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, 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 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, 1997, there were outstanding 4,169,587 shares of common
stock, $0.01 par value.
BIOMETRICS, INC.
Form 10-QSB Index
March 31, 1997
Page
----
Part I: Financial Information ...................................... 3
Item 1. Financial Statements ....................................... 3
Balance Sheets Unaudited at March 31, 1997 and
Audited at December 31, 1996 ............................... 3
Unaudited Statements of Operations for the
Three Month Periods ended March 31, 1997 and
1996 ....................................................... 4
Statement of Shareholders' Equity for year ended
December 31, 1996 and for the Three Month Period
ended March 31, 1997 (unaudited) ........................... 5
Unaudited Statements of Cash Flows for the
Three Month Periods Ended March 31, 1997 and
1996 ....................................................... 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,
1997 December 31,
(Unaudited) 1996
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 932,775 $ 741,661
Short-term investments 5,018,134 5,632,791
Accounts Receivable 40,274 19,417
Inventory 232,490 222.476
Prepaid expenses and other current assets 189,004 226,665
------------ ------------
TOTAL CURRENT ASSETS 6,412,677 6,843,010
Property and equipment, net 563,437 528,398
Patents, net 107,012 109,307
Other assets 9,585 9,585
------------ ------------
TOTAL ASSETS $ 7,092,711 $ 7,490,300
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 153,623 $ 126,257
Accrued expenses and other liabilities 90,820 76,933
------------ ------------
TOTAL CURRENT LIABILITIES 244,443 203,190
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 10,000,000 shares
authorized: 4,169,587 and 4,168,987 shares
issued and outstanding at March 31, 1997
and December 31, 1996, respectfully 41,696 41,690
Additional paid-in capital 19,706,462 19,703,468
Accumulated deficit (12,899,890) (12,458,048)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 6,848,268 7,287,110
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,092,711 $ 7,490,300
============ ============
APPLIED BIOMETRICS, INC.
Statements of Operations
(Unaudited)
Three Months Ended
--------------------------
March 31, March 31,
1997 1996
----------- -----------
Net sales $ 56,070 $ 17,375
Cost of sales 26,850 9,875
----------- -----------
GROSS PROFIT 29,220 7,500
----------- -----------
OPERATING EXPENSES:
Research and Development 319,448 162,568
Sales and Marketing 72,197 74,803
General and Administrative 163,593 125,309
----------- -----------
Total Operating Expenses 555,238 362,680
----------- -----------
OPERATING LOSS (526,018) (355,180)
Interest income 84,176 45,856
----------- -----------
NET LOSS (441,842) ($ 309,324)
=========== ===========
LOSS PER COMMON SHARE ($ .11) ($ 0.09)
=========== ===========
Weighted average common shares
outstanding 4,169,487 3,308,468
=========== ===========
APPLIED BIOMETRICS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
------------ ------------ ------------ ------------
December 31, 1995 2,943,410 $ 29,434 $ 13,507,155 $(11,089,087)
Private Placement net
of offering expenses of $587,133 860,000 8,600 4,564,267
Exercise of stock options and warrants 365,577 3,656 1,632,046
Net loss (1,368,961)
------------ ------------ ------------ ------------
December 31, 1996 4,168,987 41,690 19,703,468 (12,458,048)
Exercise of stock options (unaudited) 600 6 2994
Net loss (unaudited) (441,842)
------------ ------------ ------------ ------------
March 31, 1997 (unaudited) 4,169,587 $ 41,696 $ 19,706,462 (12,899,890)
============ ============ ============ ============
APPLIED BIOMETRICS, INC.
Statements of Cash Flows
(Unaudited)
Three Months Ended
--------------------------
March 31, March 31,
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (441,842) $ (309,324)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 41,406 22,098
Cash flows provided by (used for) changes in:
Accounts receivables (20,857) (17,871)
Inventory (10,014) (82,024)
Prepaid expenses and other assets 37,661 (4,606)
Accounts payable 27,366 14,588
Accrued expenses and other liabilities 13,887 8,148
----------- -----------
Net cash flows used by operating
activities (352,393) (368,991)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and maturities of short term investments 1,750,370 738,686
Purchases of short-term investments (1,135,713) (3,596,039)
Purchase of property and equipment (74,150) (21,978)
----------- -----------
Net cash used in investing activities 540,507 (2,879,331)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from private placement of
common stock -- 4,584,934
Exercise of options and warrants 3,000 307,251
----------- -----------
Net cash provided by financing activities 3,000 4,892,185
----------- -----------
Net (decrease) increase in cash and cash equivalents 191,114 1,643,863
CASH AND CASH EQUIVALENTS:
Beginning of period 741,661 457,322
----------- -----------
End of period $ 932,775 $ 2,101,185
=========== ===========
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, 1997 are not necessarily
indicative of the results that may be expected for the year 1997.
These statements should be read in conjunction with the audited financial
statements and related notes for the year ended December 31, 1996 included in
the Company's Form 10-KSB for the year ended December 31, 1996.
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 $587,133 were $4,572,867. In connection
with this private placement, the Company issued warrants to purchase 86,000
common shares at $6.00 per share. These warrants were exercised during 1996.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
RESULTS OF OPERATIONS
For the three months ended March 31, 1997 and 1996.
NET SALES. For the three months ended March 31, 1997 the Company had net sales
of $56,070 compared to $17,375 in three months ended March 31, 1996. This
increase is the result of the continuation of the Company's marketing roll-out
and expansion of its distribution system commenced in late 1996.
GROSS PROFIT. The Company's gross profit margin as a percentage of net sales was
52.1% for the three months ended March 31, 1997 compared to 43.2% for the three
months ended March 31, 1996. The Company believes that these margins are not
necessarily representative of the margins it will realize in future periods.
RESEARCH & DEVELOPMENT. Research and Development expenses increased 96.5% to
$319,448 for the three months ended March 31, 1997 from $162,568 for the three
months ended March 31, 1996. This increase resulted from the addition of several
new engineering personnel and an increase in other development expenditures
related to the next generation Cardiac Output Monitor. The new monitor is
expected to be completed in the third quarter of 1997.
SALES AND MARKETING. Sales and Marketing expenses decreased 3.5% to $72,197 for
the three months ended March 31, 1997 from $74,803 for the three months March
31, 1996. This decrease was the result of the resignation of the Company's Vice
President of Sales in mid 1996 who was not replaced. The Company expects its
sales and marketing expenses to increase in 1997 as it continues the marketing
roll-out of its Cardiac Output Monitoring System and expands its distribution
system.
GENERAL AND ADMINISTRATIVE. General and Administrative expenses increased 30.6%
to $163,593 for the three months March 31, 1997 from $125,309 for the three
months ended March 31, 1996. This increase was the result of increased
personnel, including a Chief Financial Officer, and other administrative
expenses associated with a higher level of activity. General and Administrative
expenses are expected to increase in 1997 as the Company's business activity
expands.
INTEREST INCOME. Interest Income increased 83.6% to $84,176 for the three months
ended March 31, 1997 from $45,856 for the three months ended March 31, 1996,
primarily as a result of more funds available for investment. The additional
funds came from a private placement of common stock in February, 1996 and from
the exercise of options and warrants.
LIQUIDITY AND CAPITAL RESOURCES
Prior to 1993 the Company funded its operation through the sale of private
placement securities and notes from certain shareholders. In July 1993 the
Company completed an initial public offering of common stock 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 was $4,572,867.
Cash and short-term investments were $5,950,909 at March 31, 1997 and working
capital was $6,168,234. The Company used $352,393 of cash in its operating
activities including a net loss of $441,842.
The Company believes that its existing cash, cash equivalents and short-term
investments together with funds generated from operations will enable the
Company to meet its liquidity and capital needs for the next twelve months.
Forward Looking Statements
Statements included in this Form 10-QSB that are not historical in nature or
current facts are "forward-looking statements" made pursuant to the safe harbor
provisions of the Private Securities Reform Act of 1995 and are subject to
certain risks and uncertainties that could cause actual results to differ
materially. Among these risks and uncertainties are (1) the Company's limited
revenues, history of losses and uncertainty of future results; (2) the
uncertainty of market acceptance of the Company's product, which has recently
been introduced, and (3) the fact the Company has limited experience in
manufacturing its product in commercial quantities.
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) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
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 30, 1997