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, 1996
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 0-22146
APPLIED BIOMETRICS, INC.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1508112
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 E. Highway 13, Burnsville, MN 55337
(Address of principal executive office and zip code)
Issuer's telephone number, including area code (612) 890-1123
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for at least the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
At April 26, 1996, there were outstanding 4,014,720
shares of common stock, $0.01 par value.
APPLIED BIOMETRICS, INC.
Form 10-QSB Index
March 31, 1996
Page
Part I: Financial Information 3
Item 1. Financial Statements 3
Balance Sheets Unaudited at March 31, 1996 and
Audited at December 31, 1995 3
Unaudited Statements of Operations for the
Three Month Period ended March 31, 1996 and 1995 4
Statement of Shareholders' Equity year ended
December 31, 1995 and the Three Month Period
ended March 31, 1996 5
Unaudited Statements of Cash Flows for the
Three Month Period Ended March 31, 1996 and 1995 6
Notes to Unaudited Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan
of Operation 8
Part II: Other Information 10
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports of Form 8-K 10
Signatures 11
Part 1: Financial Information
Item 1. Financial Statements
APPLIED BIOMETRICS, INC.
Balance Sheets
March 31,
1996 December 31,
(Unaudited) 1995
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 2,101,185 $ 457,322
Short-term investments 4,610,618 1,753,265
Accounts Receivable 17,870 --
Inventory 82,024 --
Prepaid expenses and other current assets 51,189 46,583
----------- -----------
TOTAL CURRENT ASSETS 6,862,886 2,257,170
Property and equipment, net 248,930 246,755
Patents and trademarks, less accumulated
amortization of $ 24,792 and $ 22,497 respectively 126,271 128,566
----------- -----------
TOTAL ASSETS $ 7,238,087 $ 2,632,491
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 140,385 $ 125,797
Accrued expenses and other liabilities 67,340 59,192
----------- -----------
TOTAL CURRENT LIABILITIES 207,725 184,989
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 10,000,000 shares
authorized: 3,905,970 and 2,943,410 shares
issued and outstanding at March 31, 1996
and December 31, 1995, respectfully 39,059 29,434
Additional paid-in capital 18,389,714 13,507,155
Accumulated deficit (11,398,411) (11,089,087)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 7,030,362 2,447,502
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,238,087 $ 2,632,491
=========== ===========
APPLIED BIOMETRICS, INC.
Statements of Operations
(Unaudited)
Three Months Ended
-----------------------
March 31, March 31,
1996 1995
---------- ----------
Net sales $ 17,375 $ --
Cost of sales 9,875 --
---------- ----------
GROSS PROFIT 7,500 --
---------- ----------
OPERATING EXPENSES:
Research and Development 162,568 168,413
Sales and Marketing 74,803 74,053
General and Administrative 125,309 112,978
---------- ----------
Total Operating Expenses 362,680 355,444
---------- ----------
OPERATING LOSS (355,180) (355,444)
Interest income 45,856 20,391
---------- ----------
NET LOSS (309,324) ($335,053)
========== ==========
LOSS PER COMMON SHARE ($.09) ($0.12)
========== ==========
Weighted average common shares
outstanding 3,308,468 2,885,076
========== ==========
APPLIED BIOMETRICS, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
Additional
Common Stock Paid-in Accumulated
shares amount Capital Deficit
------------ ------------ ------------ ------------
December 31, 1994 2,885,076 $ 28,851 $ 13,332,736 $ (9,801,029)
Stock options exercised 58,334 583 174,419
Net loss (1,288,058)
------------ ------------ ------------ ------------
December 31, 1995 2,943,410 29,434 13,507,155 (11,089,087)
Private Placement net
of offering expenses of $575,166 860,000 8,600 4,576,334
Exercise warrants 102,560 1,025 306,225
Net loss (309,324)
------------ ------------ ------------ ------------
March 31, 1996 3,905,970 $ 39,059 $ 18,389,714 $(11,398,411)
============ ============ ============ ============
APPLIED BIOMETRICS, INC.
Statements of Cash Flows
(Unaudited)
Three Months Ended
---------------------------
March 31, March 31,
1996 1995
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (309,324) $ (335,053)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 22,098 14,925
Cash flows provided by (used for) changes in:
Accounts receivables (17,871) --
Inventory (82,024) --
Prepaid expenses and other assets (4,606) 12,796
Accounts payable 14,588 (3,840)
Accrued expenses and other liabilities 8,148 649
----------- -----------
Net cash flows used by operating
activities (368,991) (310,523)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and maturities of short term investments 738,686 1,255,072
Purchases of short-term investments (3,596,039) (582,337)
Purchase of property and equipment (21,978) (3,170)
----------- -----------
Net cash used in investing activities (2,879,331) 669,565
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from private placement of
common stock net of expenses of $575,166 4,584,934 --
Exercise of options and warrants 307,251 --
----------- -----------
Net cash provided by financing activities 4,892,185 --
----------- -----------
Net (decrease) increase in cash and cash equivalents 1,643,863 359,042
CASH AND CASH EQUIVALENTS:
Beginning of period 457,322 386,349
----------- -----------
End of period $ 2,101,185 $ 745,391
=========== ===========
APPLIED BIOMETRICS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1. Unaudited Interim Results
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year 1996.
These statements should be read in conjunction with the audited financial
statements and related notes for the year ended December 31, 1995 included in
the Company's Form 10-KSB for the year ended December 31, 1995.
Note 2. Sale of Common Stock
In February of 1996 the Company sold 860,000 shares of common stock in a private
placement at $6.00 per share. Net proceeds to the Company, after selling agent
expenses and other offering expenses of $575,166 were $4,584,934. In connection
with this private placement, the Company issued warrants to purchase 86,000
common shares. These warrants are exercisable at $6.00 per share and expire in
2003.
During the first quarter of 1996, warrants to purchase 102,560 shares of common
stock were exercised. Proceeds to the Company were $307,251.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
OVERVIEW
Since its inception, the Company has been involved in the development of cardiac
output monitoring products. Prior to 1992, the Company focused its resources on
the development and commercialization of the TTD device. The TTD device is an
endotracheal tube with an ultrasound transducer which determines cardiac output
by measuring blood flow through the ascending aorta. That device was introduced
in 1989 and, due to technical difficulties, the Company discontinued active
marketing of the TTD device in 1991. At that time, the Company began to
substantially downsize its operations and redirected its business focus to the
development of the EVD probe. The EVD probe is attached by a surgeon directly to
the ascending aorta or the pulmonary artery to measure cardiac output.
The Company is now primarily engaged in the development of the EVD probe, which
uses the same Doppler ultrasound technology to measure cardiac output as the TTD
device. The development of the EVD probe is substantially completed and is
expected to be introduced for commercial sale in the first half of 1996. The
Company has been unprofitable since inception; in order to commercialize its
products it will be required to make significant expenditures for research,
development, marketing, sales and manufacturing and expects to incur additional
operating losses for at least the next 12 months.
RESULTS OF OPERATIONS
For the three months ended March 31, 1996 and 1995.
The Company began limited shipments of the EVD probe in the first quarter of
1996. The shipments were made to a small group of pediatric hospitals. The
Company expects to continue these limited shipments in the second quarter of
1996 as it finalizes the EVD probe development and expands its manufacturing
capability.
For the three months ended March 31, 1996, Research and Development expenses
decreased $5,845 compared to the same period in 1995. In 1996, the Company began
to inventory its purchased parts as it substantially completed the EVD
development. Prior to 1996, all purchased parts were expensed as part of the EVD
development costs. The Company expects Research and Development expenses to
increase in 1996 as it commences the redevelopment of the TTD device.
For the three months ended March 31, 1996, Sales and Marketing expenses
increased slightly compared to the same period in 1995. The Company expects
Sales and Marketing expenses to increase slightly in the second half of 1996 as
the Company expands the rollout of the EVD probe.
For the three months ended March 31, 1996, General and Administrative expenses
increased $12,331 as compared to the same period in 1995. This increase was the
result of increased personnel costs and other administrative expenses. The
Company does not expect General and Administrative expenses to increase
significantly in 1996.
For the three months ended March 31, 1996, interest income increased $25,465 as
compared to the same period in 1995. This increase is the result of more funds
available for investment. These additional funds resulted from the private
placement of common stock in February of 1996.
LIQUIDITY AND CAPITAL RESOURCES
Prior to 1993, the Company funded its operations through the sale of private
securities and notes from certain shareholders. In July , 1993, the Company
completed an initial public offering and raised $5,137,648 in net proceeds.
In February 1996, the Company sold 860,000 shares of common stock at $6.00 per
share in a private placement. Net proceeds to the Company after offering
expenses of $575,166 were $4,584,934.
Cash and short-term investments were $6,711,803 at March 31, 1996 and working
capital was $6,655,161.
Although there can be no assurance, the Company believes that the remaining
proceeds from the initial public offering, proceeds from the February 1996
private placement and funds generated from operations will enable the Company to
meet its liquidity and capital needs for at least the next 12 months.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Change in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exh. 27 -- Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March 31,
1996.
SIGNATURES
In accordance with 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.
Applied Biometrics, Inc.
Registrant
/s/ Joseph A. Marino
Joseph A. Marino
President, CEO
/s/ Gerald J. Prescott
Gerald J. Prescott,
Vice President and
Chief Financial Officer
Date: April 29, 1996