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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 June 30, 2000
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: 000-20985
CALYPTE BIOMEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1226727
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
1265 HARBOR BAY PARKWAY, ALAMEDA, CALIFORNIA 94502
(Address of principal executive offices) (Zip Code)
(510) 749-5100
(Registrant's telephone number, including area code)
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
------ -------
The registrant had 24,818,593 shares of common stock outstanding as of
August 7, 2000.
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CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
FORM 10-Q
INDEX
PAGE NO.
-------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of
June 30, 2000 and December 31, 1999 (unaudited)............. 3
Condensed Consolidated Statements of Operations
for the Three Months and Six Months Ended June 30, 2000
and 1999 (unaudited)........................................ 4
Condensed Consolidated Statements of Cash
Flows for the Six Months Ended June 30, 2000
and 1999 (unaudited)........................................ 5
Notes to Condensed Consolidated Financial
Statements (unaudited)...................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 9
Item 3. Quantitative and Qualitative Disclosures About
Market Risk................................................. 19
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds................... 20
Item 4. Submission of Matters to a Vote of Security Holders......... 20
Item 6. Exhibits and Reports on Form 8-K............................ 21
-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
ASSETS
June 30,2000 December 31, 1999
---------------- --------------
Current assets:
Cash and cash equivalents...................................................... $ 4,973 $ 2,652
Restricted cash................................................................ 866 -
Securities available for sale.................................................. - 503
Accounts receivable, net of allowance of $35 at June 30, 2000
and December 31, 1999................................................... 769 583
Inventories.................................................................... 1,457 1,460
Notes receivable - officers and employees...................................... 630 551
Prepaid expenses............................................................... 130 201
Other current assets........................................................... 97 110
---------------- --------------
Total current assets.................................................. 8,922 6,060
Property and equipment, net of accumulated depreciation of $4,181
at June 30, 2000 and $3,967 at December 31, 1999............................... 1,569 1,543
Intangibles, net of accumulated amortization of $20 at June 30, 2000 and $14 at
December 31, 1999.............................................................. 36 42
Other assets ...................................................................... 174 176
---------------- --------------
$ 10,701 $ 7,821
================ ==============
LIABILITIES, MANDATORILY REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................... $ 1,083 $ 1,290
Accrued expenses............................................................... 1,123 1,476
Note payable - current portion................................................. 707 844
Capital lease obligations - current portion.................................... 76 90
Deferred revenue............................................................... 500 500
---------------- --------------
Total current liabilities............................................. 3,489 4,200
Deferred rent obligation............................................................ 30 25
Note payable - long-term portion.................................................... 118 -
Capital lease obligations - long-term portion....................................... 122 50
---------------- --------------
Total liabilities..................................................... 3,759 4,275
---------------- --------------
Mandatorily redeemable Series A preferred stock, $0.001 par value; no shares
authorized, 100,000 shares issued and outstanding; aggregate redemption and
liquidation value of $1,000 plus cumulative dividends.......................... 2,276 2,216
---------------- --------------
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $0.001 par value; 5,000,000 shares authorized; no shares
issued and outstanding..................................................... - -
Common Stock, $0.001 par value; 50,000,000 shares authorized; 24,814,260
and 20,425,403 shares issued and outstanding as of June 30, 2000 and
December 31, 1999, respectively............................................ 25 20
Additional paid-in capital..................................................... 76,895 68,226
Deferred compensation.......................................................... (91) (135)
Accumulated deficit............................................................ (72,163) (66,781)
---------------- --------------
Total stockholders' equity............................................ 4,666 1,330
---------------- --------------
$ 10,701 $ 7,821
================ ==============
-3-
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Revenues:
Product sales............................................... $ 787 $ 914 $ 1,885 $ 1,748
------------ ------------ ------------ ------------
Operating expenses:
Product costs............................................... 1,307 1,119 2,724 2,116
Research and development costs.............................. 572 913 1,116 2,573
Selling, general and administrative costs................... 2,213 1,216 3,522 2,346
------------ ------------ ------------ ------------
Total expenses............................................ 4,092 3,248 7,362 7,035
------------ ------------ ------------ ------------
Loss from operations.................................... (3,305) (2,334) (5,477) (5,287)
Interest income, interest expense and other income............. 100 69 97 98
------------ ------------ ------------ ------------
Loss before income taxes................................ (3,205) (2,265) (5,380) (5,189)
Income taxes................................................... - - (2) (2)
------------ ------------ ------------ ------------
Net loss.............................................. (3,205) (2,265) (5,382) (5,191)
Less dividends on mandatorily redeemable Series A
preferred stock.............................................. (30) (30) (60) (60)
------------ ------------ ------------ ------------
Net loss attributable to common stockholders................... $ (3,235) $ (2,295) $ (5,442) $ (5,251)
============ ============ ============ ============
Net loss per share attributable to common stockholders
(basic and diluted).......................................... $ (0.13) $ (0.11) $ (0.24) $ (0.29)
============ ============ ============ ============
Weighted average shares used to compute
net loss per share attributable to common
stockholders (basic and diluted)............................. 24,518 20,120 22,549 18,238
============ ============ ============ ============
-4-
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended June 30,
---------------------------------
2000 1999
------------ -------------
Cash flows from operating activities:
Net loss.................................................................................. $ (5,382) $ (5,191)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization......................................................... 268 380
Amortization of deferred compensation................................................. 219 38
Reduction in note receivable from officer............................................. 96 -
Write-off of note and interest receivable to research and development costs........... - 890
Loss on sale of equipment............................................................. 16 -
Changes in operating assets and liabilities:
Accounts receivable............................................................... (186) (241)
Inventories....................................................................... 3 232
Prepaid expenses and other current assets......................................... (45) (37)
Other assets...................................................................... 2 -
Accounts payable, accrued expenses and deferred
revenue...................................................................... (560) (139)
Deferred rent obligation.......................................................... 5 (3)
------------ -------------
Net cash used in operating activities...................................... (5,564) (4,071)
------------ ------------
Cash flows from investing activities:
Purchase of equipment..................................................................... (227) (55)
Proceeds from sales of equipment.......................................................... 19 -
Notes receivable from officers............................................................ (46) (6)
Loan to Pepgen............................................................................ - (64)
Purchase of securities available for sale................................................. (11) (1,450)
Sales of securities available for sale.................................................... 514 850
------------ ------------
Net cash provided by (used in) investing activities ....................... 249 (725)
------------ -------------
Cash flows from financing activities:
Proceeds from sale of stock............................................................... 8,110 8,106
Expenses related to sale of stock......................................................... (51) (854)
Expenses related to purchase of certain assets of Cambridge Biotech....................... - (68)
Proceeds from notes payable............................................................... 750 2,000
Principal payments on notes payable....................................................... (269) -
Cash pledged to bank pursuant to loan agreement........................................... (866) -
Principal payments on capital lease obligations........................................... (38) (176)
------------- -------------
Net cash provided by financing activities.................................. 7,636 9,008
------------ ------------
Net increase in cash and cash equivalents.................................................... 2,321 4,212
Cash and cash equivalents at beginning of period............................................. 2,652 3,121
------------ ------------
Cash and cash equivalents at end of period................................................... $ 4,973 $ 7,333
============ ============
Supplemental disclosure of cash flow activities:
Cash paid for interest.................................................................. $ 62 $ 93
Cash paid for income taxes.............................................................. 2 2
Supplemental disclosure of noncash activities:
Refinance of capital lease obligation................................................... 96 82
Dividends accrued on mandatorily redeemable Series A preferred stock.................... 60 60
Conversion of note payable to common stock.............................................. 500 -
Deferred compensation attributable to stock grants...................................... 175 -
Revaluation of acquisition of certain assets of Cambridge Biotech....................... - 293
Conversion of common stock subscribed to common stock................................... - 3
-5-
CALYPTE BIOMEDICAL CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
(UNAUDITED)
(1) THE COMPANY AND BASIS OF PRESENTATION
Calypte Biomedical Corporation (the Company) is a health care company dedicated
to the development and commercialization of urine-based diagnostic products and
services for Human Immunodeficiency Virus Type 1 (HIV-1), sexually transmitted
diseases and other chronic illnesses. The Company's tests include the screening
enzyme immunoassay (EIA) and supplemental Western Blot tests, the only two
FDA-licensed HIV-1 antibody tests that can be used on urine samples. The Company
believes that accurate non-invasive urine-based testing methods for HIV and
other chronic diseases may make important contributions to public health by
helping to foster an environment in which testing may be done safely,
economically, and painlessly.
The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company, pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC), and reflect all adjustments (consisting only of
normal recurring adjustments) which, in the opinion of management, are necessary
for a fair presentation of the Company's financial position as of June 30, 2000
and the results of its operations for the three months and six months ended June
30, 2000 and 1999 and its cash flows for the six months ended June 30, 2000 and
1999. Interim results are not necessarily indicative of the results to be
expected for the full year. This information should be read in conjunction with
the Company's audited consolidated financial statements for each of the years in
the three year period ended December 31, 1999 included in its Form 10-K filed
with the SEC on March 30, 2000.
Certain information in footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted pursuant to the rules and regulations of the SEC.
The data disclosed in these condensed consolidated financial statements
and in the related notes is unaudited.
(2) SIGNIFICANT ACCOUNTING POLICIES
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic net loss per share attributable to common stockholders is computed by
dividing net loss attributable to common stockholders by the weighted average
number of shares of common stock outstanding during the period presented. The
computation of diluted earnings per common share is similar to the computation
of basic net loss per share attributable to common stockholders, except that the
denominator is increased for the assumed conversion of convertible securities
and the exercise of dilutive options using the treasury stock method. The
weighted average shares used in computing basic and diluted net loss per share
attributable to common stockholders are equivalent for the periods presented.
Options and warrants for 5,034,377 and 3,558,795 shares at June 30, 2000 and
1999, respectively, were excluded from the computation of loss per share
attributable to common stockholders as their effect was antidilutive.
-6-
(3) INVENTORY
Inventory is stated at the lower of cost or market and the cost is determined
using the first-in, first-out method. Inventory as of June 30, 2000 and December
31, 1999 consisted of the following (in thousands):
2000 1999
---------- ---------
Raw Materials $ 261 $ 233
Work-in-Process 859 862
Finished Goods 337 365
---------- ---------
Total Inventory $ 1,457 $ 1,460
========== =========
(4) NOTES RECEIVABLE - OFFICERS AND EMPLOYEES
In June 2000, the Company accepted a new note from an officer who is also a
director. The new note incorporates the principal and accrued interest from
previous indebtedness of the officer and is secured by the officer's owned stock
and vested stock options in the Company. The note bears interest at the prime
rate and is due on December 31, 2000.
(5) NOTE PAYABLE
At December 31, 1999, the Company maintained a loan agreement with a bank to
borrow up to $2.25 million at an interest rate of prime plus 1 1/4%. The
Company's assets secure borrowings under the loan. The amended agreement
originally called for the loan to be repaid in twelve equal monthly installments
of principal, plus accrued interest, beginning in August 1999. In January 2000,
the loan was modified to extend the repayment term through August 2001. In May
2000, the loan was again modified to increase the outstanding principal balance
by $250,000. At June 30, 2000, the Company had $825,000 outstanding under this
facility and the prime rate was 9.5%.
The loan agreement requires the Company to maintain certain financial conditions
and comply with certain reporting and other requirements. At times during the
first and second quarters of 2000, including at June 30, 2000, the Company was
not in compliance with certain of the financial covenants of the agreement. In
the event of such non-compliance, the agreement requires the Company to pledge
cash to the bank in an amount equal to 105% of the outstanding loan balance.
Upon the pledge of such cash, the Company is deemed to have cured any default
arising from any non-compliance with the financial covenants of the agreement.
The accompanying Consolidated Balance Sheet as of June 30, 2000 and Statement of
Cash Flows for the period ended June 30, 2000 reflect the $866,000 cash pledge
to the bank that was required to cure the Company's non-compliance as of June
30, 2000.
(6) STOCK OPTION PLANS
In February 2000, the Company's Board of Directors authorized the modification
of stock options granted to employees from October 1998 through December 1999
under the Company's 1991 Stock Option Plan to decrease the vesting period from
five years to three years. Neither the exercise price nor the life of the option
was modified.
-7-
At the annual stockholders' meeting in June 2000, the Company's stockholders
approved the adoption of the 2000 Equity Incentive Plan as a replacement for the
Company's 1991 Stock Option Plan and authorized 4,000,000 shares of the
Company's Common Stock for issuance under the new plan. The stockholders also
approved amendments to the 1995 Director Option Plan to (i) increase by 500,000
the number of shares of Common Stock reserved for issuance under the Plan; (ii)
to remove the requirement that the number of shares in each option granted to
each newly-elected director be equal and that the number of shares in each
option granted to each re-elected director be equal; (iii) to provide that if a
non-employee director whose outstanding options have been assumed or substituted
pursuant to a merger or asset sale is removed from the Board of Directors
without cause within six months of such merger or asset sale, such director's
outstanding options shall become fully vested and exercisable; and (iv) to
provide that if a non-employee director is designated for nomination to the
Board of Directors pursuant to an agreement between the Company and another
person or entity, options granted under the Director Option Plan may be granted
to such other person or entity or an affiliate of the same.
(7) FINANCING
On April 7, 2000, the Company completed the sale of 4,096,000 shares of
common stock in a private placement that raised approximately $8.3 million
after deducting the expenses of the transaction. Approximately one-half of
the financing came from a private holding company that was not a prior
investor in the Company and with which one of the Company's Directors is
affiliated. A representative of the holding company was elected as a member
of the Company's Board of Directors in April 2000. The balance of the private
placement financing came primarily from the Company's existing investors. In
March 2000, in conjunction with the private placement, one of the investors
advanced the Company $500,000 with the intent that the loan would be
converted to equity upon the closing of the private placement. The private
placement closed following the effectiveness of a registration statement
filed with the SEC, and the Company received the expected proceeds. The
bridge loan was converted to equity upon the closing of the private
placement. In conjunction with the private placement the Company issued
100,000 warrants exercisable at $3.62 per share and 50,000 options
exercisable at $2.05 per share. The warrants and options were valued on the
date of grant at $3.03 per share and $2.86 per share, respectively, using the
Black-Scholes option-pricing model with the following assumptions: expected
dividend yield of 0.0%; risk free interest rate of 6.5%, the contractual life
of 5 years for the warrants and 10 years for the options, and volatility of
80%. The expense associated with the warrants and options was accounted for
as a transaction cost of the private placement.
(8) STOCKHOLDERS' EQUITY
At the annual stockholders' meeting in June 2000, the stockholders approved an
increase the number of authorized shares of the Company's Common Stock from
30,000,000 to 50,000,000.
-8-
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE STATEMENTS IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" THAT RELATE TO FUTURE PLANS, EVENTS OR PERFORMANCE
ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. ACTUAL
RESULTS, EVENTS OR PERFORMANCE MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A VARIETY OF FACTORS, INCLUDING
THOSE SET FORTH UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS, EVENTS OR
PERFORMANCE" BELOW. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE
THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE
DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
OVERVIEW
Calypte's efforts are currently focused on expanding the sales and marketing of
its HIV-1 urine-based and serum-based diagnostic tests and on improving its
products and processes. Since the summer of 1998, when the Company received a
license for both its screening and supplemental tests, the Company has been
marketing and selling in the U.S. the only available FDA-approved urine-based
HIV test method. There can be no assurance the Company will achieve or sustain
significant revenues from sales of the HIV-1 urine screening assay or the
supplemental test.
The Company expects operating losses to continue in the near future as it
continues to expand its sales and marketing activities for its current
FDA-approved products and conducts additional research and development for
process improvements and new products. The Company's marketing strategy is to
use distributors, focused direct selling and marketing partners to penetrate
certain targeted domestic markets. The Company maintains a small direct sales
force to sell the Company's urine-based HIV-1 test to laboratories serving the
life insurance market. International and other U.S. markets are addressed
utilizing diagnostic product distributors. There can be no assurance that the
Company's products will be successfully commercialized or that the Company will
achieve significant product revenues. In addition, there can be no assurance
that the Company will achieve or sustain profitability in the future.
-9-
RESULTS OF OPERATIONS
The following represents selected financial data:
(in thousands) (in thousands)
--------------------- ---------------------
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2000 1999 2000 1999
--------- -------- -------- ---------
Total revenue $ 787 $ 914 $ 1,885 $ 1,748
--------- -------- -------- ---------
Operating expenses:
Product costs 1,307 1,119 2,724 2,116
Research and development 572 913 1,116 2,573
Selling, general and administrative 2,213 1,216 3,522 2,346
--------- -------- -------- ---------
Total expenses 4,092 3,248 7,362 7,035
--------- -------- -------- ---------
Loss from operations (3,305) (2,334) (5,477) (5,287)
Interest income (net of interest expense) and other income 100 69 97 98
--------- -------- -------- ---------
Loss before income taxes $ (3,205) $ (2,265) $ (5,380) $ (5,189)
========= ======== ========= =========
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
Revenues for the second quarter of 2000 decreased by $127,000 or 14% to $787,000
compared to $914,000 in the second quarter of 1999. The decrease in revenues is
attributable to changes in customer order patterns coupled with regulatory
changes in the domestic life insurance industry that generated a noticeable
increase in testing related to new policy applications late in 1999 and early in
2000. The increased demand for testing did not continue into the second quarter
of 2000. The second quarter reduction in insurance testing impacted sales of
both the Company's screening and supplemental test products.
Product costs increased $188,000 or 17% to $1.3 million for the three months
ended June 30, 2000 from $1.1 million for the three months ended June 30, 1999.
The increase is partially attributable to costs associated with increased
staffing and contractor usage at the Company's Rockville, Maryland facility to
expand, upgrade and validate its process and to ensure compliance with good
manufacturing practices. Additionally, the Company continues to incur
duplicative costs to operate and validate processes in its Alameda, California
facility that has not yet been approved by the FDA to manufacture product for
sale while simultaneously incurring costs to operate its two licensed facilities
in Berkeley, California and Rockville, Maryland. Redundant manufacturing costs
cannot cease until the Alameda facility receives FDA approval and the Company
closes its smaller Berkeley facility.
Research and development expenses decreased by $341,000 or 37% to $572,000 for
the three months ended June 30, 2000 from $913,000 in the corresponding period
of 1999. The Company's expenditures for pure research and clinical trials
decreased in the second quarter of 2000 as it focused more of its resources on
expanded marketing efforts to improve awareness and visibility for its existing
products. Additionally, the second quarter 2000 renegotiation of a license
agreement that allows the Company access to certain patents and proprietary
rights resulted in a reduction of research and development expenses by reducing
the contractual minimum payments required under the agreement for 2000 through
the agreement's expiration in 2009.
-10-
Selling, general and administrative expenses increased $997,000 or 82% to $2.2
million for the three months ended June 30, 2000 from $1.2 million for the three
months ended June 30, 1999. The increase was primarily related to increases in
advertising and for various complementary initiatives designed to generate and
increase awareness of the Company and its products among consumers, physicians,
and international healthcare and governmental organizations. Travel and other
expenses associated with the acquisition of various new international
distribution agreements also contributed to the increase in this expense.
Interest income (net of interest expense) and other income increased by $31,000
or 45% to $100,000 for the three months ended June 30, 2000 from $69,000 for the
three months ended June 30, 1999. The increase was primarily due to the
reduction in interest expense on borrowings under a bank loan agreement and on
capital lease obligations.
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
In the first six months of 2000, revenue increased by $137,000 or 8% to $1.9
million from $1.7 million in the prior year's comparable period due primarily to
strong first quarter 2000 sales of both the Company's screening and supplemental
tests to reference laboratories servicing the domestic life insurance industry.
Certain regulatory changes applicable to the domestic life insurance industry
generated an increased demand for testing of new policy applicants late in 1999
and early in 2000.
Product costs increased by $608,000 or 29% to $2.7 million for the six months
ended June 30, 2000 from $2.1 million for the six months ended June 30, 1999.
Product costs during the six months ended June 30, 2000 were higher due to
increased personnel and outside contractor costs necessary to prepare the
Company's Alameda, California facility for inspection and approval for
manufacturing by the FDA, to expand, upgrade and validate its Rockville,
Maryland facility's processes, and to ensure compliance with good manufacturing
practices at all of its locations. The Company continues to incur duplicative
costs to operate and validate processes in its Alameda, California facility that
has not yet been approved by the FDA to manufacture product for sale while
simultaneously incurring costs to operate its two licensed facilities in
Berkeley, California and Rockville, Maryland. These redundant manufacturing must
continue until the Alameda facility receives FDA approval and the Company is
able to close its smaller Berkeley facility.
Research and development expenses decreased by $1,457,000 or 57% to $1.1 million
for the six months ended June 30, 2000 from $2.6 million in the corresponding
period of 1999. The decrease was primarily due to the write-off of notes and
interest receivable from a related party as in-process research and development
in 1999 and reductions in the costs of third party research projects and
clinical trials. The second quarter 2000 renegotiation of a license agreement
allowing the Company access to certain patents and proprietary rights also
resulted in a reduction of research and development expenses by reducing the
contractual minimum payments required under the agreement for 2000 through the
agreement's expiration in 2009.
Selling, general and administrative expenses increased $1,176,000 or 50% to $3.5
million for the six months ended June 30, 2000 from $2.3 million for the six
months ended June 30, 1999. The increase was primarily related to increased
expenditures for advertising and various complementary initiatives designed to
generate and increase awareness of the Company and its products among consumers,
physicians, and international and governmental organizations. Travel and other
expenses associated with the acquisition of various new international
distribution agreements also contributed to the increase in this expense.
Interest income (net of interest expense) and other income was essentially
unchanged between the years. A decrease in interest income resulting from lower
average invested cash balances in 2000 was offset by the
-11-
reduction in interest expensed resulting from scheduled principal repayments on
the bank loan and capital lease obligations.
LIQUIDITY AND CAPITAL RESOURCES
FINANCING ACTIVITIES
The Company has financed its operations from its inception primarily through the
private placement of preferred stock and common stock, the Company's Initial
Public Offering (IPO) of common stock and, to a lesser extent, from payments
related to research and development agreements, a bank line of credit, equipment
lease financings and borrowings from notes payable.
In July 1996, the Company completed its IPO of 2,536,259 shares of its Common
Stock at $6.00 per share. After deducting underwriters' discounts and
commissions and additional expenses associated with the IPO, the Company
received net proceeds of $13.2 million.
In October 1997, the Company completed a private placement of 2,600,999 shares
of its Common Stock at $4.25 per share. The Company received net proceeds of
approximately $10.2 million after deducting placement agent commissions and
additional expenses associated with the private placement.
In January 1999, the Company completed a private placement of 3,102,500 shares
of its Common Stock at $1.00 per share. The Company received net proceeds of
approximately $2.8 million after deducting placement agent commissions and
additional expenses associated with the private placement.
In January 1999, the Company executed a $2.0 million loan agreement with a bank.
Borrowings under the loan agreement are secured by Calypte's assets. The line of
credit was to be repaid in twelve equal monthly installments of principal, plus
accrued interest, beginning July 20, 1999. In November 1999, the agreement was
modified to increase the amount borrowed by $250,000 and extend the repayment
term through August 2000. In January 2000, the agreement was modified to extend
the repayment term through August 2001. The agreement was subsequently modified
in May 2000 to increase the outstanding principal by $250,000.
In April 1999, the Company completed a private placement of 3,398,000 shares of
its Common Stock at $2.25 per share. The Company received net proceeds of
approximately $7.0 million after deducting placement agent commissions and
additional expenses associated with the private placement.
In April 2000, the Company completed a private placement of 4,096,000 shares
of its Common Stock at $2.05 per share following the effectiveness of a
registration statement that the Company filed covering the resale of the
shares by the investors. The Company received proceeds of approximately $8.3
million after deducting expenses of the transaction. In conjunction with the
equity financing, the Company also issued warrants for 100,000 shares of
Common Stock with an exercise price of $3.62 per share to one of the
investors in return for a short-term bridge loan commitment. The Company drew
$500,000 on the bridge loan during March 2000. The bridge loan was converted
to equity upon the closing of the private placement transaction.
Although the Company believes that current cash will be sufficient to meet
its operating expenses and capital requirements for the next six months, it
plans to raise additional capital as early as the third or fourth quarter of
2000. The Company's future liquidity and capital requirements will depend on
numerous factors, including market acceptance of its products, improvements
in the costs and
-12-
efficiency of its manufacturing processes, regulatory actions by the FDA and
other international regulatory bodies, intellectual property protection and the
ability to raise additional capital in a timely manner.
There can be no assurance that the Company will be able to achieve improvements
in its manufacturing processes or that it will achieve significant product
revenues. In addition, there can be no assurance that the Company will achieve
or sustain profitability in the future. There can be no assurance that
additional capital that the Company plans to raise will be available on
acceptable terms, if at all. Any failure to raise additional financing will
likely place us in significant financial jeopardy. Therefore, the Company cannot
predict the adequacy of its capital resources on a long-term basis.
OPERATING ACTIVITIES
For the six months ended June 30, 2000 and June 30, 1999, the Company used cash
of $5.6 million and $4.1 million, respectively, in its operations. The cash used
in operations was primarily for promoting and marketing the Company's complete
urine-based HIV-1 testing method, funding research and development, and for
manufacturing, selling, and general and administrative expenses of the Company.
NEW ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44 ("FIN No. 44"), ACCOUNTING FOR CERTAIN TRANSACTIONS
INVOLVING STOCK COMPENSATION. This Interpretation clarifies the application of
APB Opinion No. 25, "Accounting for Stock Issued to Employees" and is generally
effective July 1, 2000, with certain conclusions in the Interpretation covering
specific events that occur after either December 15, 1998 or January 12, 2000.
To the extent that this Interpretation covers events occurring during the period
after December 15, 1998, or January 12, 2000, but before the effective date of
July 1, 2000, the effects of applying this Interpretation are to be recognized
on a prospective basis from July 1, 2000. Management believes the adoption of
FIN No. 44 will not have a material impact on our financial position, results of
operations or cash flows.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"), summarizing the staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements. In
March 2000, the SEC issued Staff Accounting Bulletin No. 101A ("SAB 101A"),
delaying the implementation date of SAB101. In June 2000, the SEC issued
Staff Accounting Bulletin No.101B ("SAB 101B") further delaying the
implementation date of SAB 101. As amended, registrants must adopt SAB 101 no
later than the fourth fiscal quarter of their fiscal year beginning after
December 15, 1999. Management believes that compliance with these Bulletins
will not have a significant impact on our financial position, results of
operations, or cash flows.
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, or SFAS No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
be recorded in the balance sheet as either an asset or liability measured at
its fair value. SFAS No. 133, as recently amended by SFAS No. 137 and SFAS No.
138, is effective for fiscal years beginning after June 15, 2000. Management
believes the adoption of SFAS No. 133 will not have a material effect on our
financial position, results of operations, or cash flows.
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FACTORS THAT MAY AFFECT FUTURE RESULTS, EVENTS OR PERFORMANCE
Calypte has identified a number of risk factors and uncertainties that it faces.
These factors, among others, may cause actual results, events or performance to
differ materially from those expressed in any forward-looking statements we make
in this Form 10-Q or in press releases or other public disclosures. Investors
should be aware of the existence of these factors.
UNCERTAIN MARKET ACCEPTANCE OF OUR NEW METHOD OF DETERMINING THE PRESENCE
OF HIV ANTIBODIES. Our products incorporate a new method of determining the
presence of HIV antibodies. There can be no assurance that we will obtain:
- any significant degree of market acceptance among physicians, patients
or health care payors; or
- recommendations and endorsements by the medical community which are
essential for market acceptance of the products.
We have FDA approval to market our urine HIV-1 screening and supplemental tests
in the United States and have been marketing these products since July 1998. To
date, however, this testing method has generated only limited revenues and not
achieved significant market penetration. The failure of our products to obtain
market acceptance would have a material adverse effect on us.
WE HAVE LIMITED EXPERIENCE SELLING AND MARKETING OUR HIV-1 URINE-BASED
SCREENING TEST. We have limited experience marketing and selling our products
either directly or through our distributors. The success of our products depends
upon alliances with third-party distributors. There can be no assurance that:
- our direct selling efforts will be effective;
- our distributors will successfully market our products; or
- if our relationships with distributors terminate, we will be able to
establish relationships with other distributors on satisfactory terms,
if at all.
Any disruption in our distribution, sales or marketing network could have a
material adverse effect on us.
WE HAVE SUSTAINED LOSSES IN THE PAST AND WE EXPECT TO SUSTAIN LOSSES IN THE
FUTURE. We have incurred losses in each year since our inception. Our net loss
for the six months ended June 30, 2000 was $5.4 million and our accumulated
deficit as of June 30, 2000 was $72.2 million. We expect operating losses to
continue as we continue our marketing and sales activities for our FDA-approved
product and conduct additional research and development for product and process
improvements and new products.
OUR QUARTERLY RESULTS MAY FLUCTUATE DUE TO CERTAIN REGULATORY, MARKETING
AND COMPETITIVE FACTORS OVER WHICH WE HAVE LITTLE OR NO CONTROL. The factors
listed below, some of which we cannot control, may cause our revenues and
results of operations to fluctuate significantly:
- actions taken by the FDA or foreign regulatory bodies relating to our
products;
- the extent to which our products gain market acceptance;
- the timing and size of distributor purchases; and
- introductions of alternative means for testing for HIV by competitors.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING THAT WE MAY NEED IN THE
FUTURE. The report of KPMG LLP covering the December 31, 1999 consolidated
financial statements contains an explanatory paragraph that states that our
recurring losses from operations and accumulated deficit raise substantial doubt
about our ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
that uncertainty. We plan to raise more money to continue to finance our
operations. We may not
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be able to obtain additional financing on acceptable terms, or at all. Any
failure to raise additional financing will likely place us in significant
financial jeopardy.
WE DEPEND UPON THE VIABILITY OF THREE PRODUCTS - OUR HIV-1 URINE-BASED
SCREENING TEST AND OUR URINE AND BLOOD BASED SUPPLEMENTAL TESTS. Our HIV-1
urine-based screening test and urine and blood-based supplemental tests are our
only products. Accordingly, we may have to cease operations if our screening and
supplemental tests fail to achieve market acceptance or generate significant
revenues.
OUR PRODUCT DEPENDS UPON RIGHTS TO TECHNOLOGY THAT WE HAVE LICENSED FROM THIRD
PARTY PATENT HOLDERS AND THERE CAN BE NO ASSURANCE THAT THE RIGHTS WE HAVE UNDER
THESE LICENSING AGREEMENTS ARE SUFFICIENT OR THAT WE CAN ADEQUATELY PROTECT
THOSE RIGHTS. We currently have the right to use patent and proprietary rights
which are material to the manufacture and sale of our HIV-1 urine-based
screening test under licensing agreements with New York University, Cambridge
Biotech Corporation, Repligen Corporation, and the Texas A&M University System.
WE RELY ON SOLE SOURCE SUPPLIERS THAT WE CANNOT QUICKLY REPLACE FOR CERTAIN
COMPONENTS CRITICAL TO THE MANUFACTURE OF OUR PRODUCTS. Any delay or
interruption in the supply of these components could have a material adverse
effect on us by significantly impairing our ability to manufacture products in
sufficient quantities, particularly as we increase our manufacturing activities
in support of commercial sales.
WE HAVE LIMITED EXPERIENCE IN MANUFACTURING OUR PRODUCTS AND LITTLE
EXPERIENCE IN MANUFACTURING OUR PRODUCTS IN COMMERCIAL QUANTITIES. We may
encounter difficulties in scaling-up production of new products, including
problems involving:
- production yields;
- quality control and assurance;
- raw material supply; and
- shortages of qualified personnel.
THE SUCCESS OF OUR PLANS TO ENTER INTERNATIONAL MARKETS MAY BE LIMITED OR
DISRUPTED DUE TO RISKS RELATED TO INTERNATIONAL TRADE AND MARKETING AND THE
CAPABILITIES OF OUR DISTRIBUTORS. We anticipate that international distributor
sales will generate a significant portion of our revenues for the next several
years. We believe that our urine-based test can provide significant benefits in
countries that do not have the facilities or personnel to safely and effectively
collect and test blood samples. The following risks may limit or disrupt our
international sales;
- the imposition of government controls;
- export license requirements;
- political instability;
- trade restrictions;
- changes in tariffs;
- difficulties in managing international operations; and
- fluctuations in foreign currency exchanges rates.
Some of our distributors have limited international marketing experience.
There can be no assurance that these distributors will be able to market
successfully our products in foreign markets.
WE FACE INTENSE COMPETITION IN THE MEDICAL DIAGNOSTIC PRODUCTS MARKET AND
RAPID TECHNOLOGICAL ADVANCES BY COMPETITORS. Competition in our diagnostic
market is intense and we expect it to increase.
-15-
Within the United States, our competitors include a number of well-established
manufacturers of HIV tests using blood samples, plus at least one system for the
detection of HIV antibodies using oral fluid samples. Many of our competitors
have significantly greater financial, marketing and distribution resources than
we do. Our competitors may succeed in developing or marketing technologies and
products that are more effective than ours. These developments could render our
technologies or products obsolete or noncompetitive or otherwise have a material
adverse effect on us.
OUR ABILITY TO MARKET OUR PRODUCT DEPENDS UPON OBTAINING AND MAINTAINING
FDA AND FOREIGN REGULATORY APPROVALS. Numerous governmental authorities in the
United States and other countries regulate our products. The FDA regulates our
products under federal statutes and regulations related to pre-clinical and
clinical testing, manufacturing, labeling, distribution, sale and promotion of
medical devices in the United States.
If we fail to comply with FDA regulations, or if the FDA believes that we
are not in compliance with such regulations, the FDA can:
- detain or seize our products;
- issue a recall of our products;
- prohibit marketing and sales of our products; and
- assess civil and criminal penalties against us, our officers or our
employees.
We also plan to sell our products in certain foreign countries where they
may be subject to similar local regulatory requirements. The imposition of any
of the sanctions described above could have a material adverse effect on us.
The regulatory approval process in the United States and other countries is
expensive, lengthy and uncertain. We may not obtain necessary regulatory
approvals or clearances in a timely manner, if at all. We may lose previously
obtained approvals or clearances or fail to comply with regulatory requirements.
The occurrence of any of these events would have a material adverse effect on
Calypte.
Before we begin to manufacture our product at the Alameda facility, we must
obtain FDA approval for that facility. Delays in receiving the FDA's approval or
other difficulties which we encounter in scaling-up our manufacturing capacity
to meet demand could have a material adverse effect on us.
WE HAVE RECEIVED WARNING LETTERS FROM THE FDA REGARDING THE
SUFFICIENCY OF OUR MANUFACTURING RECORDS AND PRODUCTION PROCEDURES AND WE MUST
SATISFY THE FDA'S CONCERNS IN ORDER TO AVOID REGULATORY ACTION AGAINST US. In
November 1998, the Company received a Warning Letter from the FDA following an
inspection by the FDA of the Company's manufacturing facilities in Berkeley and
Alameda, California. On December 11, 1998, the Company responded in writing to
each of the deficiencies cited in the Warning Letter. The Company subsequently
received another letter from the FDA requesting further responses regarding
certain of the deficiencies. The Company responded to the subsequent letter on
June 1, 1999. The FDA conducted a follow-up inspection of the Berkeley and
Alameda facilities from September 28 through October 7, 1999, which resulted in
observations requiring corrective action or response from the Company. The
Company submitted its written responses to the FDA's inspection observations on
November 4, 1999. On March 21, 2000, the Company received a response from the
FDA requesting additional information. Company representatives met with and
provided information to FDA officials on April 27, 2000 and on May 5, 2000
responded in writing to requests for additional information. On June 6, 2000,
the Company received a response from the FDA indicating that the Company's
responses appear to be satisfactory and will be verified during a subsequent
inspection.
In May 1999, the Company received a Warning Letter from the FDA that
cited a number of significant observations related to its November 20 through
December 11, 1998 inspection of the Company's manufacturing plant in Rockville,
Maryland. On May 24, 1999, the Company responded in writing to each
-16-
of the deficiencies cited in the Warning Letter. On November 19, 1999, the
Company received a letter from the FDA stating that the Company's responses were
considered adequate, and the Warning Letter was formally closed. Between
November 30, and December 9, 1999, the FDA conducted a follow-up inspection of
the Rockville facility that resulted in observations requiring corrective
actions or response from the Company. On January 7, 2000, the Company responded
in writing to each of the FDA observations and is awaiting the FDA's reply. On
March 21, 2000, the Company received a response from the FDA requesting
additional information. Company representatives met with and provided
information to FDA officials on April 27, 2000 and on May 5, 2000 responded in
writing to requests for additional information. On June 6, 2000, the Company
received a response from the FDA indicating that the Company's responses appear
to be satisfactory and will be verified during a subsequent inspection.
Although the FDA indicates that it is currently satisfied with the Company's
responses to the items addressed in its inspections, if the FDA subsequently
determines that it is not satisfied with the Company's records, procedures or
corrective actions at either its Alameda or Rockville facilities, the FDA could
take regulatory actions against the Company, including license suspension,
revocation, and/or denial, seizure of products and/or injunction, and/or civil
penalties or criminal sanctions. Any such FDA action is likely to have a
material adverse effect upon the Company's ability to conduct operations. In
addition, failure of the Company to satisfy the FDA on these matters may
adversely affect receiving approval for manufacturing at the Alameda facility
and/or the Company's ability to export its products to certain international
markets.
AS A SMALL MANUFACTURER OF MEDICAL DIAGNOSTIC PRODUCTS, WE ARE EXPOSED TO
PRODUCT LIABILITY AND RECALL RISKS FOR WHICH INSURANCE COVERAGE IS EXPENSIVE,
LIMITED AND POTENTIALLY INADEQUATE. We manufacture medical diagnostic products,
which subjects us to risks of product liability claims or product recalls,
particularly in the event of false positive or false negative reports. A product
recall or a successful product liability claim or claims that exceed our
insurance coverage could have a material adverse effect on us. We maintain a
$10,000,000 claims made policy of product liability insurance. However, product
liability insurance is expensive. In the future we may not be able to obtain
coverage on acceptable terms, if at all. Moreover, our insurance coverage may
not adequately protect us from liability that we incur in connection with
clinical trials or sales of our products.
OUR CHARTER DOCUMENTS MAY INHIBIT A TAKEOVER. Certain provisions of our
Certificate of Incorporation and Bylaws could:
- discourage potential acquisition proposals;
- delay or prevent a change in control of Calypte;
- diminish stockholders' opportunities to participate in tender
offers for our common stock, including tender offers at prices
above the then current market price; or
- inhibit increases in the market price of our common stock that
could results from takeover attempts.
WE HAVE ADOPTED A SHAREHOLDER RIGHTS PLAN THAT HAS CERTAIN ANTI-TAKEOVER
EFFECTS. On December 15, 1998, the Board of Directors of Calypte declared a
dividend distribution of one preferred share purchase right ("Right") for each
outstanding share of Common Stock of the Company. The dividend was payable to
the stockholders of record on January 5, 1999 with respect to each share of
Common Stock
-17-
issued thereafter until a subsequent "distribution date" defined in a Rights
Agreement and, in certain circumstances, with respect to shares of Common Stock
issued after the Distribution Date.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired. However, the Rights should not interfere with
any tender offer, or merger, which is approved by the Company because the Rights
do not become exercisable in the event of an offer or other acquisition exempted
by Calypte's Board of Directors.
AN INVESTOR'S ABILITY TO TRADE OUR COMMON STOCK MAY BE LIMITED BY TRADING
VOLUME. The trading volume in our common shares has been relatively limited. A
consistently active trading market for our common stock may not develop.
WE MAY BE REMOVED FROM THE NASDAQ SMALLCAP MARKET IF WE FAIL TO MEET CERTAIN
MAINTENANCE CRITERIA. The Nasdaq Stock Market inquired on two occasions whether
we continue to meet the net capital surplus maintenance criterion for trading on
the Nasdaq SmallCap Market. We currently meet the maintenance criterion but our
ability to continue to do so will depend on whether we are able to maintain net
tangible assets of $2,000,000 and whether the minimum bid price for our common
stock exceeds $1.00 per share for at least ten consecutive business days during
any period of 120 consecutive business days. The public trading of our common
stock and the ability of our stockholders to sell their shares could be
significantly impaired if we fail to meet the maintenance criteria and are
removed from the Nasdaq SmallCap Market. In that case, our common stock would
trade on either the OTC bulletin board, a regional exchange or in the pink
sheets, which would likely result in an even more limited trading volume.
THE PRICE OF CALYPTE'S COMMON STOCK HAS BEEN HIGHLY VOLATILE DUE TO SEVERAL
FACTORS WHICH WILL CONTINUE TO AFFECT THE PRICE OF OUR STOCK. Our common stock
has traded as low as $1.28 per share and as high as $7.25 per share during the
first half of 2000. Some of the factors leading to the volatility include:
- price and volume fluctuations in the stock market at large
which do not relate to our operating performance;
- fluctuations in our operating results;
- announcements of technological innovations or new products
which we or our competitors make;
- FDA and international regulatory actions;
- availability of reimbursement for use of our products from
private health insurers, governmental health administration
authorities and other third- party payors;
- developments with respect to patents or proprietary rights;
- public concern as to the safety of products that we or others
develop;
- changes in health care policy in the United States or abroad;
and
-18-
- changes in stock market analysts' recommendations regarding
Calypte, other medical products companies or the medical
product industry generally.
CALYPTE AND THE PRICE OF CALYPTE SHARES MAY BE ADVERSELY EFFECTED BY THE
PUBLIC SALE OF A SIGNIFICANT NUMBER OF THE SHARES ELIGIBLE FOR FUTURE SALE. All
outstanding shares of our common stock are freely tradable. Sales of common
stock in the public market could materially adversely affect the market price of
our common stock. Such sales also may inhibit our ability to obtain future
equity or equity-related financing on acceptable terms.
OUR RESEARCH AND DEVELOPMENT OF HIV URINE TEST INVOLVES THE CONTROLLED USE
OF HAZARDOUS MATERIALS. There can be no assurance that our safety procedures for
handling and disposing of hazardous materials such as azide will comply with
applicable regulations. In addition, we cannot eliminate the risk of accidental
contamination or injury from these materials. We may be held liable for damages
from such an accident and that liability could have a material adverse effect on
us.
WE MAY NOT BE ABLE TO RETAIN OUR KEY EXECUTIVES AND RESEARCH AND DEVELOPMENT
PERSONNEL. As a small company with only 65 employees, our success depends on the
services of key employees in executive and research and development positions.
The loss of the services of one or more of such employees could have a material
adverse effect on us.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Since December 31, 1999, there have been no material changes in the Company's
market risk exposure.
-19-
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three years ended June 30, 2000, the Company completed four
private placements of shares of its Common Stock. See "Financing Activities" in
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section. The shares sold in each of the private placements were
exempt from registration with the Securities and Exchange Commission pursuant to
Rule 506 of Regulation D of the Securities Act of 1933 as amended ("Securities
Act"). Shares were sold only to accredited investors as defined in Rule 501 of
the Securities Act and were registered for resale by such investors on Forms S-3
filed on October 21, 1997, November 14, 1998, March 30, 1999, and March 13,
2000. The proceeds from each private placement have been used to finance
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Calypte's stockholders voted on five proposals at the Company's 2000
Annual Meeting of stockholders, which was held on June 13, 2000.
Proposal 1 was to re-elect all of the Company's directors to serve as
members of the Calypte Board of Directors until the 2001 annual meeting.
Proposal 2 was to amend the Company's Amended and Restated Certificate
of Incorporation to increase the number of authorized shares of the Company's
Common Stock from 30,000,000 to 50,000,000.
Proposal 3 was to adopt the 2000 Equity Incentive Plan as a replacement
for the Company's 1991 Stock Option Plan and to authorize 4,000,000 shares of
Common Stock to be issued under the terms of the plan.
Proposal 4 was to amend the 1995 Director Option Plan to (i) increase
by 500,000 the number of shares of Common Stock reserved for issuance under the
Plan; (ii) to remove the requirement that the number of shares in each option
granted to each newly-elected director be equal and that the number of shares in
each option granted to each re-elected director be equal; (iii) to provide that
if a non-employee director whose outstanding options have been assumed or
substituted pursuant to a merger or asset sale is removed from the Board of
Directors without cause within six months of such merger or asset sale, such
director's outstanding options shall become fully vested and exercisable; and
(iv) provide that if a non-employee director is designated for nomination to the
Board of Directors pursuant to an agreement between the Company and another
person or entity, options granted under the Director Option Plan may be granted
to such other person or entity or an affiliate of the same.
Proposal 5 was to ratify the appointment by the Board of Directors of
KPMG LLP as independent auditors to audit the financial statements of the
Company and its consolidated subsidiaries for the fiscal year ending December
31, 2000.
Each nominee for the Board of Directors was re-elected at the 2000
Annual Meeting. The
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following number of votes was cast for and against each nominee:
FOR AGAINST
--- --------
David E. Collins.......................................................................... 21,974,495 77,084
Nancy E. Katz............................................................................. 21,972,628 78,951
Howard B. Urnovitz, Ph.D.................................................................. 21,975,068 76,511
William A. Boeger......................................................................... 21,961,063 90,516
John J. DiPietro.......................................................................... 21,850,115 201,464
Paul Freiman.............................................................................. 21,974,428 77,151
Julius R. Krevans, M.D.................................................................... 21,972,603 78,976
Mark Novitch, M.D......................................................................... 21,973,703 77,876
Zafar Randawa, Ph.D....................................................................... 21,961,803 89,776
Claudie E. Williams....................................................................... 21,984,928 66,651
The stockholders also approved the four remaining proposals. The
following votes were tabulated:
BROKER
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
Proposal 2...................................................... 21,493,021 527,006 31,552 0
Proposal 3...................................................... 10,509,869 504,466 42,065 10,995,179
Proposal 4...................................................... 10,448,503 542,347 65,550 10,995,179
Proposal 5...................................................... 21,957,916 57,368 36,295 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 3.5* Certificate of Amendment of the Amended and
Restated Certificate of Incorporation of Calypte
Biomedical Corporation effective as of July 19, 2000.
Exhibit 10.3 1995 Director Option Plan, as amended June 13, 2000
Exhibit 10.69** Distribution Agreement between the Registrant and
American Edge Medical, dated as of May 1, 2000.
Exhibit 10.70** Distribution Agreement between the Registrant and
Biobras S. A., dated as of May 11, 2000.
Exhibit 10.71** Distribution Agreement between the Registrant and
Beijing Hua Ai Science and Technology Development Co.
Ltd, dated as of May 16, 2000.
Exhibit 10.72 Loan Modification Agreement between the Registrant and
Silicon Valley Bank,
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dated as of May 24, 2000.
Exhibit 10.73** Fourth Amendment to the License Agreement between the
Registrant and New York University, dated as of June
1, 2000.
Exhibit 10.74 2000 Equity Incentive Plan
Exhibit 10.75 Lease Extension Agreement between the Registrant and
Charles A. Grant and Mark Greenberg, dated June 26,
2000.
Exhibit 10.76 Secured Promissory Note between the Registrant and
Howard B. Urnovitz, dated June 30, 2000.
Exhibit 27 Financial Data Schedule
* Exhibit 3.5 attached hereto includes the Certificate of
Amendment to the Amended and Restated Certificate of Amendment
of Incorporation, filed July 19, 2000. The Company's Restated
Certificate of Incorporation filed July 31, 1996 is incorporated
by reference from exhibits filed with the Company's Registration
Statement on Form S-1 (File No. 333-0410) filed on May 20, 1996,
as amended to June 25, 1996, July 15, 1996, and July 26, 1996.
The Company's Form of Certificate of Designation, Preferences
and Rights of Series RP Preferred Stock is incorporated by
reference from exhibits filed with the Company's Report on Form
8-K dated December 15, 1998.
** Confidential treatment has been requested as to certain portions
of this exhibit
b. Reports on Form 8-K
None.
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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.
CALYPTE BIOMEDICAL CORPORATION
------------------------------
(Registrant)
Date: August 10, 2000 By: /s/ Nancy E. Katz
--------------------------------------
Nancy E. Katz
CHIEF EXECUTIVE OFFICER, PRESIDENT, CHIEF
FINANCIAL OFFICER
(Principal Accounting Officer)