================================================================================
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 September 30, 1999, 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 02379-1040
- ------------------------ ----------------------
(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 November 12, 1999 was 4,773,371.
================================================================================
Part I. Financial Information
Item 1. Financial Statements
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------- --------------------------------
1999 1998 1999 1998
--------------- ------------- -------------- --------------
REVENUE:
Products $ 3,649,818 $ 3,037,553 $ 10,597,343 $ 9,417,716
Services 3,830,124 3,143,406 10,866,421 9,419,169
--------------- ------------- -------------- --------------
Total revenue 7,479,942 6,180,959 21,463,764 18,836,885
COSTS AND EXPENSES:
Cost of product sales 1,780,760 1,575,772 5,411,944 5,022,361
Cost of services 2,794,385 2,157,365 7,906,037 6,479,595
Research and development 891,145 526,167 2,382,206 1,542,147
Acquired research and development - 3,380,812 - 4,230,812
Selling and marketing 1,021,324 913,891 3,129,141 2,768,518
General and administrative 1,291,832 986,202 3,503,497 2,999,214
--------------- ------------- -------------- --------------
Total operating costs and expenses 7,779,446 9,540,209 22,332,825 23,042,647
Loss from operations (299,504) (3,359,250) (869,061) (4,205,762)
Interest income 2,941 352 3,796 27,393
Interest expense (118,143) (15,458) (294,891) (19,600)
--------------- ------------- -------------- --------------
Loss before income taxes (414,706) (3,374,356) (1,160,156) (4,197,969)
Benefit from (provision for) income taxes 157,588 (2,453) 440,860 310,520
--------------- ------------- -------------- --------------
Net loss $ (257,118) $ (3,376,809) $ (719,296) $ (3,887,449)
=============== ============= ============== ==============
Net loss per share, basic and diluted $ (0.05) $ (0.72) $ (0.15) $ (0.84)
Number of shares used to calculate net income per share
Basic and diluted 4,769,003 4,665,603 4,669,217 4,650,158
See Notes to Consolidated Financial Statements
2
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1999 1998
------------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 234,821 $ 146,978
Accounts receivable, less allowances of $873,083 in 1999 and
$623,710 in 1998 5,594,365 6,086,693
Inventories 6,921,476 6,689,768
Prepaid expenses and other current assets 804,627 479,983
Deferred income taxes 963,581 847,268
------------- --------------
Total current assets 14,518,870 14,250,690
------------- --------------
Property and equipment, net 7,608,764 6,925,423
OTHER ASSETS:
Goodwill and other intangibles, net 2,643,752 2,809,825
Deposits and other assets 84,455 96,447
------------- --------------
2,728,207 2,906,272
------------- --------------
TOTAL ASSETS $ 24,855,841 $ 24,082,385
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,260,571 $ 2,369,495
Accrued compensation expenses 1,289,828 1,284,162
Other accrued expenses 911,640 795,642
Current maturities of long-term debt 15,286 15,569
Deferred revenue 29,883 690,760
------------- --------------
Total current liabilities 4,507,208 5,155,628
------------- --------------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 6,169,188 3,988,602
Other liabilities 450,634 730,138
Deferred income taxes 154,965 139,363
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 20,000,000 shares authorized in
1999 and 1998; 4,770,153 issued and outstanding in 1999 and
4,667,816 in 1998 47,701 46,678
Additional paid-in capital 16,642,182 16,418,717
Accumulated deficit (3,116,037) (2,396,741)
------------- --------------
Total stockholders' equity 13,573,846 14,068,654
------------- --------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 24,855,841 $ 24,082,385
============= ==============
See Notes to Consolidated Financial Statements
3
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
-----------------------------
1999 1998
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (719,296) $ (3,887,449)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization 1,126,511 909,905
Provision for doubtful accounts 171,103 197,903
Other liabilities (279,504) 123,578
Deferred income taxes (100,711) (56,342)
Acquired research and development - 4,230,812
Changes in operating assets and liabilities:
Accounts receivable 321,225 756,695
Inventories (231,708) (1,068,408)
Prepaid expenses and other current assets (324,644) (268,266)
Accounts payable (108,924) 112,289
Accrued compensation and other expenses 121,664 (183,971)
Deferred revenue (660,877) (447,189)
-------------- -------------
Net cash (used in) provided by operating activities (685,161) 419,557
-------------- -------------
CASH FLOWS FOR INVESTING ACTIVITIES:
Acquired research and development - (850,000)
Payments for additions to property and equipment (1,643,779) (2,139,695)
Change in deposits and other assets 11,992 19,522
Acquisitions (net of cash acquired) - (878,901)
-------------- -------------
Net cash used in investing activities (1,631,787) (3,849,074)
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt 2,191,836 883,598
Repayments of long-term debt (11,533) -
Proceeds from common stock issued 224,488 89,149
-------------- -------------
Net cash provided by financing activities 2,404,791 972,747
-------------- -------------
INCREASE (DECREASE) IN CASH: 87,843 (2,456,770)
Cash and cash equivalents, beginning of period 146,978 2,772,360
-------------- -------------
Cash and cash equivalents, end of period $ 234,821 $ 315,590
============== =============
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 the
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 nine months
ended September 30, 1999 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1999. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Annual Report on Form 10-K for the fiscal year ended December 31, 1998 for
Boston Biomedica, Inc. and Subsidiaries ("the Company" or "Boston Biomedica").
Certain prior year amounts in the consolidated financial statements may have
been reclassified to conform to the current year's presentation.
(2) Use of Estimates
In conformity with generally accepted accounting principles, management is
required to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues, and expenses for the periods presented. Such
estimates include reserves for uncollectable accounts receivable as well as the
net realizable value of inventories. Actual results could differ from the
estimates and assumptions used by management.
(3) Inventories
Inventories consist of the following:
September 30, December 31,
1999 1998
--------------- ----------------
Raw materials $ 2,568,441 $ 2,407,154
Work-in-process 1,849,841 1,788,399
Finished goods 2,503,194 2,494,215
--------------- ----------------
$ 6,921,476 $ 6,689,768
=============== ================
(4) Segment Reporting and Related Information (all dollar amounts in thousands)
Selected summarized results for the Company's four operating segments are
as follows:
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
Segment revenue: 1999 1998 1999 1998
------------- ------------ ------------- -------------
Diagnostics $ 4,465 $ 3,926 $ 12,407 $ 11,782
Clinical Laboratory Services 2,677 1,817 7,346 5,129
Laboratory Instrumentation 611 908 2,537 3,113
Other 80 - 163 -
Eliminations (353) (470) (989) (1,187)
------------- ------------ ------------- -------------
Total revenue $ 7,480 $ 6,181 $ 21,464 $ 18,837
============= ============ ============= =============
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
Segment operating income (loss): 1999 1998 1999 1998
------------- ------------ ------------- -------------
Diagnostics $ 255 $ 219 $ 515 $ 477
Clinical Laboratory Services 189 (22) 469 83
Laboratory Instrumentation (333) (149) (682) (447)
Other (411) (26) (1,171) (88)
Acquired R&D - (3,381) - (4,231)
------------- ------------ ------------- -------------
Total loss from operations $ (300) $ (3,359) $ (869) $ (4,206)
============= ============ ============= =============
5
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) Segment Reporting and Related Information (Continued)
Sept. 30, Dec. 31,
Identifiable segment assets: 1999 1998
------------- ------------
Diagnostics $ 16,747 $ 16,548
Clinical Laboratory Services 3,141 2,348
Laboratory Instrumentation 3,992 4,428
Other 976 758
============= ============
Total assets $ 24,856 $ 24,082
============= ============
(5) Acquired Research and Development
In March 1998, the Company acquired from BioSeq, Inc.("BioSeq") the sole
and exclusive worldwide right to development stage technology, including the use
of BioSeq technical information, licensed processes and improvements to develop,
manufacture, market and sell or sublicense products or services in the field of
human in vitro immunodiagnostics. In accordance with accounting standards for
purchased research and development, costs totaling $850,000 were expensed in
that period.
On September 30, 1998 the Company acquired the remaining common stock
outstanding of BioSeq (approximately 81%). The Company's aggregate cost of
acquiring all of BioSeq's equity was approximately $4,226,000, of which
approximately $3,380,000 was expensed as in-process research and development.
(6) Computation of Net Loss per Share
Net loss per share is computed using average common stock outstanding for
the periods presented. Potentially dilutive securities of 79,165 and 203,396
were not included in the computation of diluted earnings per share for the nine
months ended and 145,037 and 136,554 for the three months ended September 30,
1999 and 1998, respectively. These potentially dilutive securities are not
included because to do so would have been antidilutive as the Company was in a
loss position for all periods presented.
(7) The Amended Line of Credit Agreement
Effective June 30, 1999, the Company entered into an amended revolving line
of credit agreement (the "Amended Line") with its bank, increasing the facility
to $10 million from $7.5 million. The Amended Line matures June 30, 2001; bears
interest at the Company's option based on either the base rate plus 1/4% or
LIBOR plus 2.75%; carries a facility fee of 1/4% per annum, payable quarterly;
and is collateralized by substantially all of the assets (excluding real
property) of the Company. Borrowings under the Amended Line are limited to
commercially standard percentages of accounts receivable, inventory and
equipment. The Company had approximately $863,000 available under the Amended
Line as of September 30, 1999.
The Amended Line contains covenants regarding the Company's total
liabilities to tangible net worth ratio, minimum debt service coverage ratio,
and maximum net loss. The Amended Line further provides for restrictions on the
payment of dividends, incurring additional debt, and the amount of capital
expenditures.
(8) Changes in Securities and Use of Proceeds
On August 18, 1999, the Company sold warrants to purchase 500,000 shares of
the Company's common stock to Paradigm Group, L.L.C., an accredited investor,
for an aggregate purchase price of $50,000. The warrant purchase was recorded as
additional paid-in capital. Warrants to purchase 400,000 shares are exercisable
at $4.25 per share and warrants to purchase 100,000 shares are exercisable at
$5.25 per share, and the warrants expire in February 2000. Warrants to purchase
a total of 75,000 shares of the Company's common stock, expiring in August 2001
and with exercise prices ranging from $4.25 to $8.00 per share, were also issued
to National Securities, a registered broker-dealer.
6
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(9) Income Taxes
In accordance with SFAS 109, Accounting for Income Taxes, The Company
records assets and liabilities to reflect future deductible and taxable items.
On September 30, 1999 the Company's deferred tax asset, net of valuation
allowances and deferred tax liabilities, was approximately $809,000.
Approximately $324,000 relates to the allowance for doubtful accounts and
$306,000 relates to a temporary difference created by the March 1998 Acquisition
of technology from BioSeq. The Company feels that it is more likely than not
that the tax asset, as reflected on the September 30, 1999 balance sheet, is
realizable and therefore no valuation allowance is required at this time.
7
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Three Months Ended September 30, 1999 and 1998
Total revenue increased 21.0% or $1,299,000 to $7,480,000 for the three
months ended September 30, 1999 from $6,181,000 in the prior year period. This
increase was the result of an increase in product sales of 20.2%, or $612,000,
to $3,650,000 and an increase in specialty laboratory services of 21.8%, or
$687,000, to $3,830,000. The increase in product revenue was the result of
strong sales of OEM panels within the Quality Control product group, and
stronger diagnostic component sales. The growth in these two groups was tempered
somewhat by flat Accurun (R) sales as some new products were delayed to meet
customer OEM requirements. The increase in service revenue was the result of
continued strong clinical laboratory testing sales from both nucleic acid
(molecular) testing for HIV, Hepatitis C, and Lyme Disease and immunology
testing.
Gross profit increased 18.7%, or $457,000, to $2,905,000 for the current
three months from $2,448,000 in the prior year period. Overall gross margin
decreased to 38.8% from 39.6%. The decrease was primarily attributable to
services. The gross margin on services decreased to 27.0% from 31.4%, as the
Company used an aggressive pricing strategy to capture a portion of its
increased clinical laboratory testing revenue. This decrease was partially
offset by an improved product gross profit margin of 51.2% compared to 48.1%
from the prior period, as the increased product sales were achieved at normal
profit margins.
Research and development expenses increased 69.4%, or $365,000, to $891,000
for the current three months from $526,000 in the prior year period. The
increase is primarily the result of increased spending on development efforts in
pressure cycling technology ("PCT"). Also contributing to the increase was
continued spending on new molecular tests and Quality Control Products.
There was an accounting charge of $3,381,000 for the quarter ended
September 30, 1998 related to in-process technology as a result of the Company's
$4,266,000 acquisition of BioSeq and PCT.
Selling and marketing expenses increased 11.8%, or $107,000, to $1,021,000
for the current three months from $914,000 in the prior year period. This
increase was primarily the result of increased spending in the areas of product
promotion, and incentive compensation expense at both BBI Diagnostics and BBI
Clinical Laboratories.
General and administrative expenses increased 31.0%, or $306,000, to
$1,292,000 for the current three months from $986,000 in the prior year period.
The increase was a result of several factors: effective August 1, 1999 certain
personnel costs reclassified to G&A from other expense categories as a result of
the Company's reorganization; higher allowances recorded on clinical testing
receivables; increased professional fees related to the legal organization of
the drug discovery program; and increased business development and investor
relations activities.
Net interest expense was $115,000 for the current quarter compared to
$15,000 in the prior year period due to an increase in long-term debt under the
line of credit agreement.
The Company recorded a tax benefit in both quarters based on the combined
federal and state statutory rate of 38%.
Nine Months Ended September 30, 1999 and 1998
Total revenue increased 13.9%, or $2,627,000, to $21,464,000 for the nine
months ended September 30, 1999 from $18,837,000 in the prior year period. This
increase was the result of an increase in product sales of 12.5%, or $1,180,000,
to $10,597,000 and an increase in specialty laboratory services of 15.4%, or
$1,447,000, to $10,866,000. The increase in product revenue is due to continued
strong Accurun(R) sales as well as significant increases in diagnostic component
and laboratory instrument sales. The increase in specialty laboratory services
is primarily attributable to increases in clinical laboratory testing and
repository services under the new NHLBI (National Heart Lung and Blood
Institute) contract, partially offset by a decline in laboratory instrument
services as the contract with ABX, Inc. was completed in the first quarter of
1999.
8
Gross profit increased 11.1%, or $811,000, to $8,146,000 for the current
nine months from $7,335,000 in the prior year period. The gross profit margin
decreased to 38.0% for the current nine months versus 38.9% in the prior year
period. This decrease is due primarily to lower margins on clinical laboratory
testing services and repository activities, partially offset by higher product
margins.
Research and development expenses increased 54.5%, or $840,000, to
$2,382,000 for the current nine months from $1,542,000 in the prior year period.
The increase is primarily the result of development efforts in PCT and the drug
development program as well as additional spending on new molecular tests and
Quality Control Products.
There were two accounting charges during the nine months ended September 30,
1998. In the first quarter there was an accounting charge of $850,000 related to
the acquisition of the worldwide exclusive rights to BioSeq's immunodiagnostic
research and development technology. In the third quarter, the Company had a
charge of $3,381,000 related to in-process research and development as a result
of the Company's $4,266,000 acquisition of BioSeq.
Selling and marketing expenses increased 13.0%, or $361,000, to $3,129,000
for the current nine months from $2,768,000 in the prior year period. The
increase was attributable primarily to increased promotion and incentive
compensation expenditures.
General and administrative expenses increased 16.8%, or $504,000, to
$3,503,000 for the current nine months from $2,999,000 in the prior year period.
The increase was a result of several factors: effective August 1, 1999 certain
personnel costs were reclassified from other expense categories to G&A as a
result of the Company's reorganization; higher allowances recorded on clinical
testing receivables; increased professional fees related to both the
reorganization and of the legal organization of the drug discovery program; and
increased business development and investor relations activities.
Net interest expense of $291,000 was incurred in 1999 versus income of
$8,000 for the prior year period as the Company began incurring debt in July
1998.
The Company recorded a tax benefit in both quarters based on the combined
federal and state statutory rate of 38%.
Liquidity and Financial Condition
At September 30, 1999, the Company had cash and cash equivalents of
approximately $235,000 and working capital of $10,012,000. Trade accounts
receivable decreased $321,000 from the prior year end balance as compared to a
decrease of $757,000 for the same period last year. Inventory increased $232,000
primarily due to a higher level of Basematrix and OEM panel orders at BBI
Diagnostics. However, this represents a less significant increase than the
$1,068,000 increase realized last year, as the Company has focused its
purchasing on more immediate production needs.
The Company has financed its operations to date through cash flow from
operations, borrowings from its bank and the sale of its common stock. Effective
June 30, 1999, the Company expanded its revolving line of credit with its bank
to $10 million from $7.5 million. The Company expects its cash flow, working
capital, and available borrowings under its Amended Line to meet existing
operational and capital needs for at least the next twelve months.
Net cash used in operations for the nine months ended September 30, 1999
was $685,000 as compared to cash provided by operations of $420,000 in the prior
year period. This decrease in cash flow was primarily attributable to the
Company's step-up in research and development expenditures in 1999 and a
decrease in the rate of trade receivable collections compared to the prior year.
Cash used in investing activities for the nine months ended September 30,
1999 was $1,632,000 compared to $3,849,000 in the prior year period. The cash
used in 1999 relates to expenditures for manufacturing, laboratory
9
and information technology equipment as well as continued improvements at the
Company's Massachusetts and Maryland facilities. This represents a slower rate
of spending than in 1998 as several capital projects are nearing completion. The
1998 amount also includes $850,000 for acquired research and development, and
$879,000 of net cash outflow related to the BioSeq acquisition. (See Footnote
5).
Cash provided by financing activities for the nine months ended September
30, 1999 was $2,405,000 compared to $973,000 in the prior year period. The
increase was primarily related to the increased debt from the Company's
revolving line of credit incurred to finance operating and additional working
capital needs, as well as new property and equipment purchases.
The Company anticipates significant capital expenditures to continue during
the remainder of 1999 and 2000 as it plans to complete renovations to its
manufacturing facility in Massachusetts and a new repository facility in
Frederick Maryland, as well as implement a fully integrated Enterprise Resource
Planning System ("ERP") at all locations. Except for purchase orders in
connection with the manufacturing expansion, the Frederick facility, and the ERP
System, there were no material financial commitments for capital expenditures as
of September 30, 1999.
Year 2000 Readiness Disclosure
The following disclosure is a Year 2000 ("Y2K") readiness disclosure
statement pursuant to the Year 2000 Readiness and Disclosure Act.
Boston Biomedica's Year 2000 program is designed to minimize the
possibility of serious Year 2000 interruption. Possible Year 2000 worst case
scenarios include the interruption of significant parts of the Company's
business as a result of internal business system failure or the failure of the
business systems of its suppliers, distributors or customers. Any such
interruption may have a material adverse impact on the future results of the
Company.
In 1997 the Company decided to significantly upgrade its "business systems"
(all computer hardware and software used to run its businesses including its
operations management, administration and financial systems). Specifications
were developed for desired capabilities, including Year 2000 compliance. In 1998
the Company began assessing its Year 2000 exposure and commenced implementation
of a plan to achieve Year 2000 readiness. Based on its review to date, the
Company believes that its products are Year 2000 compliant.
During the third quarter of 1998, after investigating several alternatives,
implementation of an ERP system was started at two of the Company's four sites.
The vendor has certified that the system is Year 2000 compliant. In April 1999,
business systems at the other two sites were upgraded to Y2K compliant versions
of their existing software at a combined cost of approximately $5,000.
A task force with participants and a site leader at each Company location
has reviewed all other infrastructure areas including communications systems,
building security systems, and embedded technologies in areas such as laboratory
instruments and manufacturing equipment. All infrastructure was found to be Y2K
compliant with only minor deficiencies, which were upgraded to Y2K compliant
equipment and software versions. The Company has surveyed major suppliers,
distributors, and customers to determine the status and schedule for their Year
2000 compliance. To date, no significant issues have been identified, and the
Company expects to complete its assessment before year end. Where it believes
that a particular supplier's situation poses unacceptable risks, the Company
plans to identify an alternative source.
The costs of the readiness program for business systems, other
infrastructure areas, and suppliers and distributors are a combination of
incremental external spending and use of existing internal resources. In total,
the Company expects to spend less than $150,000 to achieve readiness, of which
approximately 95% has been expended to date. This amount is based on the costs
to upgrade the existing business systems to Y2K compliant versions, and excludes
the costs of implementing the ERP system which is being implemented for reasons
beyond Y2K compliance.
Milestones and implementation dates and the costs of BBI's Year 2000
readiness program are subject to change based on new circumstances that may
arise or new information becoming available that may change the underlying
assumptions or requirements.
10
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 that could cause actual results to differ from those projected
include the possibility that due to unforeseen management, financial, technical,
and other difficulties, reorganization of the Company's corporate structure and
management, as discussed in its July 22, 1999 Press Release, may not lead to
increased profitability or R&D program acceleration. Also, the Company may not
be able to develop its research and development programs into commercially
successful products, or such development may take longer than currently
expected. 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 Annual Report on Form 10-K for the year
ended December 31, 1998.
11
BOSTON BIOMEDICA, INC.
Part II. Other Information
Item 1. Legal Procedures
Not Applicable.
Item 2. Changes in Securities and Use of Proceeds.
On August 18, 1999, the Company sold warrants to purchase 500,000 shares of
the Company's common stock to Paradigm Group, L.L.C., an accredited investor,
for an aggregate purchase price of $50,000. The warrant purchase was recorded as
additional paid-in capital. Warrants to purchase 400,000 shares are exercisable
at $4.25 per share and warrants to purchase 100,000 shares are exercisable at
$5.25 per share, and the warrants expire in February 2000. Warrants to purchase
a total of 75,000 shares of the Company's common stock, expiring in August 2001
and with exercise prices ranging from $4.25 to $8.00 per share, were also issued
to National Securities, a registered broker-dealer.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Special Meeting in Lieu of Annual Meeting of Stockholders
on July 22, 1999 (the "Meeting"). A total of 4,015,460 shares, or 84%, of the
Common Stock issued and outstanding as of the record date, were represented at
the meeting in person or by proxy. At the meeting, four proposals were acted
upon. The results of the elections were as follows:
1. Richard Schumacher and Kevin Quinlan were elected Class III Directors of
the Company, to serve as such until the Year 2002 Annual Meeting of
Stockholders and until their successors have been duly elected and
qualified, with a minimum of 3,725,958 shares voting in favor, 289,502
votes withheld.
2. The Boston Biomedica, Inc. Employee Stock Option Plan was amended to
increase the number of shares of common stock which may be issued to
2,000,000, with 2,504,106 shares voting in favor, 330,447 against, and
1,180,907 shares abstaining or not voting.
3. The Boston Biomedica, Inc. 1999 Nonqualified Stock Option Plan was adopted,
with 2,495,189 shares voting in favor, 331,864 against, and 1,188,407
shares abstaining or not voting.
4. The Boston Biomedica, Inc. 1999 Employee Stock Purchase Plan was adopted,
with 2,656,211 shares voting in favor, 178,842 against, and 1,180,407
shares abstaining or not voting.
The terms of office of Directors Francis E. Capitanio, William R. Prather, and
Calvin A. Saravis, continued after the Meeting.
Item 5. Other Information
Not Applicable.
12
Item 6. Exhibits and Reports on Form 8-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)**
4.3 Form of warrants issued in connection with warrant purchase agreement
with Paradigm Group
10.1 Line of Credit agreement with BankBoston dated June 30, 1999
10.2 Agreement with Paradigm Group for the purchase of warrants dated
August 18, 1999
27 Financial Data Schedule
- ------------------------
** 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 8-K
None
13
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: November 15, 1999 By /S/ Kevin W. Quinlan
----------------- ------------------------
Kevin W. Quinlan, President
14
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 Articles of A**
Organization of the Company filed as Exhibit 3.1)
4.3 Form of warrants issued in connection with warrant purchase agreement with Filed herewith
Paradigm Group
10.1 Line of Credit agreement with BankBoston dated June 30, 1999 Filed herewith
10.2 Agreement with Paradigm Group for the purchase of warrants dated August 18, 1999 Filed herewith
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.
** 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.
15