<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended September 30, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number: 0-21994
GLYKO BIOMEDICAL LTD.
(Exact name of small business issuer as specified in its charter)
Canada 68-0230537
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
81 Digital Drive, Novato, California 94949
(address of principal executive offices)
(415) 382-6653
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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. Yes [X] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes___ No___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 17,243,044 common shares outstanding
as of October 31, 1996.
<PAGE> 2
GLYKO BIOMEDICAL LTD.
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995........................... 3
Consolidated Statements of Operations for the
three and nine month periods ended September 30, 1996 and 1995 .... 4
Consolidated Statements of Cash Flows for the nine
month periods ended September 30, 1996, and 1995 ............... 5
Notes to Consolidated Financial Statements......................... 6
ITEM 2.
Management's Discussion and Analysis of
Financial Conditions and Results of Operations..................... 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.........................................14
ITEM 2. Changes in Securities.....................................14
ITEM 3. Defaults upon Senior Securities...........................14
ITEM 4. Submission of Matter to a Vote of Security Holders .......14
ITEM 5. Other Information.........................................14
ITEM 6. Exhibits and Reports on Form 8-K..........................14
Signatures .................................................................15
2
<PAGE> 3
PART I.
ITEM 1. FINANCIAL STATEMENTS
GLYKO BIOMEDICAL LTD.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN U.S. DOLLARS)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 541,730 $ 620,720
Trade receivables 130,488 356,806
Inventories 94,192 108,518
Other current assets 10,482 5,132
----------- -----------
Total current assets 776,892 1,091,176
Property, plant and equipment, net 126,930 112,169
Other assets 2,200 2,239
=========== ===========
Total assets $ 906,022 $ 1,205,584
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 171,139 $ 122,375
Accrued liabilities 201,346 221,424
Deferred revenue 56,566 174,386
Payable to stockholder 219,811 219,811
----------- -----------
Total current liabilities 648,862 737,996
Deferred facilities costs 272,248 166,535
Deferred rent 66,051 76,590
----------- -----------
Total liabilities 987,161 981,121
Stockholders' equity (deficit):
Common stock, no par value, unlimited shares
authorized, 17,243,044 shares issued and
outstanding (14,567,944 in 1995) 12,203,065 11,304,356
Common stock warrants 433,897 278,085
Accumulated deficit (12,718,101) (11,357,978)
----------- -----------
Total stockholders' equity (deficit) (81,139) 224,463
=========== ===========
Total liabilities and stockholders' equity (deficit) $ 906,022 $ 1,205,584
=========== ===========
</TABLE>
See accompanying notes
3
<PAGE> 4
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN U.S. DOLLARS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ----------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
Revenues:
<S> <C> <C> <C> <C>
Sales of products and services $ 293,253 $ 395,358 $ 946,183 $ 963,092
Other revenues 4,980 39,521 54,810 169,521
------------ ------------ ------------ ------------
Total revenues: 298,233 434,879 1,000,993 1,132,613
Expenses:
Cost of products and services 118,647 172,412 377,466 399,452
Research and development 261,744 246,447 806,558 837,145
Selling, general and administrative 488,695 424,084 1,212,401 1,193,230
------------ ------------ ------------ ------------
869,086 842,943 2,396,425 2,429,827
------------ ------------ ------------ ------------
Loss from operations (570,853) (408,064) (1,395,432) (1,297,214)
Interest income 7,790 9,561 15,229 22,389
Other income and expense 6,951 (810) 20,080 (8,248)
------------ ------------ ------------ ------------
Net loss $ (556,112) $ (399,313) $ (1,360,123) $ (1,283,073)
============ ============ ============ ============
Net loss per common share $ (0.03) $ (0.03) $ (0.09) $ (0.10)
============ ============ ============ ============
Weighted average number of shares
used in computing per share amounts 17,243,044 14,567,944 15,661,431 12,813,366
============ ============ ============ ============
</TABLE>
See accompanying notes
4
<PAGE> 5
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN U.S. DOLLARS)
<TABLE>
<CAPTION>
Nine months ended
---------------------------------
September 30, September 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,360,123) $(1,283,073)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 46,299 67,085
Interest accrued on bridge loan -- 4,777
Change in assets and liabilities:
Trade receivables 226,318 7,141
Inventories 14,326 (41,364)
Other assets (5,311) (5,592)
Accounts payable 48,764 (124,105)
Accrued liabilities and deferred rent (16,601) (2,214)
Deferred revenue (117,820) --
Deferred compensation -- (81,083)
Deferred facilities costs 105,713 (110,053)
----------- -----------
Total adjustments 301,688 (285,408)
----------- -----------
Net cash used in operating activities (1,058,435) (1,568,481)
Cash flows from investing activities:
Capital expenditures (61,060) (15,722)
----------- -----------
Net cash used in investing activities (61,060) (15,722)
Cash flows from financing activities:
Proceeds from issuance of common stock and warrants 1,077,138 2,364,907
Offering costs (22,617) (83,319)
Repayments on capital lease obligation (14,016) (13,898)
----------- -----------
Net cash provided by financing activities 1,040,505 2,267,690
----------- -----------
Net increase (decrease) in cash (78,990) 683,487
Cash and cash equivalents, beginning of period 620,720 79,294
----------- -----------
Cash and cash equivalents, end of period $ 541,730 $ 762,781
=========== ===========
Supplemental disclosure of noncash financing activities:
Conversion of deferred compensation to common stock and warrants $ -- $ 33,000
Conversion of accounts payable to common stock and warrants -- 10,300
Conversion of bridge loan to common stock and warrants -- 257,808
Common stock and common stock warrants issued in exchange
for financing services 129,539 118,403
</TABLE>
See accompanying notes
5
<PAGE> 6
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements and related footnotes
have been prepared in conformity with U.S. generally accepted accounting
principles using U.S. dollars. The consolidated financial statements
include the accounts of the Company and its subsidiary, Glyko, Inc. All
significant intercompany accounts and transactions have been eliminated.
The balance sheet as of September 30, 1996 and the related statements of
operations and cash flows for the periods ended September 30, 1996 and 1995
are unaudited but have been prepared on substantially the same basis as the
annual audited financial statements. Certain reclassifications have been
made to the consolidated financial statements in the prior periods to
conform to classifications used in the current period. In the opinion of
management, the unaudited consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the consolidated financial position, results of
operations and cash flows for those periods presented. The unaudited
results for the periods ended September 30, 1996 are not necessarily
indicative of results to be expected for the entire year.
The accompanying financial statements should be read in conjunction with
the Company's annual report on form 10-KSB for the fiscal year ended
December 31, 1995.
Product sales
At times, the Company has received payment in advance for future product
shipments. Such payments are classified as deferred revenue on the
accompanying Balance Sheet. Upon shipment of products revenue is
recognized and the corresponding liability (deferred revenue) is reduced.
For the nine months ended September 30, 1996, revenues to one distributor
were 15 percent of total revenues.
Loss per Common Share
Loss per common share is computed using the weighted average number of
shares outstanding during each period presented.
2. Termination of Millipore marketing agreement
Through 1993 and the first quarter of 1994 the Company sold its products
directly and through sales to Millipore Corporation, ("Millipore") for
resale. During this time Millipore held marketing rights to Glyko products
under the terms of a distribution agreement between Millipore and the
Company. Late in 1993 Millipore announced their intention to exit the
bioscience business and in April 1994 Millipore and the Company agreed to
terminate their distribution agreement. Millipore has granted the Company
all marketing rights to Glyko analytic products and has waived its option
to purchase the Company's analytic business. In turn, Millipore will
receive 500,000 shares of Glyko Biomedical Ltd. common stock. The issuance
of stock pursuant to this agreement is subject to Canadian regulatory
approval, and that approval is pending.
6
<PAGE> 7
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Private Equity Placement Offerings
During the second quarter of 1995, the Company closed a private equity
placement offering (the Q295 Financing). Investors participating in the
Q295 Financing purchased approximately 4.786 million units which each
consisted of one share of common stock and one five year warrant to
purchase one share of common stock. The Company issued units in exchange
for cash, and also in exchange for the settlement of certain outstanding
liabilities. The units were priced at Cdn.$0.80 with an exercise price on
the warrant of Cdn.$0.90. The Company established a balance sheet value for
the common stock warrants by subtracting the discounted fair market value
for one share of the Company's common stock from the price of one unit. The
common stock warrants expire in 2000. The Q295 Financing raised
approximately $2.78 million, consisting of approximately $2.36 million in
cash and $420,000 for the settlement of a stockholder/director bridge loan
and certain other liabilities.
During the second quarter of 1996, the Company closed a second private
equity placement offering (the Q296 Financing). Investors participating in
the Q296 Financing purchased 2.5 million units each consisting of one share
of common stock and one half of a two year warrant. One warrant is required
to purchase one share of common stock. The units were priced at Cdn.$0.60
with an exercise price on the warrant of Cdn.$0.80. The Q296 Financing
raised approximately $1.077 million. An additional 175,000 units and
250,000 warrants with a total value of approximately $130,000 were
distributed to brokers in exchange for services rendered in connection
with the Q296 Financing. The Company utilized the Black-Scholes model to
value all the warrants distributed in the Q296 Financing at approximately
$156,000.
7
<PAGE> 8
ITEM 2.
GLYKO BIOMEDICAL LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains certain forward looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
the results anticipated in these forward looking statements as a result of
certain factors set forth under "Risk Factors" and elsewhere in this report.
Overview:
Glyko Biomedical Ltd. is a Canadian holding company that owns all of the capital
stock of Glyko, Inc. Glyko, Inc. is an operating company based in California.
The following discussion and the accompanying consolidated financial statements
include the accounts of Glyko Biomedical Ltd. and Glyko, Inc. presented on a
consolidated basis. Numerical references in the following discussion are rounded
to the nearest thousand. Since its inception in October 1990, Glyko has engaged
in research and development of new techniques to analyze and manipulate
carbohydrates for research, diagnostic and pharmaceutical purposes. The Company
has developed a line of analytic instrumentation laboratory products that
include an imaging system, analysis software and chemical analysis kits. The
Company is continuing to develop additional chemical kits for use with the
imaging system, and is also developing a line of carbohydrate diagnostic
products. The Company has incurred a net loss in each period since its inception
and expects to continue to incur losses at least through 1996. For the period
from its inception to September 30, 1996, the Company has incurred cumulative
losses of $12,718,000.
The Three Month Periods Ended September 30, 1996 and September 30, 1995
Revenue for the third quarter of 1996 was $298,000 and consisted primarily of
sales of products and services of $293,000. Sales of products and services
consisted of sales of chemical analysis kits, fees for custom and contract
analytical services and sales of imaging systems. Revenue for the third quarter
of 1995 was $435,000 and consisted of sales of products and services of $395,000
and other revenues of $40,000. Sales of products and services consisted of sales
of imaging systems, sales of chemical analysis kits, and fees for custom
analytical services. The decline in revenues in the third quarter of 1996
compared to the same period in 1995 was due principally to reduced sales volumes
of imaging systems to distributors for resale.
Cost of products and services in the third quarter of 1996 was $119,000 compared
to $172,000 for the same period in 1995. Reduced sales volumes of imaging
systems was the primary reason for the decrease in cost of products and
services.
Research and development expenses were $262,000 for the third quarter of 1996
compared to $246,000 for the same period in 1995. Consultancy costs related to
development of a second generation imaging system were primarily responsible for
the slight increase in overall expense.
Selling, general and administrative expenses were $489,000 in the third quarter
of 1996, compared to $424,000 for the same period in 1995, an increase of
$65,000. Most expense line items were lower in 1996 reflecting cost controls
instituted by management. However, consulting costs were significant and were
primarily responsible for the overall increase in expenses. These consulting
costs were primarily for strategic guidance regarding the possible formation of
a new company specializing in therapeutic applications.
8
<PAGE> 9
The Nine Month Periods Ended September 30, 1996 and September 30, 1995
Revenue for the first nine months of 1996 was $1,001,000 and consisted of sales
of products and services of $946,000 and other revenues of $55,000. Sales of
products and services consisted of sales of chemical analysis kits, sales of
imaging systems and custom and contract analytical services. Other revenues
consisted primarily of grant fees and equipment rental revenue. Revenue for the
first nine months of 1995 was $1,133,000 and consisted of sales of products and
services of $963,000, and other revenues of $170,000. Sales of imaging systems
were responsible for over half of all revenue from sales of products and
services. Remaining sales of products and services consisted of sales of
chemical analysis kits and fees for custom analytical services. Other revenues
consisted primarily of supply agreement fee revenue and grant fee revenue. The
overall decrease in revenue in the first nine months of 1996 compared to the
same period in 1995 was due principally to reduced sales volumes of imaging
systems to distributors for resale. Sales volumes of chemical analysis kits were
significantly higher in 1996 partially offsetting the effect of lower imaging
system sales.
Cost of goods and services was $377,000 in the first nine months of 1996 and
$399,000 in the same period in 1995. The slight decrease in cost of goods and
services in 1996 was primarily due to reduced sales volumes of imaging systems
partially offset by the effect of increased sales volumes of chemical analysis
kits.
Research and development expenses were $807,000 for the first nine months of
1996 compared to $837,000 for the same period in 1995. Increased allocation of
research and development expense to cost of products and services was the
primary reason for the overall decrease in expense. This increased allocation
resulted from higher volumes of custom and contract analytical services in 1996.
The overall decrease in 1996 expense was partially offset by higher consultancy
costs primarily related to ongoing development of a second generation imaging
system.
Selling, general and administrative expenses were $1,212,000 in the first nine
months of 1996, compared to $1,193,000 for the same period in 1995. Consulting
costs, primarily for strategic guidance regarding the possible formation of a
new company specializing in therapeutic applications, were significant.
Reductions in costs associated with travel as well as marketing and promotion
partially offset the effect of increased consultancy costs.
9
<PAGE> 10
Liquidity and Capital Resources
During the second quarter of 1995, the Company closed a private equity placement
offering (the Q295 Financing). Investors participating in the Q295 Financing
purchased approximately 4.786 million "units" that consisted of one share of
common stock and one five year warrant to purchase one share of common stock.
The Company issued units in exchange for cash, and also in exchange for the
settlement of certain outstanding liabilities. The units were priced at
Cdn.$0.80 with an exercise price on the warrant of Cdn.$0.90. The Q295 Financing
raised approximately $2.78 million, consisting of approximately $2.36 million in
cash and $420,000 for the settlement of a stockholder/director bridge loan and
other liabilities.
During the second quarter of 1996, the Company closed a second private equity
placement offering (the Q296 Financing). Investors participating in the Q296
Financing purchased 2.5 million units each consisting of one share of common
stock and one half of a two year warrant. One warrant is required to purchase
one share of common stock. The units were priced at Cdn.$0.60 with an exercise
price on the warrant of Cdn.$0.80. The Q296 Financing raised approximately
$1.077 million. An additional 175,000 units and 250,000 warrants with a total
value of approximately $130,000 were distributed to brokers in exchange for
services rendered in connection with the Q296 Financing. The Company utilized
the Black-Scholes model to value all the warrants distributed in the Q296
Financing at approximately $156,000.
Total cash used in operating activities in the first nine months of 1996 was
$1,058,000. The effect upon cash of the net operating loss of $1,360,000 was
partially offset by collections on accounts receivable and other balance sheet
activity. Gross proceeds from the Q296 Financing were $1.077 million leading to
net cash provided by financing activities of $1.041 million.
Management believes the proceeds of the Q296 Financing will allow the Company to
maintain liquidity through 1996. To maintain liquidity beyond 1996 the Company
will have to; raise additional capital, reduce expenses considerably, increase
sales significantly, or realize some combination of these factors. There can be
no assurance that the Company will be successful in maintaining liquidity. Late
in the third quarter of 1996, the Company announced layoffs and other cost
cutting measures. Management may consider selling certain assets or technology
rights to raise additional capital. The Company will continue to seek additional
funding through various means including but not limited to licensing and
marketing agreements and collaborative research agreements with strategic
partners. However, there can be no assurance that such agreements will be
reached and that additional funding will be obtained.
The Company is not committed to make any significant capital expenditures. In
the event that the Company enters into collaborative research arrangements,
spending levels will increase to conduct such funded research. Scientific
progress in the analytical and diagnostic fields, as well as in clinical trials,
will influence spending levels.
10
<PAGE> 11
RISK FACTORS
Future Capital Requirements - Uncertainty of Future Funding
The Company believes that its available cash will allow it to fund planned
operations through the remainder of 1996. The Company's Report of Independent
Public Accountants for the year ended December 31, 1995, contains a going
concern qualification reflecting both the necessity and the uncertainty of
future funding. Such funding may come from increased sales activity and/or by
reducing expenses. Funding may come individually or collectively from equity or
debt placements, licensing and marketing agreements, the sale of certain assets
of the Company, or by collaborative research agreements with strategic partners.
The Company may raise additional funds through the issuance of securities or
other financing arrangements on terms and at prices that might have the effect
of diluting the holdings of then existing stockholders. No assurance can be
given that additional financing will be available or, if available, that it will
be on terms acceptable to the Company or its stockholders. If adequate funding
is not obtained, operations will be materially adversely affected. The Company
will delay or eliminate expenditures in respect of certain products under
development such as additional analytical kits and diagnostic tests in the event
sufficient funding is unavailable. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources."
History of Operating Losses - Uncertainty of Future Profitability
The Company commenced its research activities in December 1990 and first
recorded revenues in December 1992. While revenues increased in 1994 and 1995,
the Company has not yet made a net annual operating profit. There can be no
assurance that revenues will increase in future quarters. The accumulated
deficit as of September 30, 1996, was approximately $12.7 million. The Company
anticipates that operating losses will continue at least through 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Diagnostic Products - No Prior Commercial Manufacturing or Marketing
The Company has marketed one diagnostic product, the Urinary Carbohydrate
Analysis Kit. In order to manufacture its diagnostic products in commercial
quantities and to market products independently, the Company will need to expand
its production and marketing capabilities and/or establish arrangements with
third parties having the capacity for such manufacturing or marketing.
Anticipated operating revenues and cash resources will not be sufficient to
expand manufacturing and marketing capabilities for diagnostic products
currently under development. There can be no assurance that the Company will be
able to successfully market or manufacture its diagnostic products. To the
extent that the Company arranges with third parties to manufacture or market any
diagnostic products, the commercial success of such products may depend upon the
efforts of those third parties.
Early Stage of Diagnostic Product Development
Only one of the Company's diagnostic products has been approved for commercial
sale, the Urinary Carbohydrate Analysis Kit. Potential products currently under
development by the Company will require significant additional development, and
some must undergo several phases of clinical testing and will likely require
considerable additional investment prior to their final commercialization.
Anticipated operating revenues are not sufficient to facilitate further
development of diagnostic products. There can be no assurance that any of the
Company's products under development, either now or in the future, will be
successfully developed, prove to be effective in clinical trials, receive
required regulatory approvals, be capable of being produced in commercial
quantities at reasonable costs, or be successfully marketed.
11
<PAGE> 12
Technology and Competition
The primary competitive factors in biotechnology are the ability to create and
maintain scientifically advanced technology, to attract and maintain personnel,
and to have available adequate financial resources to maintain the Company
through its research, development and commercialization of technology stages.
The Company's business is based on technology that uses common laboratory
methods of electrophoresis and bioseparation. Nevertheless there is a technical
risk associated with reducing-to-practice the basic technology for new
applications. There is no assurance that the Company will be able to develop an
economical or practical way to separate human materials for clinical diagnosis,
or that it will be able to devise specific reagents required to obtain a needed
reaction. Other companies may develop basic carbohydrate technology that
directly competes for the carbohydrate diagnostic market. Furthermore,
conventional diagnostic technology (such as enzyme or radioactive immunoassay)
may accomplish new breakthroughs in analyzing carbohydrates (which so far has
been difficult). Additionally, other newer technologies such as nucleic acid
hybridization may become competitive and erode the Company's potential shares of
diagnostic markets.
Competition in bioinstrumentation is intense. Many companies, universities, and
research organizations are engaged in the research and development of products
in the areas being developed by the Company. Many of these have financial,
technical, manufacturing and marketing resources greater than those of the
Company. As a result, carbohydrate technology will become an area of more
intense competition. In order to compete successfully the Company must expand
its efforts to develop new products and uses for its current products in
research and diagnosis. There can be no assurance that the Company will be able
to do so effectively.
Patents and Proprietary Technology
The Company's success will depend in part on its ability to obtain patents,
protect trade secrets and not infringe the patents of others. The Company has
been issued patents as well as filed applications for U.S. and foreign patents
and has exclusive licenses to patents or patent applications of others. The
Company intends in the future to apply for patents in various jurisdictions for
inventions forming part of its technology. No assurance can be given that patent
applications will result in the issue of patents or that, if issued, patents
obtained by the Company will confer on the Company a preferred position with
respect to the technology or products claimed.
There can be no assurance that others will not independently develop products
similar to the Company's, duplicate the Company's products or design around the
Company's patents. In addition the Company may be required to obtain licenses to
others' patents. No assurance can be given that such licenses can be obtained on
terms acceptable to the Company. These factors could cause the Company to
encounter delays in product market introductions or adversely affect the
Company's development or sale of products requiring licenses from third parties.
The Company's products and technologies could be subject to claims of
infringement by others. Patent conflicts and litigation can be expensive, and
could have a material adverse effect on the Company's results of operations.
Product Liability and Lack of Insurance
The Company is subject to the risk of exposure to product liability claims in
the event that the use of its technology results in adverse effects during
testing or commercial sale. The Company currently does not maintain product
liability insurance. There can be no assurance that the Company will be able to
obtain product liability insurance coverage at economically reasonable rates, or
that such insurance will provide adequate coverage against all possible claims.
12
<PAGE> 13
Uncertainty of Regulatory Approval
The Company's diagnostics products will require regulatory approval by
government agencies. This includes pre-clinical and clinical testing and
approval processes in the U.S. and other countries. Compliance can take several
years and require substantial expenditures. There can be no assurance that
difficulties or excessive costs will not be encountered by the Company in this
process or that required approvals will be obtained. The Company will not be
able to market its diagnostic products until required approvals have been
obtained.
Dependence on Key Personnel
The Company's success will depend in large part upon its ability to attract and
retain highly qualified scientific and management personnel. The Company faces
competition for such personnel from other companies, academic institutions,
government entities and other organizations. The Company depends on its key
management, including John Klock, and Christopher Starr, and the departure of
either person could have a material adverse effect on the Company. The Company
maintains key person life insurance on Dr. Klock.
13
<PAGE> 14
PART II.
ITEM 1. Legal Proceedings. None
ITEM 2. Changes in Securities: None
ITEM 3. Defaults upon Senior Securities. None.
ITEM 4. Submission of Matter to a Vote of Security Holders None
ITEM 5. Other Information. None.
ITEM 6. Exhibits and Reports on Form 8-K.
(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT
Exhibit 27, Financial Data Schedule.
(B) REPORTS ON FORM 8K
No reports were filed on Form 8-K during the three months ended
September 30, 1996.
14
<PAGE> 15
SIGNATURES
September 30, 1996
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.
Glyko Biomedical Ltd.
Date: November 12, 1996 By: /s/ John C. Klock
-------------------- ------------------
John C. Klock, M.D.
President and Chief Executive
Officer
Date: November12, 1996 By: /s/ Kevin C. Lee
--------------------- -----------------
Kevin C. Lee
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
FORM 10-QSB FOR GLYKO BIOMEDICAL LTD. FOR THE NINE MONTH PERIOD ENDED SEPTEMBER
30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 541,730
<SECURITIES> 0
<RECEIVABLES> 130,488
<ALLOWANCES> 0
<INVENTORY> 94,192
<CURRENT-ASSETS> 776,892
<PP&E> 567,800
<DEPRECIATION> 440,870
<TOTAL-ASSETS> 906,022
<CURRENT-LIABILITIES> 648,862
<BONDS> 0
0
0
<COMMON> 12,203,065
<OTHER-SE> 433,897
<TOTAL-LIABILITY-AND-EQUITY> 906,022
<SALES> 816,350
<TOTAL-REVENUES> 1,000,993
<CGS> 298,130
<TOTAL-COSTS> 377,466
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