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			       UNITED STATES
		    SECURITIES AND EXCHANGE COMMISSION
			  Washington, D.C. 20549

				 Form 10-Q

(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

For the quarterly period ended JuneSeptember 30, 1997, 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	 000-21615
			------------


			  BOSTON BIOMEDICA, INC.
	  (Exact name of Registrant as Specified in its Charter)

     Massachusetts					04-2652826
- ------------------------			   ----------------------
    (State or other				     (I.R.S. Employer
    Jurisdiction of				     Identification No.)
      Incorporation or
     Organization)

   375 West Street,
   West Bridgewater,
     Massachusetts					    02379
- ------------------------			   ----------------------
 (Address of Principal					  (Zip Code)
  Executive Offices)

Registrant's telephone number, including area code    (508) 580-1900
						      --------------

  Indicate by check 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 number of shares outstanding of the  Registrant's  only  class  of  common
stock as of JulyOctober 31, 1997 was 4,426,900.4,467,576.
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Part I. Financial Information
Item 1. Financial Statements

                BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended For the SixNine Months Ended JuneSeptember 30, Ended JuneSeptember 30, ------------------------ ----------------------------------------------------- ------------------------------ 1997 1996 1997 1996 ----------- ----------- ----------- ----------------------- ------------ ------------- ------------- REVENUE: Product sales $2,416,956 $2,130,278 $4,543,912 $3,945,759$3,342,772 $2,021,462 $ 7,886,684 $ 5,967,221 Services 2,231,998 1,714,096 4,314,091 2,982,624 ----------- ----------- ----------- -----------2,797,010 1,993,269 7,111,101 4,975,893 ------------ ------------ ------------- ------------- Total revenue 4,648,954 3,844,374 8,858,003 6,928,3836,139,782 4,014,731 14,997,785 10,943,114 COSTS AND EXPENSES: Cost of product sales 1,271,662 1,107,007 2,327,084 2,006,8331,783,485 1,044,513 4,110,569 3,051,346 Cost of services 1,456,194 1,116,171 2,931,726 2,249,6101,815,023 1,218,193 4,746,749 3,467,803 Research and development 256,995 195,054 493,745 361,619378,451 169,157 872,196 530,776 Selling and marketing 775,594 500,277 1,388,954 915,289870,425 593,523 2,259,379 1,508,812 General and administrative 694,875 551,945 1,374,082 1,088,448 ---------- ---------- ---------- ----------940,403 641,501 2,314,485 1,729,949 ------------ ------------ ------------- ------------- Total operating costs and expenses 4,455,320 3,470,454 8,515,591 6,621,7995,787,787 3,666,887 14,303,378 10,288,686 Income from operations 193,634 373,920 342,412 306,584351,995 347,844 694,407 654,428 Interest income (expense), net 99,184 (74,909) 196,670 (168,469) ----------- ----------- ----------- -----------58,250 (76,757) 254,920 (245,226) ------------ ------------ ------------- ------------- Income before income taxes 292,818 299,011 539,082 138,115410,245 271,087 949,327 409,202 Provision for income taxes (117,128) (119,604) (215,634) (55,246) ----------- ----------- ----------- -----------(164,098) (108,435) (379,731) (163,681) ------------ ------------ ------------- ------------- Net income $ 175,690246,147 $ 179,407162,652 $ 323,448569,596 $ 82,869 =========== =========== =========== ===========245,521 ============ ============ ============= ============= Net income per share $ 0.040.05 $ 0.060.05 $ 0.070.12 $ 0.03 =========== =========== =========== ===========0.08 ============ ============ ============= ============= Weighted average common and common equivalent shares outstanding 4,851,623 3,263,711 4,831,747 3,252,6434,802,878 3,313,108 4,804,942 3,251,885
See Notes to Consolidated Financial Statements 2 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
JuneSeptember 30, December 31, ------------------------- ------------- 1997 1996 ------------------------- ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,777,0482,387,874 $ 8,082,642 Accounts receivable, less allowances of $361,540$425,852 in 1997 and $352,058 in 1996 3,389,5794,611,811 3,415,994 Inventories 4,560,9275,737,191 4,180,334 Prepaid expense and other 316,342388,896 239,950 Deferred income taxes 302,948308,490 283,200 ----------- ------------------------ ------------- Total current assets 14,346,84413,434,262 16,202,120 ------------- ------------- Property and equipment, net 3,193,8964,219,094 2,699,158 OTHER ASSETS: Long term investment 1,482,500 732,500 Goodwill and other intangibles, net 86,0852,240,995 95,302 Notes receivable and other 989,322122,071 69,234 2,557,907------------- ------------- 3,845,566 897,036 ----------- ------------------------ ------------- TOTAL ASSETS $20,098,647$21,498,922 $19,798,314 =========== ======================== ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long term debt $ 13,45826,903 $ 12,820 Accounts payable 1,074,8821,507,318 991,839 Accrued compensation 740,102868,994 840,666 Accrued income taxes 27,607162,998 427,140 Other accrued expenses 307,738492,519 264,262 Deferred revenue 1,104,4151,105,499 829,477 ----------- ------------------------ ------------- Total current liabilities 3,268,2024,164,231 3,366,204 ------------- ------------- LONG-TERM LIABILITIES: Long-term debt, less current maturities 34,055Deferred rent and other liabilities 228,406 40,948 Deferred income taxes 89,67392,506 101,580 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, $.01 par value; authorized 20,000,000 shares in 1997 and 1996; issued and outstanding 4,426,9004,466,826 in 1997 and 4,378,157 in 1996 44,26944,668 43,782 Additional paid-in capital 15,351,85615,412,371 15,258,656 Retained earnings 1,310,5921,556,740 987,144 ----------- ------------------------ ------------- Total stockholders' equity 16,706,71717,013,779 16,289,582 ----------- ------------------------ ------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $20,098,647$21,498,922 $19,798,314 =========== ======================== =============
See Notes to Consolidated Financial Statements 3 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the SixNine Months Ended ----------------------------September 30, --------------------------- 1997 1996 ------------- ------------ ----------- CASH FLOWS (FOR) FROM OPERATING ACTIVITIES: Net income $ 323,448 $ 82,869569,596 $245,521 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 353,843 280,426596,747 432,490 Provision for doubtful accounts 77,781 77,145140,676 186,992 Deferred rent (53,916) (33,236)(60,194) Deferred income taxes (31,655) (29,514)(34,364) 53,334 Changes in operating assets and liabilities: Accounts receivable (51,366) 132,324(926,265) (297,192) Other assets (27,083) 4,385(11,823) (2,575) Inventories (380,593) (188,368)(474,671) (280,123) Prepaid expenses (76,392) (40,447)(97,869) (43,278) Accounts payable 83,043 70,73086,323 59,977 Accrued compensation and other expenses (402,705) 20,846(312,574) 279,372 Deferred revenue 274,938 307,843187,330 233,950 ------------ ------------------------ Net cash (used in) provided by operating activities 89,343 685,003(330,810) 808,274 ------------ ------------------------ CASH FLOWS FOR INVESTING ACTIVITIES: Payments for additions to property and equipment (839,364) (282,518) Advances under notes receivable and other assets (893,005)(1,652,588) (495,797) Purchase of Intangible Assets (5,752) - Purchase of long term investment (750,000) - Net assets of acquisition, net of cash acquired (1,993,722) - ------------ ------------------------ Net cash used in investing activities (2,482,369) (282,518)(4,402,062) (495,797) ------------ ------------------------ CASH FLOWS FROMFOR FINANCING ACTIVITIES: Proceeds from long term debt - 226,300 Repayments of long-term debt (6,255) (1,590,603)(1,116,497) (932,912) Proceeds of common stock issued 93,687 960,903154,601 960,904 Initial public offering costs - (502,538) ------------ ------------------------ Net cash provided by (used in)used in financing activities 87,432 (403,400)(961,896) (248,246) ------------ ------------- DECREASE----------- (DECREASE) INCREASE IN CASH: (2,305,594) (915)(5,694,768) 64,231 Cash and cash equivalents, beginning of period 8,082,642 11,463 ------------ ------------------------ Cash and cash equivalents, end of period $2,387,874 $ 5,777,048 $ 10,54875,694 ============ ========================
See Notes to Consolidated Financial Statements 4 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation - ----------------------------- The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and sixnine months ended JuneSeptember 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Form 10-K filing for the fiscal year ended December 31, 1996 for Boston Biomedica, Inc. and Subsidiaries ("the Company"(the "Company" or "Boston Biomedica"). Certain prior years' amounts in the consolidated financial statements may have been reclassified to conform to the current year's presentation. (2) Inventories - ---------------- Inventories consisted of the following: JuneSeptember 30, December 31, 1997 1996 ----------- ------------------------ ------------- Raw materials......................... $ 1,456,895 $ 1,359,569 Work-in-process....................... 667,078materials.................................. $2,125,707 $1,359,569 Work-in-process................................ 1,061,995 697,749 Finished goods........................ 2,436,954goods................................. 2,549,489 2,123,016 ----------- ----------- $ 4,560,927 $ 4,180,334 =========== ===========------------- ------------- $5,737,191 $4,180,334 ============= ============= (3) Computation of Income Per Share - ------------------------------------ Net income per common share is computed based upon the weighted average number of common shares and as appropriate, common equivalent shares (using the treasury stock method) outstanding after certain adjustments described below. Common equivalent shares consist of common stock options and warrants outstanding. In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 83, all common, redeemable common, and common equivalent shares issued during the twelve month period prior to the proposed date of the initial filing of the Registration Statement have been included in the calculation as if they were outstanding for all periods prior to the Initial Public Offering (IPO) using the treasury stock method and an offering price of $8.50 per share. Fully diluted net income per common share is not presented as it does not materially differ from primary earnings per share. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS 128 establishes a different method of computing net income per share than is currently required under the provisions of Accounting Principles Board Opinion No. 15. Under SFAS No. 128, the Company will be required to present both basic net income per share and diluted net income per share. Basic net income per share for the three and six months ended JuneSeptember 30, 1997 and 1996 would have been the same as the reported primary net income per share. The impact of SFAS 128 on the calculation of diluted$.06. Basic net income per share for these quarters doesthe nine months ended September 30, 1997 and 1996 would have been $.13 and $.09 respectively. The Company has not materially differ from basic netyet quantified what the impact of SFAS 128 will be on diluted income per share. The Company plans to adopt SFAS 128 for periods after December 15, 1997 and at that time all historical net income per share data presented will be restated to conform to the provisions of SFAS No. 128. (4) Investment in BioSeq, Inc. (BioSeq). - ----------------------------------------- In April 1997, the Company exercised its option to purchase an additional 165,000 shares of BioSeq stock at an aggregate cost of $750,000, thereby increasing its ownership of BioSeq to 19%. The investment is carried at cost of $1,482,000 and classified as a long term investment. 5 BOSTON BIOMEDICA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Subsequent Event(5) Purchase of the net assets of Source Scientific, Inc. - --------------------------------------------------------- In July 1997, the Company, through its wholly owned subsidiary BBI-Source Scientific, Inc., completed the acquisition of all of the assets, business, and selected liabilities of Source Scientific, Inc. upon the cash payment of $1,894,000. The acquisition will be accounted for as a purchase.("Source"). In addition to the cash payment of $1,894,000 to Source, the total purchase price will includewas $1,994,000 including consulting, legal, accounting and other acquisition costs.costs, net of cash acquired. The acquisition is treated as an asset purchase as of July 1, 1997 and the results of operations have been included since that date. The purchase price will be allocated toexceeds the fair market value of thenet assets and liabilities acquired. Any remaining portion will be allocated toacquired by approximately $2,202,000, which is recognized as goodwill and is being amortized on a straight line basis over a ten year period.fifteen years. The following pro forma information combines the consolidated results of operations of the Company and Source Scientific, Inc. as if the asset purchase had occurred at the beginning of 1996, after giving effect to certain adjustments, including amortization of intangible assets, increased interest expense on the acquisition debt, and related income tax effects. The pro forma information is shown for comparative purposes only and does not reflect the synergies expected to result from the integration of Source's business into the Company's business. Quarter Ended Nine Months Ended September 30, September 30, ---------------------- --------------------------- 1997 1996 1997 1996 Actual Pro Forma Pro Forma Pro Forma ---------- ----------- ------------ ----------- Revenues 6,139,782 5,137,731 16,750,123 15,166,114 Operating income (loss) 351,995 47,844 (91,185) 147,202 Net income (loss) 246,147 28,706 (54,711) 88,321 EPS 0.05 0.01 (0.01) 0.03 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. Overview The following Management's Discussion and Analysis reviews the Company's Results of Operations for the three months and nine months ended September 30, 1997 and 1996. Effective July 1, 1997, the Results of Operations include the results of the Company's clinical diagnostic instrument business purchased from Source Scientific, Inc. This business and the related assets, with selected liabilities, was acquired by a wholly owned subsidiary of the Company, BBI-Source Scientific, Inc. ("BBI-Source"), established to operate this instrument business. This acquisition represents a significant portion of the fluctuations for the third quarter of revenue and operating expenses, but did not have a material impact on net income. Three Months Ended JuneSeptember 30, 1997 and 1996 Total revenue increased 20.9%52.9%, or $805,000,$2,125,000, to $4,649,000$6,140,000 for the three months ended JuneSeptember 30, 1997 from $3,844,000$4,015,000 in the prior year period. This increase was the result of an increase in product sales of 13.5%65.4%, or $287,000,$1,322,000, to $2,417,000$3,343,000 from $2,130,000$2,021,000 and an increase in specialty laboratory services of 30.2%40.3%, or $518,000,$804,000, to $2,232,000$2,797,000 from $1,714,000.$1,993,000. Product revenue increased primarily due to the addition of the results of the Company's subsidiary, BBI-Source, as a result ofwell as continued strong sales of new and existing Accurun(Quality Control products including Accurun(R) run controls and TQS products, but was partially offset by lower than expected sales to diagnostic test kit manufacturers.panels. The increase in service revenue was primarily attributable to a 45.7% increaseBBI-Source's inclusion in results, continued strong sales of the Company's Specialty Clinical Laboratory Testing revenue, driven once again byservices, especially the HIV molecular (PCR) teststest needed for disease management programs.programs, and additional revenue from several new contracts at the Company's BBI-Biotech subsidiary. Gross profit increased 18.5%45%, or $300,000,$789,000, to $1,921,000$2,541,000 for the current three months from $1,621,000$1,752,000 in the prior year period. The overall gross profit margin decreased to 41.3%41.4% for the current three months versus 42.2%43.6% in the prior year period. This decrease was primarily driven by a shiftlower margins in the mix of revenue towardsBBI-Source's products and services (48% of total revenue in the current quarter versus 45% in the prior year period) as a result of the growthbusiness, and lower margins in Specialty Clinical Laboratory Testing noted above. Theservices, partially offset by higher margins in the Company's services generally carry lower margins than its Quality Control Products. BBI-Source's service margins are expected to improve as it ramps up its field service activities. Research and development expenses increased 31.8%123.7%, or $62,000,$209,000, to $257,000$378,000 for the current three months from $195,000$169,000 in the prior year period. This increase was primarily the result of additional research project expenditures for new Quality Control Products, including panels and Accurun(Accurun(R), as well as continued work on additional molecular tests for ourthe Company's Specialty Clinical Laboratory.Laboratory, and development expenditures for BBI-Source's PlateMate(tm) plate reader instrument. Selling and marketing expenses increased 55.0%46.7%, or $275,000,$276,000, to $776,000$870,000 for the current three months from $500,000$594,000 in the prior year period. ThisIn addition to including BBI-Source, this increase was primarilyalso attributable to increased personnel costs associated with the addition of field staff for Accurun(Accurun(R) and the Specialty Clinical Laboratory, increased spending for promotional materials, and increased travel costs. General and administrative expenses increased 25.9%46.6%, or $143,000,$299,000, to $695,000$940,000 for the current three months from $552,000$641,000 in the prior year period. ThisIn addition to the effect of including BBI-Source for the first time, this increase was primarilyalso a result of increased MIS and other support personnel, as well as the increased costs incurred as a public company. Net interest income of $99,000$58,000 was earned for the three months ofended September 30, 1997 versus a ($75,000)77,000) expense in the prior year period as the Company repaid most of its debt in the fourth quarter of 1996 and invested its available cash in short term, investment grade securities. For both periods, the Company provided taxes at the combined federal and state statutory rate of 40%. Six7 Nine Months Ended JuneSeptember 30, 1997 and 1996 Total revenue increased 27.9%37.1%, or $1,930,000,$4,055,000, to $8,858,000$14,998,000 for the sixnine months ended JuneSeptember 30, 1997 from $6,928,000$10,943,000 in the prior year period. This increase was the result of an increase in product sales of 15.2%32.2%, or $598,000,$1,920,000, to $4,544,000$7,887,000 from $3,946,000$5,967,000 and an increase in specialty laboratory services of 44.6%42.9%, or $1,331,000,$2,135,000, to $4,314,000$7,111,000 from $2,983,000.$4,976,000. Product revenue increased primarily due to the addition of BBI-Source for the third quarter as a resultwell as increased sales of an overall sales increase of 24.4% in Quality Control Products, due to continued strong sales ofdemand for both new and existing Accurun(Accurun(R) and panel products and partially offset by a decrease of 13.8% in sales of Diagnostic Components.products. The increase in service revenue was primarily attributable to a 57.1% increasethe addition of BBI-Source, increases in Specialty Clinical Laboratory Testing revenue, particularly from HIV molecular (PCR) tests.tests, and additional revenue from several new contracts at the Company's BBI-Biotech subsidiary. Gross profit increased 34.7%38.8%, or $927,000,$1,716,000, to $3,599,000$6,140,000 for the current sixnine months from $2,672,000$4,424,000 in the prior year period. The overall gross profit margin increased to 40.6%40.9% for the current sixnine months versus 38.6%40.4% in the prior year period. The gross margin improvement was almost entirely driven by improved margins in services (24.6%(from 30.3% in 1996 to 32.0%33.2% in 1997) as the Company continued to benefit from both the addition of several new tests and higher volume in Specialty Clinical Laboratory Testing. 7Testing, as well as improved margins in Quality Control products. BBI-Source's lower margins had less of an effect for the nine months as results were only included for the third quarter. In general, the Company expects slightly lower margins from BBI-Source's products. BBI-Source's service margins are expected to improve as it ramps up its field service business. Research and development expenses increased 36.5%64.3%, or $132,000,$341,000, to $494,000$872,000 for the current sixnine months from $362,000$531,000 in the prior year period. This increase was primarily the result of additional research project expenditures for new Quality Control Products, including panels and Accurun(Accurun(R), as well as continued work on additional molecular tests for our Specialty Clinical Laboratory.Laboratory, and project expenditures for BBI-Source's PlateMate(tm) plate reader instrument. Selling and marketing expenses increased 51.8%49.7%, or $474,000,$750,000, to $1,389,000$2,259,000 for the current sixnine months from $915,000$1,509,000 in the prior year period. ThisIn addition to including BBI-Source, this increase was primarily attributable to increased personnel costs as well as increased costs for travel and promotional materials. The increased personnel costs are associated with the addition of marketing, technical support, and field sales staff for both Accurun(Accurun(R) and the Specialty Clinical Laboratory. General and administrative expenses increased 26.2%33.8%, or $286,000,$584,000, to $1,374,000$2,314,000 for the current sixnine months from $1,088,000$1,730,000 in the prior year period. ThisIn addition to the effect of including BBI-Source for the first time, this increase was primarily a result of increased MIS and other support personnel, as well as the increased costs incurred as a public company. Net interest income of $197,000$255,000 was earned for the sixnine months of 1997 versus a ($168,000)245,000) expense in the prior year period as the Company repaid most of its debt in the fourth quarter of 1996 and invested its available cash in short term, investment grade securities. For both periods, the Company provided taxes at the combined federal and state statutory rate of 40%. Liquidity and Financial Condition The Company has financed its operations to date through cash flow from operations, borrowings from banks and sales of equity. With the repayment of debt from the IPO proceeds, the Company expects its cash flow and cash position to meet existing operational needs. In addition, the Company has available to it a $7.5 million uncollateralized revolving line of credit with its bank should additional needs arise. Net cash provided byused for operations for the sixnine months ended JuneSeptember 30, 1997 was $89,000($331,000) as compared to $685,000$808,000 provided by operations in the prior year period. This decrease in cash flow was primarily attributable to increased working capital requirements related tofor accounts receivable, new product inventory, and payments of income taxes and commissions. 8 Cash used in investing activities for the sixnine months ended JuneSeptember 30, 1997 was $2,482,000($4,402,000) as compared to $283,000($496,000) in the prior year period. This increase in investing activities was the result of: 1) the acquisition of all of the assets, business, and selected liabilities of Source Scientific, Inc.("Source") for $1,994,000 (see below); 2) increased capital expenditures for improvements at itsthe Company's Massachusetts manufacturing facility 2) financing $800,000 of certain working capital needsand new contract research facility in connection with the acquisition of the assets and business of Source Scientific, Inc.("Source"),Maryland; and 3) the Company exercising its option to purchase an additional 165,000 shares of BioSeq stock at an aggregate cost of $750,000, thereby increasing its ownership of BioSeq to 19%. On July 2, 1997, the Company completed the acquisition of Source's assets and business at a contractually reduced purchase price of $1.9 million$1,994,000 including consulting, legal, accounting and other acquisition costs, net of cash acquired, as Source's net worth had fallen below an agreed upon minimum amount. The Company is accounting for the acquisition as an asset purchase, and expects to amortizeis amortizing goodwill approximating the purchase price plus acquisition costsof $2,202,000 over a tenfifteen year period.period on a straight line basis. Cash provided byused in financing activities for the sixnine months ended JuneSeptember 30, 1997 was $87,000($962,000) as compared to $403,000 used($248,000) in the prior comparable year period. The prior year period use of cash was primarily a $960,000 receipt from the sale of common stock offset by net debt repayments of approximately $1,364,000.$707,000 and payments for the Company's planned initial public offering of $503,000. The net cash providedused in 1997 resulted from $94,000repayment of $1,107,000 of BBI-Source's debt, less proceeds received for the exercisefrom issuance of 48,750 stock options.options exercised. The Company anticipates capital expenditures for building and leasehold improvements to increasecontinue over the near term as it expects to spend approximately $400,000 more to expandcompletes the expansion of its manufacturing capacity in West Bridgewater over the next six months.Bridgewater. In addition, the Company has entered into a ten year lease agreement for space for its Maryland operationoperations and expects to incur costs for tenant improvements over the next sixseveral months. The Company believes that existing cash balances, the borrowing capacity available under its revolving line of credit and cash generated from operations are sufficient to fund operations and anticipated capital expenditures for at least the next twelve months. There were no material financial commitments for capital expenditures as of JuneSeptember 30, 1997, and currently there are no 8 material commitments for capital or investment expenditures other than the Source Scientific, Inc. asset acquisition, the manufacturing expansion and tenant improvements all as previously discussed above. Recent Accounting Pronouncements In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS 128 establishes a different method of computing net income per share than is currently required under the provisions of Accounting Principles Board Opinion No. 15. Under SFAS No. 128, the Company will be required to present both basic net income per share and diluted net income per share. Basic net income per share for the three and six months ended JuneSeptember 30, 1997 and 1996 would have been the same as the reported primary net income per share. The impact of SFAS 128 on the calculation of diluted$.06. Basic net income per share for these quarters doesthe nine months ended September 30, 1997 and 1996 would have been $.13 and $.09 respectively. The Company has not materially differ from basic netyet quantified what the impact of SFAS 128 will be on diluted income per share. The Company plans to adopt SFAS 128 for periods after December 15, 1997 and at that time all historical net income per share data presented will be restated to conform to the provisions of SFAS No. 128. Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements concerning the Company's financial performance and business operations. The Company wishes to caution readers of this Quarterly Report on Form 10-Q that actual results might differ materially from those projected in any forward-looking statements. Factors which might cause actual results to differ materially from those projected in the forward-looking statements contained herein include the following: inability of the Company to develop the end user market for quality control products; inability of the Company to integrate the business of BBI-Source Scientific, Inc. into the Company's business; inability of the Company to renew all of the existing field service contracts recently assigned to BBI-Source Scientific, Inc.; inability of the Company to grow the sales of BBI-Source Scientific, Inc. to the extent anticipated; a material adverse change in the business, financial condition or prospects of BioSeq, Inc., an early stage biotechnology company in which the 9 Company has made a significant investment; inability of the Company to obtain an adequate supply of the unique and rare specimens of plasma and serum necessary for certain of its products; significant reductions in purchases by any of the Company's major customers; and the potential insufficiency of Company resources, including human resources, plant and equipment and management systems, to accommodate any future growth. Certain of these and other factors which might cause actual results to differ materially from those projected are more fully set forth under the caption "Risk Factors" in the Company's Registration Statement on Form S-1 (SEC File No. 333-10759) 9. 10 BOSTON BIOMEDICA, INC. Part II. Other Information Item 4. Submission of Matters to a Vote of Shareholders. The Company held its Annual Meeting of Stockholders of June 12, 1997. Approximately 3,484,851 shares, or 79.4%, of the Common Stock issued and outstanding as of the record date, were represented at the meeting in person or by proxy. Set forth below is a brief description of the matter voted upon at the meeting and the voting results of such matter. Voted: To elect each of the following persons as Class I Directors of the Company, to serve as such until the Year 2000 Annual Meeting of Stockholders and until their successors have been duly elected and qualified: Francis E. Capitanio Calvin A. Saravis Item 6. Exhibits and Reports on Form 8K8-K (a) Exhibits Exhibit No. ----------- 3.1 Amended and Restated Articles of Organization of the Company** 3.2 Amended and Restated Bylaws of the Company** 4.1 Specimen Certificate for Shares of the Company's Common Stock** 4.2 Description of Capital Stock (contained in the Restated Articles of Organization of the Company filed as Exhibit 3.1) ** 10.1 Agreement, dated January 17, 1994, between Roche Molecular Systems, Inc. and the Company** 10.2 Exclusive License Agreement, dated December 6, 1994, between the University of North Carolina at Chapel Hill and the Company** 10.3 Contract, dated September 30, 1995, between the National Institutes of Health and the Company (No. 1-AI55273) ** 10.4 Contract, dated September 30, 1995, between the National Institutes of Health and the Company (No. 1-AI-55277) ** 10.6 Agreement, dated October 1, 1995, between Ajinomoto Co., Inc. and the Company** 10.7 Lease Agreement, dated June 30, 1992, for Rockville, Maryland Facility between Cambridge Biotech Corporation and the Company** 10.8 Lease Agreement, dated July 28, 1995, for New Britain, Connecticut Facility between MB Associates and the Company** 10.9 Worcester County Institution for Savings Warrant dated December 1, 1995 (No. 1) ** 10.10 Worcester County Institution for Savings Warrant dated July 26, 1993 (No. 2) ** 10.11 Stock Purchase Agreement, dated June 5, 1990, between G&G Diagnostics Limited Partnership I and the Company, as amended** 10.14 Stock Purchase Agreement, dated April 26, 1996, between Kyowa Medex Co., Ltd. And the Company** 10.15 1987 Non-Qualified Stock Option Plan**++ 10.16 Employee Stock Option Plan**++ 10 10.17 Underwriters Warrants, each dated November 4, 1996, between the Company and each of Oscar Gruss & Son Incorporated and Kaufman Bros., L.P. ** 10.20 Purchase Agreement, dated October 7, 1996, between BioSeq, Inc. and the Company** 10.21 Warrant Agreement, dated October 7, 1996, between BioSeq, Inc. and the Company** 10.22 Stockholders' Agreement, dated October 7, 1996, between BioSeq, Inc. and the Company** 10.23 License Agreement, dated October 7, 1996, between BioSeq, Inc. and the Company** 10.24.1 Commercial Loan Agreement, dated as of March 28, 1997, between The First National Bank of Boston and the Company** 11 10.25 Asset Purchase Agreement, dated March 26, 1997 between Source Scientific, Inc. and the Company** 10.26 Contract, dated March 1, 1997, between National Cancer Institute and the Company** 10.27 Lease Agreement, dated May 16, 1997, for Rockville, Maryland facility between B.F. Saul Real Estate Investment Trust and the Company 11 Statement re: Computation of Per Share Earnings 21.1 Subsidiaries of the Company 27 Financial Data Schedule ________________________ ++ Management contract or compensatory plan or arrangement. ** In accordance with Rule 12b-32 under the Securities Exchange Act of 1934, as amended, reference is made to the documents previously filed with the Securities and Exchange Commission, which documents are hereby incorporated by reference. (b) Reports on Form 8K8-K The Company filed a form 8K8-K dated July 17, 1997 regarding the acquisition of the assets, business, and selected liabilities of Source Scientific, Inc. 1112 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. BOSTON BIOMEDICA, INC. Date: AugustNovember 14, 1997 By /s/ KEVIN W. QUINLAN ---------------- ----------------------------------------- ----------------------- Kevin W. Quinlan, Chief Financial Officer (Principal Financial Officer) 1213 BOSTON BIOMEDICA, INC. EXHIBIT INDEX EXHIBIT INDEX - ---------------------------
Exhibit No. Reference ----------- ----------- 3.1 Amended and Restated Articles of Organization of the Company A** 3.2 Amended and Restated Bylaws of the Company A** 4.1 Specimen Certificate for Shares of the Company's Common Stock A** 4.2 Description of Capital Stock (contained in the Restated A** Articles of Organization of the Company filed as Exhibit 3.1) 10.1 Agreement, dated January 17, 1994, between Roche Molecular A** Systems, Inc. and the Company 10.2 Exclusive License Agreement, dated December 6, 1994, between A** the University of North Carolina at Chapel Hill and the Company 10.3 Contract, dated September 30, 1995, between the National A** Institutes of Health and the Company (No. 1-AI55273) 10.4 Contract, dated September 30, 1995, between the National A** Institutes of Health and the Company (No. 1-AI-55277) 10.6 Agreement, dated October 1, 1995, between Ajinomoto Co., Inc. A** and the Company 10.7 Lease Agreement, dated June 30, 1992, for Rockville, Maryland A** Facility between Cambridge Biotech Corporation and the Company 10.8 Lease Agreement, dated July 28, 1995, for New Britain, A** Connecticut Facility between MB Associates and the Company 10.9 Worcester County Institution for Savings Warrant dated A** December 1, 1995 (No. 1) 10.10 Worcester County Institution for Savings Warrant dated A** July 26, 1993 (No. 2) 10.11 Stock Purchase Agreement, dated June 5, 1990, between G&G A** Diagnostics Limited Partnership I and the Company, as amended 10.14 Stock Purchase Agreement, dated April 26, 1996, between Kyowa A** Medex Co., Ltd. and the Company 10.15 1987 Non-Qualified Stock Option Plan* A** 10.16 Employee Stock Option Plan* A** 10.17 Underwriters Warrants, each dated November 4, 1996, between B** the Company and each of Oscar Gruss & Son Incorporated and Kaufman Bros., L.P. 10.20 Purchase Agreement, dated October 7, 1996, between BioSeq, A** Inc. and the Company 1314 10.21 Warrant Agreement, dated October 7, 1996, between BioSeq, Inc. A** and the Company 10.22 Stockholders' Agreement, dated October 7, 1996, between A** BioSeq, Inc. and the Company 10.23 License Agreement, dated October 7, 1996, between BioSeq, Inc. A** and the Company 10.24.1 Commercial Loan Agreement, as of dated March 28, 1997, between C** The First National Bank of Boston and the Company 10.25 Asset Purchase Agreement, dated March 26, 1997 between Source C** Scientific, Inc. and the Company 10.26 Contract, dated March 1, 1997, between National Cancer D** Institute and the Company 10.27 Lease Agreement, dated May 16, 1997, for Rockville, Maryland Filed herewithE** facility between B.F. Saul Real Estate Investment Trust and the Company 11 Statement re: Computation of Per Share Earnings Filed herewith 21.1 Subsidiaries of the Company Filed herewithE** 27 Financial Data Schedule Filed herewith
________________________ A Incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 333-10759)(the "Registration Statement"). The number set forth herein is the number of the Exhibit in said registration statement. B Incorporated by reference to the Registration Statement, where the Exhibit was filed as Exhibit No. 10.17 and contained in Exhibit 1.1. C Incorporated by reference to the Company's Form 10K filed March 31, 19971997. D Incorporated by reference to the Company's Form 10Q filed May 14, 19971997. E Incorporated by reference to the Company's Form 10Q filed August 14, 1997. * Management contract or compensatory plan or arrangement. ** In accordance with Rule 12b-32 under the Securities Exchange Act of 1934, as amended, reference is made to the documents previously filed with the Securities and Exchange Commission, which documents are hereby incorporated by reference. 1415