1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-24128
BIO-PLEXUS, INC.
(Exact name of Registrant as specified in its Charter)
CONNECTICUT 06-1211921
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
384 Q MERROW ROAD, TOLLAND CONNECTICUT 06084
(Address of principal executive offices including zip code)
(203) 871-8601
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
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 .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Shares Outstanding as of July 31, 1996
Class A Common Stock, no par value 20,000
Common Stock, no par value 6,923,605
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BIO-PLEXUS, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet at June 30, 1996 and
December 31, 1995 1
Condensed Statement of Operations for the three months
ended June 30, 1996 and 1995 2
Condensed Statement of Operations for the six months
ended June 30, 1996 and 1995 and for the period from
inception (September 2, 1987) through June 30, 1996 3
Condensed Statement of Cash Flows for the six months
ended June 30, 1996 and 1995 and for the period from
inception (September 2, 1987) through June 30, 1996 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
EXHIBIT 11. COMPUTATION OF NET LOSS PER COMMON SHARE
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BIO-PLEXUS, INC.
(a development stage company)
CONDENSED BALANCE SHEET
JUNE 30,
1996 DECEMBER 31,
(UNAUDITED) 1995
ASSETS
Current assets:
Cash and cash equivalents $ 6,663,000 $ 11,842,000
Accounts receivable 307,000 138,000
Inventories
Raw materials 1,254,000 1,408,000
Work-in-process 136,000 150,000
Finished goods 445,000 1,071,000
------------ ------------
1,835,000 2,629,000
Other assets 264,000 228,000
Total current assets 9,069,000 14,837,000
------------ ------------
Fixed assets, net 8,380,000 8,262,000
Other assets:
Deferred debt financing expenses 205,000 260,000
Patents, net of amortization 36,000 30,000
------------ ------------
$ 17,690,000 $ 23,389,000
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt $ 1,720,000 $ 1,663,000
Accounts payable 766,000 685,000
Accrued interest payable 31,000 29,000
Accrued employee costs 382,000 443,000
------------ ------------
Total current liabilities 2,899,000 2,820,000
------------ ------------
CII debt, net 122,000 116,000
Other long-term debt, net 8,369,000 8,983,000
Accrued financing expense - CII debt 550,000 550,000
Redeemable Class A common stock 20,000 20,000
Redeemable common stock warrants 149,000 149,000
Shareholders' equity
Common stock, no par value, 10,000,000 authorized,
6,892,605 and 6,568,938 shares issued and
outstanding 45,978,000 45,481,000
Deficit accumulated during the development stage (40,397,000) (34,730,000)
------------ ------------
Total shareholders' equity 5,581,000 10,751,000
------------ ------------
$ 17,690,000 $ 23,389,000
============ ============
See notes to condensed financial statements.
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BIO-PLEXUS, INC
(a development stage company)
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
Three months Ended
June 30,
1996 1995
Revenue $ 730,000 $ 200,000
------------ ------------
Costs and expenses:
Research and development 405,000 415,000
Other operating and engineering costs 1,058,000 1,261,000
Marketing, general and administrative 1,831,000 1,558,000
------------ ------------
Total operating costs and expenses 3,294,000 3,234,000
------------ ------------
Financing expenses:
CII debt:
Interest expense 6,000 6,000
Amortization of deferred debt financing 27,000 27,000
Accretion of repurchase premium
Loss on settlement of accrued interest
Other interest expense 402,000 318,000
Less: interest income (106,000) (41,000)
------------ ------------
Total financing expenses 329,000 310,000
------------ ------------
Net loss $ (2,893,000) $ (3,344,000)
============ ============
Net loss per common share (Note 2) $ (0.42) $ (0.71)
============ ============
Weighted average common shares
outstanding (Note 2) 6,809,217 4,726,906
============ ============
See notes to condensed financial statements.
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BIO-PLEXUS, INC
(a development stage company)
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
FROM INCEPTION
SIX MONTHS ENDED (SEPTEMBER 2,
JUNE 30, 1987) THROUGH
JUNE 30,
1996 1995 1996
Revenue $ 1,183,000 $ 326,000 $ 2,391,000
------------ ------------ ------------
Costs and expenses:
Research and development 785,000 909,000 7,635,000
Other operating and engineering costs 2,000,000 2,750,000 12,850,000
Marketing, general and administrative 3,424,000 2,944,000 16,700,000
------------ ------------ ------------
Total operating costs and expenses 6,209,000 6,603,000 37,185,000
------------ ------------ ------------
Financing expenses:
CII debt:
Interest expense 13,000 11,000 454,000
Amortization of deferred debt financing 56,000 54,000 419,000
Accretion of repurchase premium 796,000
Loss on settlement of accrued interest 53,000
Other interest expense 816,000 609,000 3,786,000
Less: interest income (244,000) (116,000) (884,000)
------------ ------------ ------------
Total financing expenses 641,000 558,000 4,624,000
------------ ------------ ------------
Net loss before extraordinary item $ (5,667,000) $ (6,835,000) (39,418,000)
============ ============ ------------
Extraordinary item (Note 3):
Loss on extinguishment of debt, net
of income taxes of nil 979,000
------------
Net loss after extraordinary item $(40,397,000)
============
Net loss per common share (Note 2) $ (0.85) $ (1.45)
============ ============
Weighted average common shares
outstanding (Note 2) 6,693,000 4,725,871
============ ============
See notes to condensed financial statements.
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BIO-PLEXUS, INC.
(a development stage company)
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
FROM INCEPTION
(SEPTEMBER 2,
1987) THROUGH
SIX MONTHS ENDED JUNE 30, JUNE 30,
1996 1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,667,000) $ (6,835,000) $(40,397,000)
Adjustments to reconcile net loss to cash used
by operating activities:
Depreciation and amortization 600,000 444,000 2,507,000
Writedown of equipment to net realizable value 54,000
Loss on early extinguishment of debt 979,000
Warrants granted 118,000
Accretion of repurchase premium 796,000
Amortization of deferred debt financing
expenses 56,000 54,000 498,000
Amortization of debt discount 230,000 198,000 1,177,000
Settlement of accrued interest with common
stock 158,000
Decrease (increase) in inventories 794,000 (1,568,000) (1,835,000)
Increase in accounts payable 81,000 385,000 766,000
Increase (decrease) in accrued interest payable 2,000 (10,000) 31,000
(Decrease) increase in accrued employee costs (61,000) (18,000) 382,000
Other (206,000) 203,000 (268,000)
------------ ------------ ------------
Net cash used in operating activities (4,171,000) (7,147,000) (35,034,000)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases and construction of fixed assets (717,000) (1,401,000) (11,116,000)
Acquisition of land (425,000)
Purchases of short-term investments (8,295,000)
Proceeds from sales of short-term investments 2,795,000 8,295,000
Cost of patents (8,000) (60,000)
------------ ------------ ------------
Net cash (used in) provided by investing activities (725,000) 969,000 (11,176,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of convertible preferred stock 3,066,000
Net proceeds from sale of common stock 35,941,000
Proceeds from exercise of common stock warrants 345,000 584,000 929,000
Proceeds from exercise of common stock options 92,000 183,000
Proceeds from long-term debt 2,500,000 14,222,000
Net decrease in notes payable (450,000)
Proceeds from sale and leaseback 1,412,000 5,409,000
Purchase of common stock warrant (280,000)
Purchase of common stock (27,000)
Repayments of long-term debt (720,000) (377,000) (6,570,000)
Increase in deferred offering costs (186,000)
------------ ------------ ------------
Net cash (used in) provided by financing activities (283,000) 3,483,000 52,873,000
------------ ------------ ------------
Net (decrease) increase in cash and cash
equivalents (5,179,000) (2,695,000) 6,663,000
Cash and cash equivalents, beginning of
period 11,842,000 4,187,000
------------ ------------ ------------
Cash and cash equivalents, end of period $ 6,663,000 $ 1,492,000 $ 6,663,000
============ ============ ============
Supplemental cash flow disclosures:
Cash payments of interest $ 597,000 $ 500,000 $ 3,044,000
Cash payments of income taxes 15,000 15,000 45,000
Surrender of debt upon warrant exercise 60,000 -- 996,000
See notes to condensed financial statements.
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BIO-PLEXUS, INC.
(a development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The interim condensed financial statements included herein are
unaudited. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations and cash flows for the periods presented
have been included. The results of operations for the interim period is not
necessarily indicative of the results of operations to be expected for the full
year. Bio-Plexus, Inc. is considered a development stage company as defined in
Statement of Financial Accounting Standards No. 7. These financial statements
should be read in conjunction with the financial statements and the notes
included in the 1995 Annual Report to Shareholders of Bio-Plexus, Inc.
NOTE 2 - LOSS PER SHARE
Net loss per common share is determined based on the weighted average
number of common shares outstanding during the period. In determining weighted
average common shares outstanding, common share equivalents are excluded from
the computation as their effect is anti-dilutive.
NOTE 3 - EXTRAORDINARY ITEM
During the third quarter of 1995, the Company incurred a $979,000
charge relating to the early extinguishment of various debt. The extraordinary
charge was comprised of the following:
-The unamortized debt discount of $226,000 associated with the early
extinguishment of a 1993 CDA loan in the original principal amount of
$600,000.
-The unamortized debt discount and deferred financing costs of $705,000
associated with the early extinguishment of $4.0 million of private
placement notes sold to certain investors on August 4, 1995.
-The unamortized $48,000 associated with the early extinguishment on a
$1,000,000 line of credit which expired in September 1995 upon completion
of the Company's public offering.
NOTE 4 - COMMITMENTS
As of June 30, 1996, the Company had capital expenditure purchase
commitments outstanding of approximately $719,000.
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NOTE 5 - RELATED PARTY
On April 30, 1996, two principal officers exercised warrants previously
issued at an exercise price of $1.38 per share resulting in net proceeds to the
Company of $345,000.
NOTE 6 - SUBSEQUENT EVENTS
In July, the Company received proceeds of $840,000 as part of a new
$2,000,000 four-year sale-leaseback agreement with a lessor primarily to finance
the purchase of a new generation needle assembly and packaging system. Monthly
rent expense will equal 2.4997% of the equipment leased and is payable monthly
in advance. The Company has the option to purchase all but not less than all of
the leased equipment at the end of the lease term for the then current market
value of the equipment, which shall not be less than 15% or more than 20% of the
equipment cost. In consideration of the Lessor's agreement to execute the lease,
the Company will issue warrants to purchase common stock in an amount determined
as follows: the aggregate exercise prices of the warrants would be equal to 9.5%
of the $2,000,000 aggregate equipment cost. Each warrant would be for one share
and would be exercisable for 110% of the seven day moving average of the asking
stock price on Nasdaq at the time of issuance. The warrants would expire five
years from their date of issuance.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Bio-Plexus is a development stage company with limited sales of its
products, the Punctur-Guard(R) blood collection needle and needle holders. From
its inception in September 1987 through June 30, 1996, the Company recorded
revenues of $2,391,000 and incurred cumulative ongoing losses from operations
totaling $40,397,000. During the same period, the Company's principal focus has
been the design, development, testing and evaluation of the Punctur-Guard(R)
blood collection needle and the design and development of the molds, needle
assembly machines and production processes needed for manufacturing the
Punctur-Guard(R) blood collection needle and holders.
The Company is currently in the process of expanding its production
capacity with a new generation needle assembly and packaging system which has
been installed in its Vernon facility and is currently undergoing pre-production
testing. Production on the new machine is anticipated to commence in the third
quarter of 1996.
The Company has also continued its accelerated research and development
efforts on new products including a needle disposal container, a winged
intravenous set and an I.V. catheter, and on June 27, 1996 received its 510(k)
approval with the Food and Drug Administration for its winged intravenous set.
In March 1996, the Company filed its 510(k) notification with the Food and Drug
Administration for its needle disposal container and is currently awaiting
approval.
On June 3, 1996, the Company entered into an agreement with an Italian
company to market and sell the Company's blood collection needles and holders
throughout Italy. Pursuant to the agreement, the distributor purchased initial
inventory, agreed to make minimum purchases in the future,
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and agreed to maintain ample supplies of inventory. In return, the Company
agreed to fund certain initial marketing expenses to assist the distributor in
promoting the Company's products in Italy.
The Company anticipates continued sales growth during the second half
of 1996, but expects ongoing losses from operations to continue at least for the
balance of the year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Revenues increased to $730,000 for the three months ended June 30, 1996
compared to $200,000 for the same period a year ago. The increase in sales is
primarily the result of the expansion of the Company's marketing staff during
1995 which generated new customers, and from the addition of a major new account
in early 1996, as well as the sale of blood collection needles and holders to an
Italian distributor in June 1996.
Research and development expenses were $405,000 during the second
quarter of 1996, compared to $415,000 for the three months ended June 30, 1995.
These costs reflect the Company's continuing focus on improving and expanding
production processes and tooling, as well as its ongoing efforts to develop new
products.
Other operating and engineering costs declined from $1,261,000 for the
three months ended June 30, 1995 to $1,058,000 for the second quarter of 1996
primarily as a result of a reduction in the Company's production workforce which
occurred in late summer of 1995.
Marketing, general and administrative expenses were $1,831,000 for the
three months ended June 30, 1996 compared to $1,558,000 for the same period a
year ago. The increase is primarily attributable to the Company's increased
marketing activities and the expansion of its salesforce during 1995.
Financing expenses were $329,000 for the second quarter of 1996
compared to $310,000 for the three months ended June 30, 1995. Financing
expenses include interest expense and amortization of deferred debt financing
expenses, less interest income. The overall increase in financing expenses for
the period resulted primarily from an increase in other interest expense which
rose from $318,000 for the three months ended June 30, 1995 to $402,000 in the
second quarter of 1996. This increase is primarily due to higher outstanding
balances on the Company's equipment lease financing arrangements and a full
period of expense on a term loan with the Connecticut Development Authority
which was originated in March 1995. During this period, interest income
increased as a result of investment earnings from the proceeds of the Company's
1995 public offering.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Revenue increased to $1,183,000 for the six months ended June 30, 1996
compared to $326,000 for the same period a year ago. The increase in sales is
primarily the result of the expansion of the Company's marketing staff during
1995 which generated new customers, and from the addition of a major new account
in early 1996, as well as the sale of blood collection needles and holders to an
Italian distributor in June 1996.
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Research and development expenses were $785,000 for the six months
ended June 30, 1996 compared to $909,000 for the six months ended June 30 ,1995.
The Company's efforts in each of these periods were primarily focused on
improving the design and continuing development of the production processes for
the Punctur-Guard(R) blood collection needle, and, during the six months ended
June 30, 1996, the development of new products.
Other operating and engineering costs were $2,000,000 for the six
months ended June 30,1996 compared to $2,750,000 for the six months ended June
30, 1995. The decrease in these costs primarily reflect a reduction in the
Company's production workforce which occurred in late summer of 1995.
Marketing, general and administrative expenses were $3,424,000 for the
six months ended June 30, 1996, compared to $2,944,000 for the six months ended
June 30, 1995. These increases resulted primarily from the expansion of the
Company's direct sales force and increased marketing activities.
Financing expenses were $641,000 for the six months ended June 30, 1996
compared with $558,000 for the six months ended June 30, 1995. Financing
expenses include interest expense, and amortization of deferred debt financing
expenses, less interest income.
Other interest expense increased from $609,000 for the six months ended
June 30, 1995 to $816,000 for the same period in 1996 as a result of higher
outstanding balances under equipment financing arrangements and a full period of
expense on a term loan with the Connecticut Development Authority which was
originated in March 1995. During this period, interest income increased by
$128,000 as a result of investment earnings from the proceeds of the Company's
1995 public offering.
LIQUIDITY AND CAPITAL RESOURCES
The Company's need for funds has increased from period to period as it
has continued its research and development activities surrounding the
Punctur-Guard(R) blood collection needle and its production processes, increased
its capital expenditures on molds and production equipment, expanded sales staff
and commenced commercial production of the blood collection needle. To date, the
Company has financed its operations primarily through borrowings and the sale of
equity securities.
Through June 30, 1996, the Company has received net proceeds of
approximately $21,912,000 through borrowings and the sale of debt securities and
$40,119,000 through the sale of equity securities. Of the net equity proceeds,
$17,575,000 was raised in the Company's 1995 public offering, $14,191,000 was
raised in the Company's initial public offering and the balance of $8,353,000
was raised through the private placement of equity securities.
As of June 30, 1996 the Company's principal source of liquidity was
cash totaling $6,663,000, and accounts receivable of $307,000.
The Company's primary cash requirement for the remainder of 1996 will
be for working capital to sustain ongoing operations including debt service, and
to continue its research and development efforts to improve and increase
manufacturing capacity and capabilities and reduce manufacturing costs. The
Company also anticipates additional capital expenditures for molds and equipment
both for its blood collection needle program as well as new products, including
further research and development on its winged intravenous set and I.V.
catheter. The Company is currently expanding its manufacturing
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capacity through the purchase of additional production equipment at a cost of
approximately $2,100,000, against which approximately $1,400,000 had already
been paid at June 30, 1996. The Company is considering the development of a
strategic partnership with another company to assist with the development and
expansion of its product line, and in particular with the I.V. catheter. Its
overall strategy is to minimize expenditures on new product research and
development, as well as production capacity for new products until such time as
either additional financing is secured or until it determines that a strategic
partnership is feasible. Based on the above, the Company believes that the
remaining balance of the net proceeds from its 1995 public offering, which at
June 30,1996 totaled approximately $6,700,000, together with funds generated
from increasing sales of its products and additional equipment lease financing
will be sufficient to meet its ongoing cash requirements and planned
expenditures for the blood collection needle program through 1996. These
estimated capital requirements do not include significant expenditures in new
product areas, and amounts needed could vary based on the actual growth of sales
and the level of additional investment and time required to further increase
manufacturing capacity and capabilities, and reduce manufacturing costs. In
addition to considering a strategic partnership, the Company is reviewing
alternative financing strategies that would allow it to accelerate development
of its new products and to develop the equipment and production molds needed for
the new products in order to achieve commercial levels of production. Failure to
raise needed capital would likely have an adverse effect on the Company's
operations, development plans and cash flows. In such case, the Company would
expect to reduce costs and expenses, in turn slowing the Company's planned rate
of expansion.
In July, the Company received proceeds of $840,000 as part of a new
$2,000,000 lease financing commitment, and also received a preliminary
commitment for an additional $1,000,000 in equipment lease financing for planned
capital expenditures during the second half of the year.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit 11 - Computation of Net Loss Per
Common Share
Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended June
30, 1996.
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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.
Bio-Plexus, Inc.
(Registrant)
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(Date) Ronald A. Haverl
Chairman of the Board, Chief
Executive Officer, and Treasurer
(Principal Executive, Financing
and Accounting Officer)
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