1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
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Exchange Act of 1934. For the quarterly period ended June 30, 1997.
Transition report pursuant to Section 13 or 15(d) of the Securities
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Exchange Act of 1934. For the transition period from to .
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Commission File Number: 0-19749
CHEMTRAK INCORPORATED
Delaware 77-0295388
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(State or other jurisdiction of (I.R.S Employer)
incorporation or organization) Identification No.)
929 E. Arques Avenue, Sunnyvale, CA 94086
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(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 773-8156
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.001 par value
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class: Common Stock $.001 par value Outstanding at August 7, 1997: 12,994,006
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CHEMTRAK INCORPORATED
INDEX
PART I. FINANCIAL INFORMATION PAGE
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NO.
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Item 1: Financial Statements
Condensed Balance Sheets as of June 30, 1997 and December 31, 1996 3
Condensed Statements of Operations for the three and six months ended
June 30, 1997 and 1996 4
Condensed Statements of Cash Flows for the six months ended
June 30, 1997 and 1996 5
Notes to Condensed Financial Statements 6-7
SIGNATURES 13
EXHIBITS
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CHEMTRAK INCORPORATED
CONDENSED BALANCE SHEETS
ASSETS
June 30, 1997 December 30, 1996
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(unaudited) (Note)
Current assets:
Cash and cash equivalents $ 1,875,000 $ 4,125,000
Short-term investments -- 567,000
Accounts receivable, net 520,000 485,000
Inventories 1,523,000 540,000
Prepaid expenses and other current assets 131,000 320,000
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Total current assets 4,049,000 6,037,000
Property and equipment, net 2,286,000 2,738,000
Other assets 66,000 66,000
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Total assets $ 6,401,000 $ 8,841,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 248,000 $ 289,000
Accrued payroll and benefits 165,000 199,000
Other accrued liabilities 791,000 788,000
Accrued royalties 149,000 105,000
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Total current liabilities 1,353,000 1,381,000
Deferred Revenue 350,000 --
Accrued rent 315,000 295,000
Convertible debentures 506,000 2,135,000
Stockholders' equity:
Common stock 13,000 12,000
Additional paid-in capital 43,160,000 41,375,000
Deferred compensation (39,000) (49,000)
Accumulated deficit (39,257,000) (36,308,000)
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Total stockholders' equity 3,877,000 5,030,000
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Total liabilities and stockholders' equity $ 6,401,000 $ 8,841,000
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Note: The balance sheet at December 31, 1996 has been derived from the
audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See accompanying notes.
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CHEMTRAK INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
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1997 1996 1997 1996
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Net revenues:
Product sales $ 870,000 $ 581,000 $ 1,478,000 $ 1,437,000
Funded research and other revenues -- 25,000 833,000 175,000
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Total net revenues 870,000 606,000 2,311,000 1,612,000
Cost and expenses:
Cost of product sales 517,000 824,000 1,221,000 1,555,000
Research and development 579,000 729,000 1,032,000 1,473,000
Marketing, general and administrative 1,530,000 1,179,000 3,153,000 2,273,000
------------ ------------ ------------ ------------
Total costs and expenses 2,626,000 2,732,000 5,406,000 5,301,000
------------ ------------ ------------ ------------
Operating loss (1,756,000) (2,126,000) (3,095,000) (3,689,000)
Interest income and (expense), net 102,000 (663,000) 146,000 (596,000)
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Net loss $ (1,654,000) $ (2,789,000) $ (2,949,000) $ (4,285,000)
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Net loss per share $ (0.13) $ (0.29) $ (0.24) $ (0.44)
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Shares used in calculating per share amounts 12,855,000 9,773,000 12,470,000 9,743,000
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CHEMTRAK INCORPORATED
CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
Six months ended
June 30,
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1997 1996
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Operating activities:
Net loss $ (2,949,000) $(4,285,000)
Adjustment to reconcile net loss to net cash and
cash equivalents used in operating activities:
Depreciation and amortization 403,000 430,000
Interest expense and financing charges
on convertible debentures 105,000 619,000
Accrued rent 20,000 27,000
Stock option compensation and other -- 2,000
Loss on disposal of assets 170,000 --
Changes in operating assets and liabilities:
Accounts receivable (35,000) (364,000)
Inventories (983,000) (266,000)
Prepaid expenses and other current assets 189,000 167,000
Accounts payable (41,000) (183,000)
Accrued payroll and benefits (34,000) 36,000
Deferred Revenue 350,000 --
Accrued royalties and other accrued liabilities 47,000 349,000
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Net cash and cash equivalents
used in operating activities (2,758,000) (3,468,000)
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Investing activities:
Proceeds from available-for-sale securities 567,000 514,000
Acquisition of property and equipment, net (121,000) (190,000)
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Net cash and cash equivalents provided
by investing activities 446,000 324,000
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Financing activities:
Net proceeds from issuance of convertible debentures -- 4,700,000
Issuance of common stock 62,000 182,000
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Net cash and cash equivalents provided
by financing activities 62,000 4,882,000
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Net increase (decrease) in cash and cash equivalents (2,250,000) 1,738,000
Cash and cash equivalents at beginning of period 4,125,000 4,251,000
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Cash and cash equivalents at end of period $ 1,875,000 $ 5,989,000
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Supplemental disclosure of non-cash financing activities:
Conversion of convertible debentures and accrued
interest to common stock $ 1,629,000 $ --
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See accompanying notes.
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CHEMTRAK INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1997
(unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements include all adjustments
consisting of normal recurring adjustments which the Company's management
believes to be necessary to fairly present the Company's financial position as
of June 30, 1997, and the results of operations for the three and six month
periods ended June 30, 1997.
The operating results of the interim periods presented are not
necessarily indicative of the results for the full year. The accompanying
financial statements should be read in conjunction with the financial statements
for the year ended December 31, 1996, included in the ChemTrak Incorporated
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the
"Form 10-K"), and the 1996 Annual Report to Stockholders (the "Annual Report").
The information set forth in the accompanying balance sheet as of December 31,
1996, has been derived from the audited balance sheet included in the
above-referenced Form 10-K and Annual Report.
Note 2. Net Loss Per Share
Net loss per share is computed using the weighted average number of
shares outstanding. Common equivalent shares from stock options are excluded in
the computation as their effect is antidilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which ChemTrak is required to adopt on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute loss per share and to restate all prior
periods. Under the new requirements for calculating primary loss per share, the
dilutive effect of stock options will be excluded. The primary loss per share
for the three and six month period ended June 30, 1997 and June 30, 1996 would
not change as reported. The impact of Statement 128 is expected not to have a
material effect on fully diluted loss per share.
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CHEMTRAK INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS (continued)
June 30, 1997
(unaudited)
Note 3. Inventories
Inventories are stated at the lower of standard cost (which approximates
actual costs on a first-in, first-out basis) or market. Inventories consisted of
the following:
June 30, 1997 December 31,1996
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Raw materials....... $ 728,000 $ 289,000
Work in process..... 182,000 63,000
Finished goods...... 613,000 188,000
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Total............. $1,523,000 $ 540,000
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Note 4. Convertible Debentures
In May 1996, the Company issued $5,000,000 of convertible debentures
resulting in net proceeds to the company of $4,700,000 after deducting selling
commissions. The debentures, which are due in May 1998, are convertible into
common stock at the lower of 110% of the average closing prices during the
ten-day trading period ending with the initial debenture funding date, or 82.5
percent of the similarly-defined average ten-day market price ending with the
conversion date. The Company has the option to convert the amount of periodic
interest due on the convertible debentures, computed at the rate of 7.5% per
annum, into common stock of the Company in lieu of cash payments. Through June
30, 1997, all interest obligations on the debentures have been settled by the
issuance of common stock.
The accompanying financial statements reflect deemed non-cash interest
expense of $875,000 ($656,250 and $218,750 in the quarters ended June 30, 1996
and September 30, 1996, respectively).
As of June 30, 1997, aggregate principal amount of $4,605,000 had been
converted into 3,013,000 shares of common stock and approximately 84,436 shares
were issued to settle interest obligations.
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CHEMTRAK INCORPORATED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: August 14, 1997 CHEMTRAK INCORPORATED
/s/ Donald V. Fluken
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Donald V. Fluken
Chief Financial Officer
(Principal Financial and Accounting Officer)