UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
for the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 0-23512
---------------
BIOCORAL INC.
-----------------------------------------------------------------
(Exact name of Small Business Issuer as specified in its charter)
Delaware 33-0601504
- ------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
3 villa de l'Industrie, Saint-Ouen, FRANCE
- --------------------------------------------------------------------------------
(Address of principal executive offices)
011-3314-010-2252
- --------------------------------------------------------------------------------
(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 Securities Exchange Act of 1934 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 CORPORATE ISSUERS
The number of shares of common stock outstanding as of March 31, 1998 was
7,697,215.
<PAGE>
PART I
Item 1. Financial Statements. Attached.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The Company experienced a net loss of $282,923 from continuing
operations during the three month period ending March 31, 1998 ("Stub 1998") as
compared to a net loss from continuing operations of $441,110 for the comparable
period in 1997 ("Stub 1997"). The decrease in the loss is attributable primarily
to Inoteb's having reduced its loss from approximately $193,000 in Stub 1997 to
approximately $96,000 in 1998. This reduction was primarily due to Inoteb
reducing its cost of sales from $122,800 in Stub 1997 to $31,600 in Stub 1998
and other operating expenses by approximately $66,000 from approximately
$151,000 in Stub 1997 to $85,000 in Stub 1998. These reductions in Inoteb's
expenses were offset somewhat by an increase in research and development
expenditures of approximately $76,500 from $40,300 in Stub 1997 to $116,800 in
Stub 1998. The Company's other expenses, not from Inoteb, were reduced during
Stub 1998 by approximately $33,000 due to the Company's having written off
certain marketing rights during the fourth quarter of 1997 therefore stopping
the amortization expense associated therewith. Total revenues for Stub 1998 were
$143,806, as against $141,667 for Stub 1997, an insignificant change. Revenues
reflected principally the results of Inoteb's sales.
In February 1997 the Company sold its Bensenville properties, its
discontinued real estate operations, to a third party in a transaction in which
the Company received net proceeds of approximately $1,500,000 (subject to
certain escrows to secure guarantees), and recognized a loss on disposal of
approximately $188,000. The aforementioned items resulted in the Company's net
loss per share being reduced to $.04 per share from $.08 per share.
Financial Condition, Liquidity and Capital Resources; Current Plans.
At March 31, 1998, the Company had a working capital deficiency of
$313,159 and an accumulated stockholder's deficit of $488,534. In their report
on the Company's financial statements at December 31, 1997, the Company's
auditors expressed doubts about the Company's ability to continue as a going
concern. Management believes that the Company's cash position, combined with its
anticipated revenues and management's commitment to obtain financing for the
Company of at least $700,000 will enable it to sustain its activities through at
least April 1, 1999.
Statements contained herein may constitute forward-looking statements
under the Federal securities laws. Such statements are subject to certain risks
and uncertainties that could cause the actual timing of such other events to
differ materially from those projected. With respect to such dates, the
Company's management has made certain assumptions regarding, among other things,
the availability of additional capital on reasonable terms, successful and
<PAGE>
timely completion of pre-clinical tests, obtaining certain approvals of the
clinical trials from the FDA, the availability of adequate clinical supplies,
the absence of delays in patient enrollment and the availability of adequate
capital resources necessary to complete the clinical trials. The Company's
ability to commence clinical trials on the dates anticipated is subject to
certain risks. Undue reliance should not be placed on the dates on which the
Company anticipates commencing clinical trials. These estimates are based upon
the current expectations of Company's management, which may change in the future
due to a large number of potential events, including unanticipated future
developments.
PART II
Item 1. Legal Proceedings. On July 25, 1997, the United States Securities and
Exchange Commission ("Commission") filed a complaint in the United States
District Court for the District of Columbia against the Company alleging that
the Company had failed to file its Annual Report on Form 10-KSB for the year
ended December 31, 1996, two Quarterly Reports on Form 10-QSB for the fiscal
quarters ended September 30, 1996 and March 31, 1997, and five Notifications of
Late Filing with respect to its delinquent reports. The Commission sought to
compel the Company to file its delinquent periodic reports and to enjoin the
Company from any further violations of Section 13(a) of the Exchange Act and
Rules 12b-25, 13a-1 and 13a-13 thereunder. Simultaneously with the filing of the
Commission's complaint, the Company consented to the entry of a Final Judgment
granting the relief sought by the Commission and admitted that it had not filed
the periodic reports as described above. All delinquent filings have now been
made by the Company.
Item 2. Changes in Securities. There are no reportable events relating to this
item.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. There are no
reportable events relating to this item.
Item 5. Other Information. There are no reportable events relating to this item.
Item 6. Exhibits and Reports on Form 8-K.
(A) Not applicable.
(B) None.
<PAGE>
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 hereunto duly authorized.
BIOCORAL, INC.
Date: May 15, 1998 /s/ Nasser Nassiri
------------------------
Nasser Nassiri, Chairman
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997 F-2
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 F-3
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
THREE MONTHS ENDED MARCH 31, 1998 F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997 F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6/14
* * *
F-1
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
March December
ASSETS 31, 1998 31, 1997
----------- -----------
(Unaudited) (See Note 1)
<S> <C> <C>
Current assets:
Cash $ 443,900 $ 506,930
Accounts receivable, net of allowance for
doubtful accounts of $190,200 and $245,900 84,000 104,600
Inventories 171,500 177,500
Net assets of discontinued operations 280,000 430,000
Other current assets 80,800 95,000
----------- -----------
Total current assets 1,060,200 1,314,030
Property and equipment, net of accumulated
depreciation of $163,100 and $149,500 73,356 109,053
Other assets 188,269 188,682
----------- -----------
Totals $ 1,321,825 $ 1,611,765
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt $ 335,200 $ 352,825
Notes payable:
Related parties 428,811 428,811
Other 25,000 25,000
Accounts payable and accrued liabilities 584,348 591,302
----------- -----------
Total current liabilities 1,373,359 1,397,938
Long-term debt, net of current portion 437,000 447,875
----------- -----------
Total liabilities 1,810,359 1,845,813
----------- -----------
Commitments and contingencies
Stockholders' deficiency:
Preferred stock, par value $.001 per share;
1,000,000 shares authorized; none issued - -
Common stock, par value $.001 per share;
20,000,000 shares authorized; 7,697,215
shares issued and outstanding 7,697 7,697
Additional paid-in capital 12,509,248 12,509,248
Accumulated deficit (12,578,916) (12,295,993)
Unearned compensation (426,563) (455,000)
----------- -----------
Total stockholders' deficiency (488,534) (234,048)
----------- -----------
Totals $ 1,321,825 $ 1,611,765
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
----------- -----------
Revenues:
Sales $ 143,000 $ 137,200
Other income 806 4,477
----------- -----------
Totals 143,806 141,677
----------- -----------
Operating expenses:
Cost of sales 31,600 122,800
Research and development, net of subsidies 116,800 40,300
Interest 19,395 16,783
Depreciation of property and equipment 13,600 9,900
Amortization of other assets 32,763
Amortization of unearned compensation 28,437 56,875
Consulting and professional fees 105,504 106,048
Other operating expenses 111,393 197,318
----------- -----------
Totals 426,729 582,787
----------- -----------
Loss from continuing operations (282,923) (441,110)
Discontinued real estate operations -
loss on disposal (188,058)
----------- -----------
Net loss $ (282,923) $ (629,168)
=========== ===========
Loss per common share:
Loss from continuing operations -- basic $ (.04) $ (.06)
Loss from discontinued operations -- basic (.02)
----------- -----------
Net loss per common share -- basic $ (.04) $ (.08)
=========== ===========
Weighted average common shares outstanding 7,697,215 7,544,944
=========== ===========
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
Number Number Additional Total
of of Paid-In Accumulated Unearned Stockholders'
Shares Amount Shares Amount Capital Deficit Compensation Deficiency
------ ------ ------ ------ ------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1998 - $ - 7,697,215 $7,697 $12,509,248 $(12,295,993) $(455,000) $(234,048)
Amortization of un-
earned compensation 28,437 28,437
Net loss (282,923) (282,923)
--- ---- --------- ------ ----------- ------------ --------- ---------
Balance, March 31,
1998 - $ - 7,697,215 $7,697 $12,509,248 $(12,578,916) $(426,563) $(488,534)
=== ==== ========= ====== =========== ============ ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Operating activities:
Net loss $(282,923) $(629,168)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation of property and equipment 13,600 9,900
Loss on disposal of property and equipment 22,097 56,100
Amortization of other assets 32,763
Amortization of unearned compensation 28,437 56,875
Loss from discontinued operations 188,058
Changes in operating assets and liabilities:
Accounts receivable 20,600 (26,200)
Inventories 6,000 102,800
Other current assets 14,200 (288,434)
Other assets 413 1,000
Accounts payable and accrued liabilities (6,954) 96,952
--------- ---------
Net cash used in operating activi-
ties (184,530) (399,354)
--------- ---------
Investing activities - net proceeds from dis-
posal of discontinued real estate operations 150,000 612,923
--------- ---------
Financing activities:
Proceeds from long-term obligations 60,300
Principal payments on long-term obligations (28,500) (70,600)
Proceeds from sale of common stock 300,000
--------- ---------
Net cash provided by (used in)
financing activities (28,500) 289,700
--------- ---------
Net increase (decrease) in cash (63,030) 503,269
Cash, beginning of period 506,930 9,142
--------- ---------
Cash, end of period $ 443,900 $ 512,411
========= =========
Supplemental disclosure of cash flow data:
Interest paid $ 8,675 $ 55,547
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Business and basis of presentation:
Business:
BioCoral, Inc. ("BioCoral") was incorporated under the laws of the
State of Delaware on May 4, 1992 and originally organized as a
"blind pool" or "blank check" company for the purpose of either
merging with or acquiring an operating company. BioCoral was a
"development stage company" for accounting purposes until March 25,
1994 when it acquired all of the issued and outstanding stock of
Cabestan, Inc. ("Cabestan"), which concurrently acquired commercial
real estate properties from a commonly-controlled related party. As
further explained in Note 2 of the notes to the consolidated
financial statements in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997 (the "10-KSB") previously filed
with the United States Securities and Exchange Commission and in
Note 4 herein, Cabestan entered into an agreement to sell its real
estate properties in October 1996 and consummated the sale in
February 1997. Accordingly, the results of the real estate
operations have been shown separately as discontinued operations in
the accompanying consolidated statements of operations. The net
assets of the discontinued real estate operations have also been
reclassified and shown separately in the accompanying consolidated
balance sheets.
During 1995, BioCoral acquired 3H Human Health Hightech Public
Limited Company ("3H"), an Irish corporation, for the purpose of
commencing and developing commercial biomaterials operations. 3H's
only significant activity prior to being acquired by BioCoral was
the acquisition of an option for the purchase of a license from
Inoteb SA ("Inoteb"), a French corporation, that would give 3H the
exclusive right to distribute, anywhere outside of France, the
medical products developed and manufactured by Inoteb. During 1995,
BioCoral also exercised its option for the purchase of the license
from Inoteb (see Note 2 in the 10-KSB), and it acquired an option to
purchase a controlling interest in Inoteb. During July 1996,
BioCoral exercised its option for the purchase of the controlling
interest in Inoteb (see Note 2 in the 10-KSB).
BioCoral, Inoteb, 3H, Cabestan and BioCoral's other subsidiaries
are referred to collectively herein as the "Company."
As of March 31, 1998, substantially all of the Company's continuing
operations were biomaterials operations conducted through Inoteb,
which was 66.95%-owned as of that date. Such operations consist
primarily of developing, manufacturing and marketing bone substitute
materials made from coral and other orthopedic, oral and
maxillofacial products, including products marketed under the trade
name of BioCoral. The Company has not received the regulatory
approvals needed to market its products in the United States.
Obtaining such approvals could take a long time and involve
substantial expenditures.
F-6
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Business and basis of presentation (continued):
Business (concluded):
The Company has generated limited amounts of revenues from its
biomaterials operations and, as a result, on December 31, 1997 it
wrote off all of the costs of goodwill and licensing fees that it
had incurred and capitalized in the development of its biomaterials
operations.
During 1994, BioCoral filed a registration statement under the
Securities Exchange Act of 1934 (the "Exchange Act") and, as a
result, it is required to file periodic reports with the United
States Securities and Exchange Commission.
Basis of presentation:
The accompanying consolidated financial statements have been
prepared based on the assumption that the Company will continue as
a going concern. However, the Company has generated limited amounts
of revenues from its biomaterials operations and has incurred
significant recurring losses from its continuing and discontinued
operations, including net losses of $282,923 and $3,378,564 for the
three months ended March 31, 1998 and the year ended December 31,
1997, respectively. As a result, the Company had a working capital
deficiency of $313,159 and an accumulated deficit of $12,578,916 at
March 31, 1998. Inoteb, the Company's principal operating
subsidiary, also had a working capital deficiency and an
accumulated deficit. These conditions, among others, raise
substantial doubts about the ability of the Company to continue as
a going concern.
Management believes that the Company's commercial success and
ability to ultimately generate profitable biomaterials operations
and continue as a going concern will depend to a significant extent
on the Company's ability to obtain from regulatory authorities, such
as the Food and Drug Administration, the approvals that will be
necessary to enable it to sell its products in the United States and
certain other countries. Management expects that the approval
process is likely to be very costly and time consuming, and that
the Company will need substantial additional amounts of working
capital to fund operations while it further develops its technology
and obtains the regulatory approvals.
Management believes that the Company will need a minimum of
approximately $700,000 to finance its operations through at least
April 1, 1999. Management plans to obtain such resources through
loans from, or sales of capital stock to, related and/or unrelated
parties. Management believes that if the Company cannot obtain such
resources from other parties, the Company's chairman of the board of
directors and chief executive officer is committed to and will
provide the funds through loans or the purchase of the Company's
capital stock. Management will also seek such funds from joint
venture or other strategic partners. However, management cannot
provide any assurances that the Company will be successful in
obtaining such financing and regulatory
F-7
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Business and basis of presentation (concluded):
Basis of presentation (concluded):
approvals, or that even if it does obtain such financing and
regulatory approvals it will be able to generate profitable
operations on a sustained basis. The accompanying consolidated
financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going
concern.
In the opinion of management, the accompanying unaudited
consolidated financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present fairly
the financial position of the Company as of March 31, 1998, and its
results of operations and cash flows for the three months ended
March 31, 1998 and 1997. Information included in the consolidated
balance sheet as of December 31, 1997 has been derived from the
audited balance sheet in the 10-KSB. These unaudited consolidated
financial statements should be read in conjunction with the
financial statements, notes to financial statements and the other
information in the 10-KSB.
Note 2 - Loss per common share:
Effective December 31, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, Earnings per
Share ("SFAS 128"), which replaces the presentation of "primary" and
"fully-diluted" income (loss) per common share required under
previously promulgated accounting standards with the presentation of
"basic" and "diluted" income (loss) per common share.
Basic net income (loss) per common share is calculated by dividing
net income or loss for each period by the weighted average number of
common shares outstanding during the period. The calculation of
diluted net income (loss) per common share is similar to that of
basic net income (loss) per common share, except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if all potentially dilutive
common shares, principally those issuable upon the exercise of stock
options, were issued during the period.
Since the Company had losses for the three months ended March 31,
1998 and 1997, the assumed effects of the exercise of outstanding
stock options were anti-dilutive and, accordingly, diluted per share
amounts have not been presented in the accompanying consolidated
statements of operations. In addition, the basic loss per common
share amounts presented in the accompanying consolidated statement
of operations for the three months ended March 31, 1997 which were
computed in accordance with SFAS 128 do not differ from those
computed under previously promulgated accounting standards.
F-8
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 - Minority interest in Inoteb:
As further explained in Note 2 in the 10-KSB, as a result of losses
incurred by Inoteb during and prior to 1997, the minority interest
in Inoteb had been eliminated as of December 31, 1997 and 1996. The
Company's net losses for the three months ended March 31, 1998 and
1997 included approximately $32,000 and $85,000, respectively, of
Inoteb's net losses that could not be allocated due to the prior
elimination of the minority interest. Income earned by Inoteb
subsequent to March 31, 1998, if any, will be allocated entirely to
the Company until such time as the Company recovers excess losses of
approximately $427,000 that could not be charged to the minority
interest.
Note 4 - Sale of discontinued real estate operations:
As further explained in Note 2 in the 10-KSB, in October 1996, the
Company decided to discontinue its real estate operations and
entered into an agreement to sell the commercial real estate owned
by Cabestan for total consideration of approximately $6,800,000
before costs directly related to the sale. The sale was consummated
on February 18, 1997. During the period from February 18, 1997 to
December 31, 1997, the purchaser paid approximately $4,748,000 by
assuming a mortgage note on the properties and paying $1,945,000 in
cash at various dates. Of the total cash payments, approximately
$1,515,000 was remitted to the Company and $430,000 was initially
deposited in escrow to secure certain minimum rent guarantees made
to the purchaser. During the three months ended March 31, 1998, a
total of $150,000 was released from escrow. The escrow account
balances of $280,000 and $430,000 were the only remaining assets
attributable to discontinued real estate operations as of March 31,
1998 and December 31, 1997, respectively; there were no remaining
liabilities attributable to discontinued real estate operations as
of either of those dates.
The loss from discontinued real estate operations includes charges
for interest of $38,764 for the three months ended March 31, 1997.
Depreciation was discontinued when the property and equipment was
written down to net realizable value in 1995 and, accordingly, there
was no charge for depreciation expense for the three months ended
March 31, 1997.
F-9
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5 - Income taxes:
As of March 31, 1998, the Company had net operating loss
carryforwards of approximately $6,458,000 available to reduce future
Federal taxable income which, if not used, will expire at various
dates through 2013. Due to changes in the ownership of the Company,
the utilization of these loss carryforwards may be subject to
substantial annual limitations.
Deferred tax assets of approximately $2,196,000 and $2,109,000
attributable to the potential benefits from such net operating loss
carryforwards as of March 31, 1998 and December 31, 1997,
respectively, were offset by equivalent valuation allowances due to
the uncertainties related to the extent and timing of the Company's
future taxable income. There were no other material temporary
differences as of these dates.
Note 6 - Short-term notes payable:
At March 31, 1998, the Company had outstanding notes payable to
related parties with a principal balance of $428,811 that are due on
demand and bear interest at 10%. The notes are secured by 12,298
shares of Inoteb's common stock. The noteholders have the option to
convert the notes at any time into a total of 500,000 shares of
common stock of the Company (which is equivalent to a conversion
rate of $.8576 per share). Interest on such borrowings totaled
approximately $11,000 for the three months ended March 31, 1998.
The Company sold six month, 12% notes (the "Regulation D notes") in
the principal amount of $1,975,000 in 1994 and 1995 through an
offering that was exempt pursuant to Regulation D of the Securities
Act. As of April 4, 1995, the Company was in default with respect to
the payment of Regulation D notes with a principal balance of
$1,775,000 and accrued but unpaid interest of $53,250 and,
accordingly, such notes became due and payable. In 1995, the Company
made payments that reduced the principal balance to $517,500 and
negotiated an extension of the due date. During the period from
February 18, 1997 to December 31, 1997, the Company used a portion
of the proceeds from the sale of its commercial real estate (see
Note 4) to make principal payments on the notes totaling $492,500.
As a result, the outstanding principal balance of the Regulation D
notes was $25,000 at March 31, 1998 and December 31, 1997.
Management anticipates that the Company will repay the remaining
balance as soon as it can locate the remaining noteholder.
F-10
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 - Long-term debt:
Long-term debt at March 31, 1998 and December 31, 1997 consisted of
the following:
March December
31, 1998 31, 1997
-------- --------
Term loans payable monthly in
varying installments, including
interest at rates ranging from
6.95% to 9.5%, through December
2001 (A) $376,300 $397,600
Noninterest bearing advances in-
itially scheduled to be paid
in monthly installments through
2002 (B) 395,900 403,100
-------- --------
772,200 800,700
Less current portion 335,200 352,825
-------- --------
Long-term debt $437,000 $447,875
======== ========
(A) The loans were secured by equipment with a net carrying value
of approximately $73,356 at March 31, 1998.
(B) The advances were made to Inoteb by an agency of the French
government that finances or subsidizes certain research and
development projects. If the research does not result in a
commercially feasible product and certain other conditions are
met, Inoteb will not have to pay some or all of the advances.
Principal payment requirements on long-term obligations in each of
the five years subsequent to March 31, 1998 are as follows:
Year Ending
March 31, Amount
--------- ------
1999 $335,200
2000 131,500
2001 109,000
2002 98,200
2003 98,300
Management of the Company believes that the term loans and the
noninterest bearing advances had carrying values that approximated
their fair values as of March 31, 1998 because the interest rates
and other relevant terms of such financial instruments were the
equivalent of those that the Company could have obtained for new
loans as of that date.
F-11
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8 - Common stock issued or issuable to consultants and advisors:
On October 1, 1997, the Company formed a Scientific Advisory Board
("SAB") with four members who will advise the Company on scientific
and medical developments relating to its products. Although the
Company is not contractually obligated to compensate the members of
the SAB, management intends to issue shares of the Company's common
stock with a fair value of $39,000 to them on April 1, 1998 and
October 1, 1998 to compensate them for their services. Accordingly,
the Company accrued a liability of $39,000 for such compensation as
of March 31, 1998, which, based on the fair market value of the
Company's common shares, will be paid through the issuance of
approximately 19,500 common shares.
Note 9 - Stock option plan
As further explained in Note 9 in the 10-KSB, on May 4, 1992, the
Company adopted a stock option plan (the "Plan") pursuant to which
options to purchase an aggregate of up to 2,000,000 shares of common
stock may be issued. As of December 31, 1997, the Company had
granted options for the purchase of 1,758,334 shares of common stock
all of which were exercisable at exercise prices ranging from $2.375
to $5.81 per share. The weighted average exercise price of those
options was $3.56 per share.
On February 3, 1998, the Company granted options for the purchase of
200,000 shares of common stock exercisable at $3.25 per share, the
fair market value of the shares on the date of grant. These options,
which are exercisable for a five year period from the date of
issuance, remained outstanding at March 31, 1998. No options were
granted during the three months ended March 31, 1997.
Accordingly, as of March 31, 1998, the Company had granted options
for the purchase of 1,958,334 shares of common stock all of which
were exercisable at exercise prices ranging from $2.375 to $5.81 per
share. The weighted average exercise price of those options was
$3.52 per share. A total of 41,666 shares remained available for
grant.
F-12
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9 - Stock option plan (concluded):
Since, as also explained in Note 9 in the 10-KSB, the Company has
elected to continue to use the provisions of Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, in
accounting for its stock options and the exercise price for the
options granted during the three months ended March 31, 1998
approximated the fair value of the underlying stock at the date of
grant, the Company did not recognize any compensation costs in
connection with the options granted on February 3, 1998 for the
purchase of 200,000 shares of common stock.
The compensation cost, pro forma loss and loss per common share from
continuing operations and net loss and net loss per common share for
the three months ended March 31, 1998 and 1997, determined using a
fair value based method of accounting as required by SFAS 123 for
the stock options granted by the Company, have not been presented
since such amounts do not differ materially from the corresponding
historical amounts.
Note 10 - Preferred stock:
At January 1, 1997, there were 300 shares of nonconvertible, Series
A preferred stock outstanding, all of which were owned by a company
controlled by Riccardo Mortara, a principal stockholder of the
Company (see Notes 2 and 10 in the 10-KSB). During January 1997, the
remaining 300 shares of preferred stock outstanding were canceled
and 400,000 shares of common stock were sold to the holder for
$300,000.
Note 11 - Segment and geographic information:
The Company operates principally in one industry segment which
includes the development, manufacture and sale of biomedical
materials used in medical products. The Company conducts operations
outside of the United States, principally in France and Ireland.
Information about the Company's operations in different geographic
locations for the three months ended March 31, 1998 and 1997 is
shown below:
United
States France Ireland Consolidated
------ ------ ------- ------------
1998
- ----
Net sales $ 143,000 $ 143,000
Loss from
continuing
operations $ (180,827) (95,900) $ (6,196) (282,923)
Identifiable
assets 576,279 745,546 1,321,825
F-13
<PAGE>
BIOCORAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 11 - Segment and geographic information (concluded):
United
States France Ireland Consolidated
------ ------ ------- ------------
1997
- ----
Net sales $ 137,200 $ 137,200
Loss from
continuing
operations $ (201,139) (193,000) $ (46,971) (441,110)
Identifiable
assets 1,957,966 1,036,036 1,305,932 4,299,934
* * *
F-14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Biocoral
Inc. and Subsidiaries and is qualified in it's entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 443,900
<SECURITIES> 0
<RECEIVABLES> 274,200
<ALLOWANCES> 190,200
<INVENTORY> 171,500
<CURRENT-ASSETS> 1,060,200
<PP&E> 236,456
<DEPRECIATION> 163,100
<TOTAL-ASSETS> 1,321,825
<CURRENT-LIABILITIES> 1,373,359
<BONDS> 1,226,011
0
0
<COMMON> 7697
<OTHER-SE> (496,231)
<TOTAL-LIABILITY-AND-EQUITY> 1,321,825
<SALES> 143,000
<TOTAL-REVENUES> 143,806
<CGS> 31,600
<TOTAL-COSTS> 31,600
<OTHER-EXPENSES> 375,734
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,395
<INCOME-PRETAX> (282,923)
<INCOME-TAX> 0
<INCOME-CONTINUING> (282,923)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (282,923)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
