FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] Quarterly Report Per Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the 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_________________.
Commission File Number 0-9860
BIOSEARCH MEDICAL PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2090421
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
35 Industrial Parkway, Somerville, New Jersey 08876-1276
- --------------------------------------------- -----------------
(Address of principal executive offices) (Zip Code + 4)
Registrant's telephone number, including area code: (908) 722-5000
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuers classes of
Common Stock, as of the close of the period covered by this report.
Class Outstanding at
June 30, 1996
Common Stock,
without par value 2,202,858
BIOSEARCH MEDICAL PRODUCTS, INC.
INDEX TO FORM 10-Q SB
JUNE 30, 1996
Page No.
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Part I - FINANCIAL INFORMATION
Condensed Balance Sheet at June 30, 1996 (unaudited)
and December 31, 1995. ....................................... 3 - 4
Condensed Statements of Operations (unaudited)
for the three month periods and six month periods ended
June 30, 1996 and June 30, 1995. ............................. 5
Condensed Statements of Cash Flows (unaudited)
for the three month periods and six month periods ended
June 30, 1996 and June 30, 1995. ............................. 6
Notes to (unaudited) Condensed
Financial Statements. ........................................ 7 - 8
Management's Discussion and Analysis of the Financial
Condition and the Results of Operations. ..................... 9 - 10
Part II - OTHER INFORMATION
Signatures. .................................................. 11
2
Part I
ITEM I - FINANCIAL STATEMENTS
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
ASSETS
June 30 December 31
1996 1995(1)
Unaudited
Current assets:
Cash and cash equivalents ................ $ 191,219 $ 568,092
Trade receivables ........................ 220,708 162,500
Inventories (note 2) ..................... 444,079 616,091
Other assets ............................. 54,729 17,551
---------- ----------
Total current assets ..................... 910,735 1,364,234
Property, plant and equipment, (net) ....... 1,433,188 1,370,487
Other assets ............................... 463,156 729,153
---------- ----------
Total assets ...................... $2,807,079 $3,463,874
========== ==========
- ------------
(1) - Derived from audited financial statements.
(continued)
3
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED BALANCE SHEETS
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30 December 31
1996 1995(1)
Unaudited
Current liabilities:
Current maturities of L/T debt (note 3) ....... $ 32,648 $ 32,648
Customer deposit .............................. -- --
Accounts payable .............................. 219,763 163,534
Accrued liabilities ........................... 63,063 188,328
---------- -----------
Total current liabilities ..................... 315,474 384,510
Long-term debt (note 3) ......................... 683,517 699,522
---------- -----------
Total liabilities ............................. 998,991 1,084,032
--------- ----------
Shareholders' equity:
Common stock, no par value; 5,000,000
shares authorized; issued 2,202,858
at June 30, 1996, and at December 31, 1995 .. 11,129,948 11,129,948
Accumulated deficit ........................... (9,290,545) (8,718,791)
Treasury stock, at cost; 7,940 shares
at June 30, 1996 and at December 31, 1995 ... (31,315) (31,315)
----------- ------------
Total shareholders' equity .................... 1,808,088 2,379,842
----------- -----------
$ 2,087,079 $ 3,463,874
=========== ===========
- ----------------
(1) - Derived from audited financial statements.
See accompanying notes to unaudited
condensed financial statements.
4
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
Unaudited
Three Months Ended Six Months Ended
June 30 June 30
-------------------------- ----------------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
Revenues, net .......................... $ 775,254 $ 974,387 $1,367,940 $2,185,491
Cost of goods sold ..................... 729,542 835,381 1,286,229 1,877,182
--------- --------- ---------- ----------
Gross profit ........................... 45,712 139,006 81,711 308,309
Selling, general and
administrative costs ................. 321,631 325,657 619,249 687,386
--------- --------- ---------- ----------
Operating loss ......................... (275,919) (186,651) (537,538) (379,077)
Other income/(expense):
Interest expense ..................... (17,996) (6,277) (34,954) (13,578)
Other, net ........................... 830 8,749 738 20,097
(17,166) 2,472 (34,216) 6,519
---------- --------- ---------- ---------
Pre-tax net income/(loss) .............. (293,085) (184,179) (571,754) (372,558)
Federal income taxes
Net income ............................. $(293,085) $(184,179) $ (571,754) $(372,558)
========= ========= ========== =========
Net income per common share ............ $ (.13) $ (.08) $ (.26) $ (.17)
========== ========= ========== =========
Weighted average number
of common shares ..................... 2,202,858 2,202,753 2,202,858 2,202,753
========== ========= ========= =========
See accompanying notes to
unaudited condensed financial statements
5
BIOSEARCH MEDICAL PRODUCTS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
Increase/(Decrease) in Cash and Cash Equivalents
Three Months Ended Six Months Ended
June 30 June 30
----------------------- -----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $(293,085) $(184,178) $(571,754) $(372,558)
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 20,550 29,412 41,100 58,824
--------- --------- --------- ---------
Sub total 20,550 29,412 41,100 58,824
--------- --------- --------- ---------
CHANGES IN ASSETS AND LIABILITIES:
(Increase)/decrease in accts receivable 182,480 220,587 (58,208) 322,185
Decrease/(increase) in inventory 88,422 61,874 172,012 35,503
Decr/(incr) in other current assets (10,734) 1,271 (37,178) (9,466)
Increase in other assets 110,322 540,818 265,997 514,344
(Decrease)/increase in accounts payable 1,046 (51,256) 56,658 (13,965)
Decrease in other liabilities
and customer deposits (17,781) (8,338) (125,694) (16,971)
--------- --------- --------- ---------
Sub total 353,755 794,956 273,587 831,630
--------- --------- --------- ---------
Total adjustments 374,305 794,368 314,687 890,454
--------- --------- --------- ---------
Net cash used in operating activities 81,220 610,190 (257,067) 517,896
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (59,124) (6,850) (103,801) (18,006)
Net cash provided by investing activities (59,124) (6,950) (103,801) (18,006)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term borrowings (8,481) (7,524) (16,005) (14,203)
--------- --------- --------- ---------
Net cash used in financing activities (8,481) (7,524) (16,005) (14,203)
--------- --------- --------- ---------
Net increase/(decrease) in cash & cash equivalents 13,615 595,716 (376,873) 485,687
Cash & cash equivalents at beginning of period 177,604 356,803 568,092 466,832
--------- --------- --------- ---------
Cash & cash equivalents at end of period $ 191,219 $ 952,519 $ 191,219 $ 952,519
========= ========= ========= =========
See accompanying notes to
unaudited condensed financial statements
6
BIOSEARCH MEDICAL PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Unaudited
1. BASIS OF PRESENTATION
The accounting policies followed by the Company are set forth in Note 1 of
Notes to Condensed Financial Statements in the 1995 Annual Report on Form
10-KSB.
In the opinion of the management of the Company, the accompanying condensed
financial statements contain only normal and recurring adjustments necessary for
the fair presentation of the Company's financial position as of June 30, 1996
and the results of operations for the three month periods and six month periods
ended June 30, 1996 and June 30, 1995 and the statement of cash flows for the
three month periods and six month periods ended June 30, 1996 and June 30, 1995.
The results of operations for the three month periods and six month periods
ended June 30, 1996 are not necessarily indicative of the results to be expected
for a succeeding quarter or for the full year.
2. INVENTORIES
June 30, 1996 December 31, 1995
Unaudited
Finished Goods $ 27,961 $ 64,102
Work In Process 161,832 243,751
Raw Materials 254,286 308,238
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$ 444,079 $ 616,091
=========== ===========
7
BIOSEARCH MEDICAL PRODUCTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Unaudited
3. LONG-TERM DEBT
June 30, 1996 December 31, 1995
Unaudited
Note payable - bank (a) 716,165 732,170
Less current maturities 32,648 32,648
---------- ----------
Long-term debt $ 683,517 $ 699,522
========== ==========
(a) This note is secured by a first mortgage on the Company's Somerville,
New Jersey facility and miscellaneous equipment, and represents Economic
Development Authority ("EDA") funds. The note bears an interest rate of 75% of
prime with a minimum interest rate of 11.25% and a maximum interest rate of
22.5%. The principal is payable in varying monthly installments of principal and
interest, with the final payment April 1, 2007.
4. COMMITMENTS AND CONTINGENCIES
There are no claims or actions against the Company which will materially
effect its financial statements.
8
BIOSEARCH MEDICAL PRODUCTS, INC.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues were $775,254 for the three months ended June 30, 1996, down
$199,133 or 20.4% compared to revenues of $974,387 for the prior year three
month period. However, revenues for the six months ended June 30, 1996 were
$1,367,940,down $817,551 or 37.4% compared to last year's $2,185,491.
Gross profit for the second quarter 1996 was down $93,294 or 67.1% from
$139,006 or 14.3% of sales, for the same period in 1995. Six month figures
reflect the same trend, gross profit being down $226,598 or 73.5% from $308,309
or 14.1% of sales to $81,711 or 6.0% of sales. The reduction in gross profit is
due primarily to the lower overall sales attained in 1996 versus the total sales
volume for 1995.
The operating loss for the second quarter 1996 was $293,085 or 37.8% of
sales. This represents an increased loss of $108,906 or 59.1% compared to the
1995 loss of $184,179 or 18.9% of sales during the same period last year. Year
to date 1996, the operating loss is $571,754 or 41.8% of sales against a loss of
$372,558 or 17.0% of sales for 1995. These losses are largely due to the
decrease in sales volumes in 1996 versus 1995.
9
BIOSEARCH MEDICAL PRODUCTS, INC.
Item 2. Management Discussion and Analysis of the Financial Condition
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities generated $81,220 for the second quarter
1996, however year to date 1996, it used $257,087. Investing activities used
$59,124 and $103,801, while financing activities used $8,481 and $16,005 for the
same periods. The overall cash flow decreased by $376,873 for the six months
ended June 30, 1996.
For the three month period ended June 30, 1996 the Company generated
$81,220 from operating activities. This is due primarily to a good month of cash
collections on accounts receivable which generated $182,480 and the final escrow
payment from the Sherwood agreement during May, which generated $110,322. All
other assets and liabilities used $211,582 in cash.
Management believes that the Company's financial condition at June 30, 1996
represents an adequate base to conduct current operations. However, the basis
for long term requirements are unknown. At the present time the Company has no
available line of credit.
The Company's marketing emphasis has been to refocus on the manufacturing
and selling of the endoscopic product line through its developing dealer
network. The Company expects to receive ISO9000 certification in the third
quarter of 1996. This certification will open the European market to its
products and allow it to build additional relationships with other large medical
products companies, who for whatever reason, have not received their
certification and wish to sell their products in Europe.
10
PART II - OTHER INFORMATION
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.
BIOSEARCH MEDICAL PRODUCTS, INC.
Dated: August 11, 1996 /s/ MANFRED F. DYCK
---------------------------------
Manfred F. Dyck
President and Principal
Executive Officer and
Director
Dated: August 11, 1996 /s/ ROBERT C. KELLER
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Robert C. Keller
Treasurer
Chief Financial and
Accounting Officer
11