UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] 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 - 21284
Saliva Diagnostic Systems, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 91-1549305
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11719 NE 95th Street Suite G, Vancouver WA 98682
(Address of Principal executive offices) (Zip Code)
(360) 696-4800
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
Indicate the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date:
Outstanding at
Class of Common Stock August 9, 1996
$.01 par value 21,885,035 shares
ge 1 of 12. There is no Exhibit Index.
<PAGE>
SALIVA DIAGNOSTIC SYSTEMS, INC.
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance 3-4
Sheets - December 31, 1995 and
June 30, 1996
Consolidated Condensed Statements of 5
Operations - Three Months Ended June 30,
1995 and 1996
Condensed Statements of Operations - 6
Six Months Ended June 30, 1995 and 1996
Condensed Statement of Cash Flows - 7-8
Six Months Ended June 30, 1995
and 1996
Notes to Consolidated Condensed 9
Financial Statements
Item 2. Management's Discussion and Analysis 10
of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of 11
Security Holders
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
<PAGE>
<TABLE>
<CAPTION>
SALIVA DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, June 30,
1995 1996
----------- ----------
(Derived from (Unaudited)
Audited Financial
Statements)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 2,688,014 $ 2,436,711
Accounts receivable 43,291 80,061
Inventory 300,161 352,834
Prepaid expenses 28,956 24,768
------------ ------------
TOTAL CURRENT ASSETS 3,060,422 2,894,374
PROPERTY AND EQUIPMENT, NET 470,593 654,175
OTHER ASSETS 827,443 750,480
------------ ------------
$ 4,358,458 $ 4,299,029
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other
accrued expenses $ 500,078 $ 492,821
Accrued interest payable 49,703 68,240
Current portion of long-term
debt and obligations
under capital leases 15,869 34,937
Convertible debentures 2,785,000 -
----------- ------------
TOTAL CURRENT LIABILITIES 3,350,650 595,998
LONG-TERM DEBT AND OBLIGATIONS
UNDER CAPITAL LEASES,
net of current portion 30,497 111,844
------------ ------------
TOTAL LIABILITIES $ 3,381,147 $ 707,842
------------ ------------
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<CAPTION>
SALIVA DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(continued)
December 31, June 30,
1995 1996
----------- ----------
(Derived from (Unaudited)
Audited Financial
Statements)
<S> <C> <C>
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - authorized
25,000,000 shares, $.01
par value, issued and outstanding
13,126,366 and 21,350,785 on
December 31, 1995 and June 30,
1996, respectively 131,264 213,510
Additional paid-in capital 17,726,578 22,375,931
Notes receivable related
to sale of stock (83,825) (83,825)
Cumulative foreign translation
adjustment (34,859) (68,292)
Accumulated deficit (16,761,847) (18,846,137)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 977,311 3,591,187
============ ===========
$ 4,358,458 $ 4,299,029
============ ===========
See accompanying Notes to Consolidated Condensed Financial
Statements
<PAGE>
<CAPTION>
SALIVA DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1996 (UNAUDITED)
1995 1996
------- --------
<S> <C> <C>
REVENUES
Product sales $ 144,589 $ 124,937
Other fees and interest income 62,342 29,737
-------- --------
TOTAL REVENUES 206,931 154,674
-------- --------
COSTS AND EXPENSESS
Cost of product sold 24,024 66,753
Research and development 338,598 91,843
Selling, general and admini-
strative 1,376,982 1,075,132
Interest expense and loan fees 3,091 645
---------- ---------
TOTAL COSTS AND EXPENSES 1,742,695 1,234,373
---------- ---------
NET LOSS $(1,535,764) $(1,079,699)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 9,400,000 20,992,000
=========== ==========
LOSS PER COMMON SHARE $ (.16) $ (.05)
=========== ==========
See accompanying Notes to Consolidated Condensed Financial
Statements
<CAPTION>
<PAGE>
SALIVA DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996 (UNAUDITED)
1995 1996
---- ----
<S> <C> <C>
REVENUES
Product sales $ 217,882 $ 296,316
Other fees and interest
income 63,880 52,079
--------- -------
TOTAL REVENUES 281,762 348,395
--------- -------
COSTS AND EXPENSES
Cost of product sold 47,029 187,263
Research and development 429,570 195,838
Selling, general and admin-
istrative 1,871,301 1,979,916
Interest expense and loan fees 6,581 69,668
--------- ---------
TOTAL COSTS AND EXPENSES 2,354,481 2,432,685
--------- ---------
NET LOSS $(2,072,719) $(2,084,290)
========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 9,400,000 18,760,000
========== ==========
LOSS PER COMMON SHARE $ (.22) $ (.11)
========= ==========
See accompanying Notes to Consolidated Condensed Financial Statements
<PAGE>
<CAPTION>
SALIVA DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996
1995 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (2,072,719) $(2,084,290)
Adjustment to reconcile net
loss to net cash used in op-
erating activities:
Cumulative foreign trans-
lation adjustment 28,902 (33,433)
Depreciation and amort-
ization 155,946 190,615
Expenses satisfied with
issuance of shares 568,750 65,702
Changes in operating assets
and liabilities:
(Increase) decrease in
receivables (48,274) (36,770)
(Increase) decrease in
inventory (3,137) (52,673)
(Increase) decrease in
prepaid expenses 4,188
Increase (decrease) in
accounts payable
and accrued expenses (138,705) 11,280
-------- ----------
NET CASH USED IN
OPERATING ACTIVITIES (1,509,237) (1,935,381)
----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Increase in other assets (8,091) (3,004)
Purchase of property and
equipment (73,389) (294,230)
--------- ----------
NET CASH USED IN INVESTING
ACTIVITIES (81,480) (297,234)
--------- ----------
<CAPTION>
<PAGE>
SALIVA DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(continued)
1995 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES
Notes payable and interim
financing 36,146 109,476
Repayment of obligations
under capital leases (9,061)
Repayment of convertible
debentures (25,000)
Sale of stock - private
placement and exempt
offering 1,782,500
Stock warrants and options
exercised 1,905,897
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,818,646 1,981,312
---------- ---------
NET INCREASE (DECREASE)
IN CASH $ 227,929 $ (251,303)
CASH BALANCE, Beginning of
period 96,431 2,688,014
---------- ---------
CASH BALANCE, End of period $ 324,360 $ 2,436,711
========== ==========
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING AND
FINANCING ACTIVITIES
Shares issued in lieu of
fees and expenses $ 568,750 $ 65,702
Conversion of debentures
into common shares 2,760,000
See accompanying Notes to Consolidated Condensed Financial
Statements
</TABLE>
<PAGE>
SALIVA DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements are
unaudited but, in the opinion of the management of the Company,
contain all adjustments, consisting of only normal recurring
accruals, necessary to present fairly the financial position at
June 30, 1996, the results of operations for the three months and six
months ended June 30, 1995 and 1996, and the changes in cash flows for
the six months ended June 30, 1995 and 1996. Certain information
and note disclosures normally included in financial statements that
have been prepared in accordance with generally accepted accounting
principles have been condensed of omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although
management of the Company believes that the disclosures in these
financial statements are adequate to make the information presented
therein not misleading. For further information, refer to the financial
statements and footnotes thereto included in the Company's 1995
Form 10-KSB filed with the Securities and Exchange Commission.
Operating results for the six month period ended June 30, 1996,
are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996.
2. PROFORMA STOCKHOLDERS' EQUITY
Subsequent to quarter ended June 30, 1996, the Company raised
$535,000 from the exercise of certain warrants and options to purchase
535,000 shares of the Company's common stock.
Following is a condensed proforma statement of stockholders'
equity and total assets as of June 30, 1996 giving effect to the
various sales of the Company's common stock after June 30, 1996:
June 30,
1996
---------
Historical stockholders' equity $ 3,591,187
Warrants and options exercised 535,000
---------
Proforma stockholders' equity $ 4,126,187
==========
Historical total assets $ 4,299,029
Warrants and options exercised 535,000
----------
Proforma total assets $ 4,834,029
=========
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations: Six Months Ended June 30,
The Company had total revenues of $348,395 and $281,762 for the
six months ended June 30, 1996 and 1995, respectively. The
increase in revenues was primarily the result of sales of Omni-SAL
from the Company's Singapore facility and sales of Omni-SWAB.
Costs and expenses increased to $2,432,685 from $2,354,481 for
the six months ended June 30, 1996 and 1995, respectively.
The Company incurred a net loss of $2,084,290 or $.11 per share,
for the six months ended June 30, 1996, compared with a loss of
$2,072,719 or $.22 per share, in the year ago period. Average common
shares outstanding were 18,760,000 in 1996 and 9,400,000 in 1995.
Financial Condition
The Company's working capital at June 30, 1996 was $2,298,376.
It had a working capital deficit of $290,228 at December 31, 1995.
The Company's current ratio was 4.86 to 1 at June 30, 1996 as
compared to .91 to 1 at December 31, 1995.
During the six months ended June 30, 1996, net cash used from the
Company's operating activities was $1,935,381 as compared to
$1,509,237 of cash used in operating activities in the six months
ended June 30, 1995.
Cash used in investment activities for the first six months of
1996 was $297,234 as compared to cash used of $81,480 in the year
ago period.
Cash provided by financing activities in the six months ended
June 30, 1996 was $1,981,312 as compared to cash provided from
these activities in the first six months of 1995 of $1,818,646.
The largest portion of cash provided was from the Company's private
offering of securities in the first six months of 1995.
The Company has significant requirements for capital to continue
to fund its activities. As a result of the above-described
activities, management believes it has adequate resources to fund
only limited activities for the next several months. After this
period, the Company will be required to obtain additional capital
to continue to fund its activities. There is no assurance,
however, that such additional capital will be available, or if
available, whether it will be available on terms acceptable to the
Company.
<PAGE>
Part II OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Item 1 of the Company's Form 10-QSB for its
quarter ended March 31, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
On July 17, 1996, at the Company's Annual Meeting of
Shareholders, the Company's shareholders elected management's slate
of directors, which included Messrs. Ronald L. Lealos, Kenneth J.
McLachlan, Hans R. Vauthier and Drs. David Barnes and Joel
Scheinbaum. Each nominee received 13,618,775 votes for and 505,028
votes against.
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended June 30, 1996, the
registrant filed a report on Form 8-K dated June 4, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SALIVA DIAGNOSTIC SYSTEMS, INC.
Date: August 14, 1996 By: s/Ronald L. Lealos
President, Treasurer
SALIVA\1OQ-jun.96
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,436,711
<SECURITIES> 0
<RECEIVABLES> 80,061
<ALLOWANCES> 0
<INVENTORY> 352,834
<CURRENT-ASSETS> 2,894,374
<PP&E> 654,175
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,299,029
<CURRENT-LIABILITIES> 595,998
<BONDS> 0
0
0
<COMMON> 213,510
<OTHER-SE> 3,377,677
<TOTAL-LIABILITY-AND-EQUITY> 4,299,029
<SALES> 296,316
<TOTAL-REVENUES> 348,395
<CGS> 187,263
<TOTAL-COSTS> 187,263
<OTHER-EXPENSES> 2,175,754
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,668
<INCOME-PRETAX> (2,084,290)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,084,290)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,084,290)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
