pharmaceuticals, Inc. (the wholly owned
subsidiary of Celox) entered into an agreement with Fairview-University Medical
Center (FUMC), Minneapolis, MN. FUMC will provide collecting, processing and
assaying of human peripheral blood stem cells as part of Protide's clinical
investigation of ViaStem(TM).
During May, 2000 the Company submitted an application to the FDA to
initiate human clinical trials for ViaStem(TM). This was the first submission
ever made by the Company to the FDA for testing in human subjects.
c. DISTRIBUTION/MARKETING
The Company continues to sell its products on a direct basis to customers
around the world. In addition the Company has formed the following distribution
avenues:
The Company has a non-exclusive world-wide distribution agreement with ICN
Pharmaceuticals, Inc. (NYSE:ICN), Costa Mesa, CA. Under the agreement, ICN is
marketing Celox' TCM(TM), TCH(TM), TM-235(TM) serum replacement products as well
as Cellvation(TM). The Company has also entered into an agreement with ICN to
custom manufacture certain of the Company's basal media and balanced salt
solutions to ICN for worldwide distribution. ICN manufactures and markets a
broad range of prescription and over-the-counter pharmaceuticals, medical
diagnostic products and biotechnology research products in North and Latin
America, Eastern and Western Europe and the Pacific Rim countries.
In 1997, the Company began providing its proprietary products to Sigma
Chemical Company (NASDAQ:SIAL), St. Louis, MO. under a private label
distribution agreement.
In 1997, the Company entered into a non-exclusive distribution agreement
with TaKaRa Shuzo Co., Ltd., Biomedical Group, Kyoto, Japan. Under the
agreement, TaKaRa will initially market Celox' proprietary product
Cellvation(TM). TaKaRa's Biomedical Group leads the industry in several areas
owing to the international scope of its research operations which span from the
People's Republic of China to North America and Europe. TaKaRa will market
Cellvation(TM) in Japan, Taiwan, Korea and People's Republic of China.
The Company also has distribution of its products in Japan through
Funakoshi Co., LTD, a well established Japanese distributor.
10
<PAGE>
In March, 2000, the Company entered into an agreement with SciQuest.com,
Inc. (NASDAQ:SQST) to sell its products online. SciQuest.com, Inc. is a leading
business-to-business e-marketplace for scientific products used by
pharmaceutical, clinical, biotechnology, chemical, industrial and educational
organizations worldwide.
YEAR 2000 ISSUES
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the change in the century. If not corrected, many computer
applications could fail or create erroneous results by or at the Year 2000. The
Year 2000 issue affects virtually all companies and organizations.
At this time, no material problems have been encountered due to the Year
2000 issue.
RESULTS OF OPERATIONS
During the quarter ended May 31, 2000, the Company had net sales of $33,018
which was a decrease of $23,808 or 42% from $56,826 reported in the same quarter
for the prior year. For the nine months ended May 31, 2000 net sales totaled
$127,835 versus $149,176 for the nine months ended May 31, 1999. This represents
a decrease of 14% from the previous period. The decreases between years for both
the quarter and the nine month period results primarily from the amount and
timing of custom orders as well as orders received from distributors and
customers. The Company has also discontinued some products. In addition, the
Company has been expending substantial efforts relating to the advancement of
ViaStem(TM).
The Company had a net loss of $79,702 for the quarter ended May 31, 2000
compared to a net loss of $91,732 for the same period in the previous year. For
the nine month period, a net loss of $253,517 was incurred in fiscal 2000 as
compared to a net loss of $272,912 in fiscal 1999. On a per share basis, the
loss for the current quarter equaled 2 cents versus a 3 cent loss in the
comparable period in fiscal 1999. For the nine months ended May 31, 2000 the net
loss per share was 8 cents. The loss reported for in the comparable period in
fiscal 1999 was 10 cents.
The cost of products sold was 60% of net sales for the three months ended
May 31, 2000, as compared to 40% of net sales for the three months ended May 31,
1999. For the nine month period ending May 31, 2000, cost of products sold was
45% compared to 44% during the comparable period in the previous fiscal year.
The increase for the three month reporting period results from reduced sales
levels which results in a higher percentage of fixed manufacturing costs as
compared to sales. The mix of products sold also impacts the cost of sales
comparisons.
An operating loss of $98,542 was generated for the quarter ended May 31,
2000 compared to an operating loss of $98,145 for the same period in the
previous year. For the nine months ended May 31, 2000 the Company had an
operating loss of $273,650 versus an operating loss of $301,595 for the nine
months ended May 31, 1999. The decrease between years for the three month
reporting period as well as the nine month reporting period resulted from
decreases in administrative and marketing and sales expenses as well as a modest
decrease in research and development expense as compared to the previous year.
11
<PAGE>
The Company received interest and investment income of $7,467 during the
quarter ended May 31, 2000 as compared to $7,112 in the prior year. For the nine
month reporting period in fiscal 2000 interest and investment income in the
amount of $16,641 was received as compared to $23,667 for the prior nine month
period. Investment income is derived primarily from the investment of the
proceeds of the Company's March 1992 initial public offering as well as from
subsequent private placements. The increase in investment income during the
quarter as compared to the previous year results from investing the proceeds of
the private placements in bank certificates of deposit. For the nine month
reporting period, the decrease results from lower investment balances as the
Company uses capital in its operations, as well as lower effective interest
rates received on bank certificates of deposit.
Operating expenses decreased $26,699 (20%) to $105,767 from $132,466 for
the quarter ended May 31, 2000 as compared to the prior year and decreased by
$41,954 (11%) to $343,811 from $385,765 for the nine months ended May 31, 2000
compared to the comparable period in the prior fiscal year. The decrease for the
three month reporting period as compared to the prior fiscal year results from
lower marketing and sales costs which fluctuate based on timing of promotional
activities, as well as decreased research and development expenses and general
and administrative expenses. For the nine months ended May 31, 2000 the decrease
between reporting periods results from lower marketing and sales expenses, lower
research and development expenses as well as lower administrative expenses.
Research and development costs decreased by $1,638 (4%) to $37,418 from
$39,056 in the current quarter as compared to the previous fiscal year. For the
nine month period ended May 31, 2000 research and development costs decreased
$22,781 (17%) to $109,366 from $132,147 in the previous fiscal year. The
decrease for both of the reporting periods results from the timing of
expenditures in the areas of salaries and wages, professional fees and
preclinical testing incurred in connection with the ViaStem(TM) product. The
Company expects the costs of research and development to fluctuate based on the
status of preclinical and clinical trials for ViaStem(TM).
Marketing expenses decreased by $10,870 (31%) to $23,965 from $34,835 for
the quarter ended May 31, 2000 as compared to the previous year. For the nine
months ended May 31, 2000 marketing expenses decreased by $17,851 (20%) to
$71,231 from $89,082 in fiscal 1999. The decrease for the current quarter as
compared to the previous year results primarily from the timing of advertising
and promotion expenditures. The decrease for the nine month period is
attributable to the amount and timing of brochures, price lists and sales
related supplies as well as lower depreciation expense and lower delivery
expenditures. The Company expects that marketing and sales expenses will
fluctuate based on introduction of new products, new studies, and as new
advertising materials are developed.
Administrative expenses decreased by $14,191 (24%) for the quarter ended
May 31, 2000 compared to the previous fiscal year to $44,384 from $58,575.
Administrative expenses decreased by $1,322 (1%) in the nine months ended May
31, 2000 to $163,214 from $164,536 in the comparable period in fiscal 1999. The
decrease for the three month reporting period is due to the timing of legal
expenditures connected with the introduction of new products and certain matters
related to ViaStem(TM). The decrease between years for the nine month reporting
period is due to reduced temporary help and lower legal fees offset by increased
lease expenses due to fully assessed real estate taxes.
12
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LIQUIDITY AND CAPITAL RESOURCES
Capital resources on hand at May 31, 2000 include cash and short-term
investments of $685,703 and net working capital of $569,462. This represents an
increase of $156,365 (30%) in cash and short-term investments and an increase of
$156,763 (38%) in net working capital as compared to August 31, 1999.
The Company is leasing approximately 9,500 square feet of office,
laboratory and warehouse space in St. Paul, MN under a seven year lease. The
Company moved into the new facility during March, 1997. As partial payment for
tenant improvements in the new facility, the Company borrowed $100,000 from a
local bank. In February, 2000 the loan was renegotiated with a different bank.
The new loan is secured by a certificate of deposit at this bank. The interest
rate for this loan, currently 5.5%, is tied to the certificate of deposit rate.
The loan is for a one year term with a maturity in February, 2001. The balance
of the tenant improvements over this amount was paid with Company funds.
During fiscal 1999 the Company raised $59,400 in additional capital by
selling 55,000 units at $1.00 per unit to five accredited investors through a
private placement. Each unit consisted of one share of common stock and a
warrant to purchase an additional two shares of common stock at an exercise
price of $0.04 per share. The units were sold at a premium to the share price on
the OTC Bulletin Board at the time of the placement.
During the second quarter of fiscal 2000 the Company raised $175,150 in
additional capital by selling 145,000 units at $1.15 per unit to five investors
through a private placement. Each unit consisted of one share of common stock
and a warrant to purchase an additional two shares of common stock at an
exercise price of $0.10 per share.
During the third quarter of fiscal 2000 additional funds in the amount of
$211,750 were raised by selling units at $1.15 per unit and common stock at
$1.40 per share to other investors in a private placement. The additional funds
raised will be primarily used for advancing ViaStem(TM) through the necessary
testing before FDA approval can be obtained. The Company intends to pursue
additional financing, subject to prevailing market conditions. There is no
guarantee however, that the Company will be able to successfully raise an
adequate amount of additional funds. In addition, there can be no assurance that
the Company will be able to obtain the necessary FDA approvals for ViaStem(TM).
The Company anticipates spending approximately $30,000 during fiscal 2000
on capital expenditures. Through May 31, 2000 the Company has made capital
expenditures in the amount of $6,981. The majority of the planned expenditures
will be used to fund additional sales, research and development, manufacturing
growth, as well as computer upgrades. The Company believes that its capital
resources on hand at May 31, 2000 together with revenues from product sales,
will be sufficient to meet its cash requirements for the fiscal year.
FORWARD LOOKING INFORMATION
Information contained in this Form 10-QSB contains " forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may", "will", "expect", "plan", "anticipate", "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology.
There are certain important factors that could cause results to differ
materially from those anticipated by some of these forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty. The factors, among others, that could cause actual results to
differ materially include the Company's ability to obtain FDA approval for its
clinical products, the ability of the Company to raise additional capital and
the ability to execute its business plan.
13
<PAGE>
PART II -- OTHER INFORMATION
ITEM I. -- LEGAL PROCEEDINGS
The Company is not presently involved in any material legal proceedings.
ITEM 2. -- CHANGES IN SECURITIES
None
ITEM 3. -- DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In December, 1999 the Company solicited the vote of shareholders to amend
the Articles of Incorporation to increase the corporation's authorized
capital stock from four million (4,000,000) to forty million (40,000,000),
par value $0.01 per share, by means of a Written Action of the Shareholders
of Celox Laboratories, Inc. in Lieu of a Special Meeting. A majority of
shareholders approved this resolution in lieu of a special meeting.
ITEM 5. -- OTHER INFORMATION
None
ITEM 6. -- (A) EXHIBITS
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CELOX LABORATORIES, INC.
Dated: July 12, 2000 By: /S/ Milo R. Polovina
-----------------------------------
Milo R. Polovina, President & CEO
(Principal Financial Officer)
14
