<PAGE> 1
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 June 30, 2000.
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to _____.
Commission file number: 0-20652
ACCUMED INTERNATIONAL, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-4054899
------------------------------- ----------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
920 N. Franklin St., Suite 402, Chicago, IL 60610
-------------------------------------------------
(Address of principal executive offices)
(312) 642-9200
---------------------
(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 [X] No [ ]
The registrant had 5,696,542 shares of common stock outstanding as of
August 7, 2000.
<PAGE> 2
ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 2000 and December 31, 1999....................................... 1
Condensed Consolidated Statements of Operations
for the Three Months Ended June 30, 2000 and 1999
and for the Six Months Ended June 30, 2000 and 1999 ............................ 2
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 2000 and 1999................................. 3
Notes to Condensed Consolidated Financial Statements................................. 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................. 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................... 11
PART II.OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders.................................. 13
Item 6. Exhibits and Reports on Form 8-K..................................................... 13
SIGNATURES ......................................................................................... 14
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited
----------------------------------
ASSETS June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 656,234 $ 196,303
Prepaid expenses and other current assets 40,319 7,944
Available-for-sale security 237,412 121,301
Note receivable -- 400,000
Inventories 691,706 700,919
------------ ------------
Total current assets 1,625,671 1,426,467
------------ ------------
Fixed assets, net 561,442 705,273
Purchased technology, net 3,854,868 4,185,868
Patents, net 815,091 842,484
Note receivable, officer 41,712 62,237
------------ ------------
$ 6,898,784 $ 7,222,329
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Long term debt, current portion $ 237,550 $ 362,550
Accounts payable 220,664 223,822
Accrued interest 17,729 15,415
Income taxes 35,000 35,000
Deferred revenues 550,008 --
Other current liabilities 553,457 750,183
------------ ------------
Total current liabilities 1,614,408 1,386,970
------------ ------------
Long term debt 167,000 167,000
Deferred revenues 1,040,149 --
Stockholders' equity
Preferred stock, Series A convertible 2,868,419 4,249,735
Common stock, $0.01 par value 56,966 54,919
Additional paid-in capital 60,998,531 59,619,262
Accumulated other comprehensive income 115,181 (4,960)
Accumulated deficit (59,745,133) (58,033,860)
Treasury stock (216,737) (216,737)
------------ ------------
Total stockholders' equity 4,077,227 5,668,359
------------ ------------
$ 6,898,784 $ 7,222,329
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-1-
<PAGE> 4
ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- ---------------------------
2000 1999 2000 1999
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 13,500 -- $ 168,463 $ 11,435
Licensing fees 48,984 -- 48,984 --
Royalties 21,644 -- 21,644 --
----------- ----------- ----------- -----------
Total net revenues 84,128 -- 239,091 11,435
----------- ----------- ----------- -----------
Operating expenses:
Cost of sales 6,149 -- 49,830 3,413
General and administrative 781,513 593,928 1,569,681 1,615,585
Research and development 230,512 514,105 582,880 969,144
Sales and marketing 15,555 73,920 88,144 145,148
----------- ----------- ----------- -----------
Total operating expenses 1,033,729 1,181,953 2,290,535 2,733,290
----------- ----------- ----------- -----------
Operating loss (949,601) (1,181,953) (2,051,444) (2,721,855)
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (7,500) (7,668) (15,000) (477,694)
Realized gain on available-for-sale security -- -- 326,844 --
Other income (expense), net 12,992 69,429 28,327 2,667
----------- ----------- ----------- -----------
Total other income (expense) 5,492 61,761 340,171 (475,027)
----------- ----------- ----------- -----------
Loss from continuing operations (944,109) (1,120,192) (1,711,273) (3,196,882)
----------- ----------- ----------- -----------
Discontinued operations:
Loss from discontinued operations -- -- -- (158,250)
Gain on disposal -- -- -- 8,357,449
----------- ----------- ----------- -----------
Income from discontinued operations -- -- -- 8,199,199
----------- ----------- ----------- -----------
Net (loss) income $ (944,109) $(1,120,192) $(1,711,273) $ 5,002,317
=========== =========== =========== ===========
Basic and diluted loss per share from continuing operations $ (0.17) $ (0.20) $ (0.31) $ (0.58)
Income per share from discontinued operations -- -- -- 1.49
----------- ----------- ----------- -----------
Basic and diluted net (loss) income per share $ (0.17) $ (0.20) $ (0.31) $ 0.91
=========== =========== =========== ===========
Weighted average common shares outstanding 5,663,657 5,491,901 5,600,360 5,489,878
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
-2-
<PAGE> 5
ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
UNAUDITED
-----------------------------
2000 1999
------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income $ (1,711,273) $ 5,002,317
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Income from discontinued operations -- (8,199,199)
Non-cash expenses of asset disposal -- 492,500
Depreciation and amortization 529,978 452,244
Increase in deferred revenues 1,590,157 --
Changes in other operating assets and liabilities (527,051) (553,306)
------------ ------------
CASH USED IN OPERATING ACTIVITIES (118,189) (2,805,444)
------------ ------------
INVESTING ACTIVITIES:
Proceeds from note receivable 400,000 --
Proceeds from sale of available-for-sale security 326,844 --
Capital expenditures (27,755) --
Proceeds from sale of Microbiology division -- 15,150,000
Expenses related to sale of Microbiology division -- (750,000)
------------ ------------
CASH PROVIDED BY INVESTING ACTIVITIES 699,089 14,400,000
------------ ------------
FINANCING ACTIVITIES:
Payment of notes payable (125,000) (8,497,551)
------------ ------------
CASH USED IN FINANCING ACTIVITIES (125,000) (8,497,551)
------------ ------------
CASH TRANSFER TO DISCONTINUED OPERATIONS -- (313,979)
------------ ------------
EFFECT OF EXCHANGE RATES ON CASH 4,031 --
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 459,931 2,783,026
------------ ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 196,303 213,386
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 656,234 $ 2,996,412
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE> 6
ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. PREPARATION OF INTERIM FINANCIAL STATEMENTS
In the opinion of the management of AccuMed International, Inc. and its
wholly-owned subsidiary, the accompanying unaudited condensed consolidated
financial statements include all normal adjustments considered necessary to
present fairly AccuMed's financial position as of June 30, 2000, and its results
of operations for the three-month and six-month periods ended June 30, 2000 and
1999 and cash flows for the six-month periods ended June 30, 2000 and 1999.
Interim results are not necessarily indicative of results for a full year.
The condensed consolidated financial statements and notes are presented as
permitted by Form 10-Q, and do not contain certain information included in
AccuMed's audited consolidated financial statements and notes there to for the
fiscal year ended December 31, 1999 as filed with the Securities and Exchange
Commission on Form 10-K.
2. BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
AccuMed and its wholly-owned subsidiary. All significant intercompany balances,
transactions and stockholdings have been eliminated.
On December 22, 1998, (the measurement date), AccuMed received shareholder
approval to sell its microbiology division under a sales agreement negotiated by
management under the approval of the Board of Directors. On January 29, 1999,
AccuMed closed the sale of the microbiology division for proceeds of $15,150,000
in cash. AccuMed recognized a gain of $8,357,000, net of income taxes of
$140,000 and after working capital adjustments, on the disposal of the
microbiology division. Accordingly, the microbiology division is accounted for
as a discontinued operation in the accompanying condensed consolidated balance
sheets, statements of operations and statements of cash flows.
-4-
<PAGE> 7
3. OTHER COMPREHENSIVE INCOME (LOSS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net (loss) income $ (944,109) $(1,120,192) $(1,711,273) $ 5,002,317
Other comprehensive income (loss)
Reclassification of realized gain
included in net income -- -- (326,844) --
Change fair value of available-for-sale
security (28,565) -- 442,955 --
Foreign currency translation adjustments
4,738 (31,046) 4,031 (84,748)
----------- ----------- ----------- -----------
Comprehensive (loss) income $ (967,936) $(1,151,238) $(1,591,131) $ 4,917,569
=========== =========== =========== ===========
</TABLE>
4. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- --------
<S> <C> <C>
Raw material and packaging $570,536 $529,919
Work in process -- --
Finished goods 121,170 171,000
-------- --------
Total inventories $691,706 $700,919
======== ========
</TABLE>
5. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
2000 1999
----------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Interest paid $ 12,686 $ 295,170
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Preferred stock converted to common stock $1,381,316 $ 79,731
</TABLE>
6. SALE OF AVAILABLE-FOR-SALE SECURITY
In February 2000, AccuMed sold 85,776 of the shares it holds in Ampersand
Medical Corporation on the open market for proceeds of $326,844. AccuMed
recorded a realized gain on the sale of these shares of $326,844 for the six
months ended June 30, 2000.
-5-
<PAGE> 8
7. NOTE RECEIVABLE
On March 31, 2000, AccuMed received $417,747, including interest, in full
satisfaction of the amounts advanced to Microsulis Corporation (Microsulis)
under a line of credit. AccuMed has no obligation to make further advances to
Microsulis.
8. LICENSE AGREEMENTS
On March 24, 2000, AccuMed entered into a license and development agreement
with Ventana Medical Systems, Inc. (Ventana), whereby AccuMed agreed to license
its patents and proprietary information and rights to Ventana for certain
medical applications. Under the terms of the agreement, AccuMed has received and
deferred an up-front licensing fee, advance royalty payment, and development
funds. Additional development funds will be received over the next nine months
for contract research. The agreement also provides for the sale of AcCell(TM)
Systems to Ventana and royalties to be received in the future on the sale of
covered products by Ventana. The deferred up-front licensing fee is being
recognized as revenue systematically over the 36-month term of the agreement.
The advance royalty payment will be recognized as revenue during the period that
the royalties are earned on the sale of covered products. AccuMed is required
under the agreement to complete certain development obligations. Qualifying
development costs incurred during the development process will be charged
against the deferred development funds received. The excess amount of
development funds, if any, over the amount of qualifying costs incurred will be
recognized in income upon the completion of the development process. AccuMed
does not anticipate that any excess development funds will be material.
On March 29, 2000, the Company entered into a patent and technology license
agreement with BCAM International, Inc., renamed CellMetrix, Inc. (CellMetrix),
whereby AccuMed agreed to license its patents and proprietary information and
rights to CellMetrix for certain medical applications. Under the terms of the
agreement, AccuMed received a guaranteed license fee upon signing of the
agreement. Over the next nine months AccuMed will receive additional guaranteed
license fees, shares of CellMetrix common stock, and an advance royalty payment
in the form of cash or shares of CellMetrix common stock. Royalties are to be
received in the future on the sale of covered products by CellMetrix. AccuMed
has deferred the amount of the license fee it received. This fee is being
recognized as revenue systematically over the 60-month term of the agreement.
On March 29, 2000, AccuMed entered into a letter agreement to reinstate and
amend its September 4, 1998 patent and technology license agreement with
Ampersand. Upon signing of the letter agreement, AccuMed received an up-front
license fee. On June 9, 2000, AccuMed signed a formal amendment to the agreement
and received an advance royalty in the form of cash. AccuMed will also receive a
$100,000 convertible note and 128,571 shares of Ampersand common stock as an
additional advance royalty. AccuMed has deferred the amount of the up-front
license fee it received. This fee is being recognized as revenue systematically
over the remaining 41-month term of the agreement. The advance royalties are
being recognized as revenue during the period that the royalties are earned on
the sale of covered products.
-6-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
AccuMed is engaged in marketing and developing cost effective screening
instruments and systems for clinical diagnostic laboratories, hospitals and
others. AccuMed's integrated systems use reliable, accurate and innovative
products and methods to provide laboratories with comprehensive solutions that
are intended to improve efficiency and reduce costs while achieving significant
improvements in disease detection. AccuMed currently is developing cytology
computer-aided image cytometry instruments and systems that support early
detection and diagnosis programs for screening high-risk individuals for
cellular diseases, such as lung cancer.
During 1998, AccuMed received shareholder approval to sell its microbiology
business. Accordingly, the results of the microbiology business are reported as
a discontinued operation in the accompanying condensed consolidated financial
statements. On January 29, 1999, AccuMed closed the sale of the microbiology
business for net proceeds of $14,400,000.
The following management discussion and analysis of financial condition and
results of operations relate only to the cytopathology business, AccuMed's only
business line. Also, AccuMed is committed to a substantial research and
development program. Accordingly, AccuMed expects to incur additional operating
losses over at least the next twelve months due to continued spending for
product development, prototype construction and testing and regulatory
activities.
OVERVIEW
On March 24, 2000, AccuMed entered into a license and development agreement
with Ventana Medical Systems, Inc. (Ventana), whereby AccuMed agreed to license
its patents and proprietary information and rights to Ventana for certain
medical applications. Under the terms of the agreement, AccuMed received an
up-front licensing fee, advance royalty payment, and development funds.
Additional funds will be received over the next nine months for contract
research. The agreement also provides for the sale of AcCell(TM) Systems to
Ventana and royalties to be received in the future on the sale of covered
products by Ventana.
On March 29, 2000, the Company entered into a patent and technology license
agreement with BCAM International, Inc., renamed CellMetrix, Inc. (CellMetrix),
whereby AccuMed agreed to license its patents and proprietary information and
rights to CellMetrix for certain medical applications. Under the terms of the
agreement, AccuMed received a guaranteed license fee upon signing of the
agreement. Over the next nine months, AccuMed will receive additional guaranteed
license fees, shares of CellMetrix common stock and advance royalties in the
form of cash or shares of CellMetrix common stock. Royalties are to be received
in the future on the sale of covered products by CellMetrix.
-7-
<PAGE> 10
On March 29, 2000, AccuMed entered into a letter agreement to reinstate
and amend its September 4, 1998 patent and technology license agreement with
Ampersand Medical Corporation (Ampersand). The Company received an up-front
license fee upon signing the letter agreement. On June 9, 2000, AccuMed signed a
formal amendment to the agreement and received an advance royalty in the form of
cash. AccuMed will also receive a convertible note and shares of Ampersand
common stock as an additional advance royalty.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
REVENUES AND COST OF SALES
AccuMed's net revenues were $84,000 for the three months ended June 30,
2000 compared to zero for the three months ended June 30, 1999. Net revenues for
the 2000 period reflect the sale of one AcCell(TM) unit and licensing fees and
royalties earned on our license agreements with Ampersand, CellMetrix, and
Ventana, which were signed late in the 2000 1st quarter. There were no units of
product sold or any licensing fees or royalties earned during the 1999 period.
Cost of sales represents the cost of products sold. We anticipate our future
product sales will be made on a build to order or contract manufacturing basis.
OPERATING EXPENSES
General and administrative expenses increased by $188,000, or 31.6%, from
$594,000 in the 1999 period to $781,000 in the 2000 period. The 2000 period
includes a payment to settle certain benefits owed to the Company's previous
chief executive officer that resulted from the amended patent and technology
license agreement with Ampersand. The 1999 period also includes the favorable
effect of the settlement of certain litigation for less than previously
estimated. The increase in expenses is offset to a certain degree by cost
savings resulting from the consolidation of our operations.
Research and development expenses decreased by $284,000, or 55.2%, from
$514,000 in 1999 to $231,000 in 2000. The decrease in these expenses is a result
of the application of qualifying costs under our development obligation with
Ventana to development funds received and benefits achieved from the
consolidation of our research and development activities along with the
consolidation of our operations. Current research and development expenses
represent ongoing efforts to develop the Savant(TM) medical technologies' next
generation products.
Sales and marketing expenses decreased to $16,000 for the three months
ended June 30, 2000 compared to $74,000 for the 1999 period. The decrease is
primarily a result of personnel reductions and a decrease in travel costs.
AccuMed continues to market its products on a limited basis in certain
laboratory market segments. AccuMed anticipates that its third party licensees
will assume a large portion of the marketing effort.
-8-
<PAGE> 11
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
REVENUES AND COST OF SALES
AccuMed's net revenues were $239,000 for the six months ended June 30, 2000
compared to $11,000 for the six months ended June 30, 1999. Net revenues for the
2000 period reflect the sale of AcCell(TM) and AcCell-Savant(TM) units and
licensing fees and royalties earned on our license agreements with Ampersand,
CellMetrix, and Ventana, which were signed in 2000. Net revenues for the 1999
period represent sales of consumables and computer support equipment. Cost of
sales represents the cost of products sold.
OPERATING EXPENSES
General and administrative expenses decreased by $46,000, or 2.8%, from
$1,616,000 in the 1999 period to $1,570,000 in the 2000 period. The decrease in
these expenses is a result of reduced corporate level activity due to the sale
of the microbiology business, and less administrative cost following the
consolidation of AccuMed's operations.
Research and development expenses decreased by $386,000, or 39.9%, from
$969,000 in 1999 to $583,000 in 2000. The decrease in these expenses is a result
of the application of qualifying costs under our development obligation with
Ventana to development funds received and benefits achieved from the
consolidation of our research and development activities along with the
consolidation of our operations.
Sales and marketing expenses were $88,000 for the six months ended June 30,
2000 compared to $145,000 for the 1999 period. The decrease in these expenses is
primarily a result of personnel reductions and reduced spending on consultants.
Interest expense for the period ended June 30, 2000 was $15,000 compared to
$478,000 for the 1999 period. The decline in interest expense is a result of the
repayment in January 1999 of AccuMed's 14.5% secured note payable and 12.0%
unsecured convertible notes with proceeds from our sale of the microbiology
division. Interest expense for the 1999 period also includes $370,000 from a
non-cash write-off of deferred financing costs and debt discounts related to the
repayment of these notes.
DISCONTINUED OPERATIONS
AccuMed's loss of $158,000 in 1999 from discontinued operations reflects
the results of operations of AccuMed's microbiology business before its sale in
January 1999. In 1999, we recorded a gain of $8,357,000, net of income taxes of
$140,000, on the disposal of the microbiology business.
-9-
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
AccuMed's primary cash requirements are for research and development,
general corporate and marketing expenses, including salaries, materials and
consulting support, to develop and market AccuMed's cytopathology products and
technology. We anticipate that the receipt of funds under our agreements with
Ventana, CellMetrix, and Ampersand, our available cash, and our marketable
securities on hand will provide the necessary liquidity to finance AccuMed's
projected operations and financing obligations through the next twelve months.
At June 30, 2000, AccuMed has long-term debt, including the current
portion, of $405,000. The long-term debt consists of a $322,000 Canadian dollar
note and a non-interest bearing repayable contribution of $187,000 (U.S.
dollars). The Canadian dollar note is payable in monthly installments of $25,000
U.S. dollars, plus interest at a rate of 6.0% over the Canadian prime rate
through July 15, 2000, with the remainder due on demand, or in the event not
called, the principal payments will continue at a rate of $25,000 U.S. dollars
per month, plus interest. The demand portion of the Canadian note is convertible
into shares of AccuMed's common stock at a price of $1.43 per share. The
repayable contribution was received under a Canadian government program and
calls for semi-annual installments based on future sales of product and
available funds, as defined.
OPERATING ACTIVITIES
For the six months ended June 30, 2000 and 1999, AccuMed used $118,000 and
$2,805,000, respectively, of cash in operations. The decrease in the use of cash
in operations in 2000 compared to 1999 is primarily a result of a decrease in
operating expenses of $443,000, the receipt of $1,850,000 under AccuMed's
agreements with Ventana, CellMetrix, and Ampersand, and other working capital
changes.
INVESTING ACTIVITIES
Investing activities generated $699,000 in cash for the six months ended
June 30, 2000 compared to $14,400,000 provided by investing activities for the
1999 period. In 2000, AccuMed received $327,000 from the sale of shares it held
in Ampersand and collected $400,000 from the repayment by Microsulis of loans
made by AccuMed under outstanding notes receivable. In 1999, AccuMed received
$14,400,000 in proceeds, net of expenses incurred, from the sale of AccuMed's
microbiology business. To date in 2000, we have spent $28,000 on capital
expenditures. We do not anticipate material capital expenditures during the
remainder of 2000.
FINANCING ACTIVITIES
AccuMed used $125,000 of cash in financing activities during the six months
ended June 30, 2000 compared to the use of $8,498,000 in cash during the 1999
period. Cash used in 2000 was for repayment of AccuMed's Canadian dollar note
payable. In 1999, we repaid all of our outstanding 14.5% secured notes and 12%
unsecured convertible notes with proceeds from the sale of AccuMed's
microbiology division.
-10-
<PAGE> 13
AccuMed currently has no commitments with respect to sources of additional
financing other than with respect to funds to be received under our agreements
with Ventana, CellMetrix, and Ampersand.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AccuMed holds shares of common stock of Ampersand Medical Corporation, a
publicly traded company. As a result, AccuMed's financial results could be
significantly affected by changes in the traded market price of this security.
AccuMed also has debt instruments that are denominated in Canadian dollars. The
interest rate for one of these debt instruments varies based on changes in the
Canadian prime rate of interest. As a result, AccuMed's financial results could
be significantly affected by changes in the exchange rate for Canadian dollars
and to changes in the Canadian prime rate of interest. Management does not
actively employ strategies to minimize AccuMed's risks to these exposures.
The following table presents information about the shares AccuMed holds in
Ampersand as of June 30, 2000.
<TABLE>
<CAPTION>
SHARES FAIR
HELD VALUE
------ --------
<S> <C> <C>
Ampersand Medical Corporation 65,493 $237,412
</TABLE>
The following tables present information about AccuMed's debt instruments
that are subject to foreign currency and interest rate risk. The table presents
principal cash flows, related weighted-average interest rate by expected
maturity, and the applicable average Canadian to U.S. dollar exchange rate.
<TABLE>
<CAPTION>
FAIR
2000 2001 TOTAL VALUE
---- ---- ----- -----
<S> <C> <C> <C> <C>
Foreign currency risk:
Principal $237,550 $167,000 $404,550 $404,550
Average interest rate 12.4% 0%
Exchange rate 1.4780 1.4780
</TABLE>
-11-
<PAGE> 14
<TABLE>
<CAPTION>
FAIR
2000 2001 TOTAL VALUE
---- ---- ----- -----
<S> <C> <C> <C> <C>
Interest rate risk:
Principal $217,550 $ - $217,550 $217,550
Average interest rate 13.5%
</TABLE>
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are based on our
current expectations, assumptions, estimates and projections about us and our
industry. When used in this Report, the words "may," "will," "expects,"
"anticipates," "believe," "estimates," "intends" and similar expressions are
intended to identify forward-looking statements. These statements describe our
beliefs concerning the future based on currently available information. Our
actual results could differ materially from those contained in the
forward-looking statements due to a number of risks and uncertainties. We assume
no obligation to publicly update or revise these forward-looking statements for
any reason, or to update the reasons actual results could differ materially from
those anticipated in these forward-looking statements, even if new information
becomes available in the future.
-12-
<PAGE> 15
PART II.
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 16, 2000 AccuMed held its annual meeting of stockholders. The only matter
voted upon was the election of directors. The following nominees were elected as
directors by the votes indicated.
<TABLE>
<CAPTION>
Director Votes For Votes Withheld
-------- --------- --------------
<S> <C> <C>
Mark Banister 2,892,937 27,238
Jack H. Halperin 2,893,287 26,888
Paul F. Lavallee 2,893,870 26,305
Robert L. Priddy 2,893,687 26,488
Leonard M. Schiller 2,893,687 26,505
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibits are filed herewith:
10.1 Amendment to Patent and Technology License Agreement dated
June 9, 2000 between AccuMed and Ampersand Medical
Corporation
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed during the three-month period ended
June 30, 2000.
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<PAGE> 16
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.
ACCUMED INTERNATIONAL, INC.
/s/ PAUL F. LAVALLEE
-------------------------------------
Paul F. Lavallee
Chairman of the Board and
Chief Executive Officer
(Principal Accounting Officer)
Date: August 10, 2000
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<PAGE> 17
Index to Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
10.1 Amendment to Patent and Technology License Agreement dated
June 9, 2000 between AccuMed and Ampersand Medical Corporation
27.1 Financial Data Schedule
