-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VCiU0tX6Kw7gZ18VAKAjoubnr58gbKUeeIuAaARXwMWXYeVrNyRXvh373U+JW4i8 whn2hdgNtLcCt0+8gzZ3BQ== 0000891020-97-001467.txt : 19971117 0000891020-97-001467.hdr.sgml : 19971117 ACCESSION NUMBER: 0000891020-97-001467 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AFEM MEDICAL CORP CENTRAL INDEX KEY: 0000820608 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 330202574 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-17119 FILM NUMBER: 97719385 BUSINESS ADDRESS: STREET 1: 10180 SW NIMBUS AVE STE J 5 CITY: PORTLAND STATE: OR ZIP: 97223-4340 BUSINESS PHONE: 5039688800 MAIL ADDRESS: STREET 1: 10180 SW NIMBUS AVE STREET 2: SUITE J-5 CITY: PORTLAND STATE: OR ZIP: 97223 FORMER COMPANY: FORMER CONFORMED NAME: XTRAMEDICS INC /NV/ DATE OF NAME CHANGE: 19920703 10QSB 1 FORM 10-QSB FOR PERIOD ENDED SEPTEMBER 30, 1997 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB X Quarterly Report pursuant to Section 13 or 15(d) --- of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1997 Transition Report Under Section 13 or 15(d) of the --- Securities Exchange Act of 1934 For the transition period from To ----- ----- Commission File Number: 0-17119 --------- A-Fem Medical Corporation ----------------------------------------------------------------- (exact name of small business issuer as specified in its charter) Nevada 33-0202574 ------------------------------- ------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 10180 SW Nimbus Ave., Suite J5 Portland, OR 97223 ---------------------------------------- (Address of principal executive offices) (503)968-8800 --------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- As of November 7, 1997, the issuer had outstanding 12,798,694 shares of its $.01 par value Common Stock. Transitional Small Business Disclosure Format: (Check one) Yes No X ----- ----- 2 PART I - FINANCIAL INFORMATION See "Basis of Presentation." ITEM 1. FINANCIAL STATEMENTS A-Fem Medical Corporation BALANCE SHEETS as of September 30 (unaudited)
1997 1996 ------------ ----------- ASSETS CURRENT ASSETS: Cash and Cash Equivalents $ 1,878,612 $ 329,599 Restricted Cash 79,715 -- Accounts Receivable, trade 24,554 36,740 Inventory 101,828 356,531 Prepaids and Other 205,305 181,188 ------------ ----------- Total Current Assets 2,290,014 904,058 EQUIPMENT, FURNITURE and LEASEHOLDS, at cost 1,067,452 788,253 Less: Accumulated Depreciation (338,768) (207,581) ------------ ----------- 728,684 580,672 PATENTS and LICENSES, net 57,889 45,764 LOANS RECEIVABLE - Officers and Directors 57,840 171,948 ============ =========== Total Assets $ 3,134,427 $ 1,702,442 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable $ 269,360 186,209 Current Portion of Capital Lease Obligation 208,913 130,767 Accrued Expenses 25,259 21,150 Accrued Salaries and Related Liabilities 156,736 6,144 ------------ ----------- Total Current Liabilities 660,268 344,270 Long-Term Portion of Capital Lease Obligation 203,532 129,098 ------------ ----------- Total Liabilities 863,800 473,368 STOCKHOLDERS' EQUITY Common Stock, $0.01 par value, authorized 33,000,000 Shares; 12,593,694 and 9,458,597 shares issued and outstanding at September 30, 1997 and September 30, 1996 125,936 94,586 Additional Paid-in Capital 12,215,760 9,337,254 Accumulated (Deficit) Earnings (10,071,069) (8,202,766) ------------ ----------- Total Stockholders' Equity 2,270,627 1,229,074 ============ =========== Total Liabilities and Stockholders' Equity $ 3,134,427 $ 1,702,442 ============ ===========
The accompanying notes are an integral part of these balance sheets. PAGE 2 3 A-Fem Medical Corporation STATEMENTS OF OPERATIONS (unaudited)
For the three months ended For the nine months ended September 30 September 30 ------------------------ -------------------------- 1997 1996 1997 1996 ---------- --------- ---------- ----------- Sales, net $ 2,374 $ 33,645 $ 33,474 $ 189,446 Cost of Sales 71,407 16,754 413,855 71,449 ---------- --------- ---------- ----------- Gross Margin (69,033) 16,891 (380,381) 117,997 Operating Expenses: General and Administrative 694,532 734,613 1,982,930 2,918,363 ---------- --------- ---------- ----------- Net Operating Loss (763,565) (717,722) (2,363,311) (2,800,366) Other Income 16,975 -- 2,027,756 -- ---------- --------- ---------- ----------- Net Loss $ (746,590) $(717,722) $(335,555) $(2,800,366) ========== ========= ========== =========== Net Loss Per Share ($0.06) ($0.08) ($0.03) ($0.31) ========== ========= ========== =========== Weighted Average Shares Outstanding 12,345,115 9,198,742 11,325,314 9,035,089 ========== ========= ========== ===========
The accompanying notes are an integral part of these statements. PAGE 3 4 A-Fem Medical Corporation STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash (unaudited)
For the three months For the nine months ended September 30 ended September 30 ------------------------- -------------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ----------- Cash Flows From Operating Activities: Net Loss $ (746,590) $ (717,722) $ (335,555) $(2,800,366) Adjustments to reconcile net loss to net cash Used in operating activities: Depreciation and amortization 34,747 41,560 101,831 118,620 Loss on disposal of assets (654) -- 351 -- Changes in working capital: Restricted cash 26,856 -- 79,660 -- Accounts receivable 2,056 (28,289) 6,218 (34,675) Inventory (61,097) 31,785 88,990 (196,911) Prepaid expenses and other 85,500 101,167 (78,362) 77,302 Accounts payable (31,355) 45,975 179,888 (10,338) Accrued salaries and related liabilities (22,471) (11,641) (135,757) (9,576) Accrued expenses 5,982 4,950 (30,962) (48,850) ---------- ---------- ---------- ----------- Net cash used in operating activities (707,026) (532,215) (123,698) (2,904,794) Cash Flows From Investing Activities: Purchases of equipment, furniture and leaseholds (74,409) (615) (212,294) (243,974) Net proceeds from sale of equipment 50 -- 1,650 -- Acquisition of licensing rights -- -- -- (33,000) ---------- ---------- ---------- ----------- Net cash used in investing activities (74,359) (615) (210,644) (276,974) Cash Flows From Financing Activities: Additions to notes receivable, net of repayments (871) (51,729) 66,253 (55,188) Net proceeds from long-term lease obligations, net of repayments (28,880) (47,687) 38,400 259,864 Proceeds from sale of Common Stock, exercise of options and warrants 171,857 827,750 1,436,806 842,650 ---------- ---------- ---------- ----------- Net cash provided by financing activities 142,106 728,334 1,541,459 1,047,326 Net Increase (Decrease) in Cash and Cash Equivalents (639,279) 195,504 1,207,117 (2,134,442) Cash and Cash Equivalents, beginning of period 2,517,891 134,095 671,495 2,464,041 ---------- ---------- ---------- ----------- Cash and Cash Equivalents, end of period $1,878,612 $ 329,599 $1,878,612 $ 329,599 ========== ========== ========== ===========
The accompanying notes are an integral part of these statements. PAGE 4 5 A-Fem Medical Corporation NOTES TO FINANCIAL STATEMENTS September 30, 1997 1. ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES The Company A-Fem Medical Corporation ("A-Fem" or the "Company") is a product development company dedicated to women's healthcare. A-Fem has developed two core technologies, one related to feminine protection and the other related to diagnostic products. Each of these core technologies has a variety of product applications that the Company is developing for the short and long-term. The Company's feminine protection product is an interlabial pad. It is the first generation of a product which is intended to create an entirely new segment within the feminine protection category. The Company is developing its proprietary RapidoSense(TM) diagnostic technology which enables the visual quantification of a desired substance (such as tumor markers) in any desired biological sample (i.e. blood, urine or saliva). Basis of Presentation The interim financial data are unaudited; however, in the opinion of management, the interim data include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. Operating results for the periods presented are not necessarily indicative of future results. These financial statements should be read in conjunction with the financial statements and notes to financial statements included in the Company's annual report on Form 10-KSB for the year ended December 31, 1996. Per Share Data The net loss per share was computed by dividing the net loss by the weighted average number of shares and dilutive common stock equivalents of the Company outstanding during the periods. Warrants and options outstanding are not included as the effect would be anti-dilutive. 2. COMMON STOCK OPTIONS AND WARRANTS Under the provisions of its 1994 Incentive and Non-Qualified Stock Option Plan, as amended July 1997 (the "Plan"), the Company has reserved 3,300,000 shares of its common stock for issuance under qualified options, non-qualified options, stock appreciation rights, and other awards as set forth in the Plan. The Plan provides for administration by a committee comprised of not less than two non-employee members of the Company's Board of Directors. Such committee (or the Board of Directors in its absence) determines the number of shares, option price, duration and other terms of the options granted under the Plan. Incentive stock options may only be awarded to employees of the Company. Non-qualified options are available for issuance to consultants, advisors and others having a relationship with the Company, on terms determined by the committee. PAGE 5 6 As of September 30, 1997, options for a total of 2,631,775 shares of Common Stock have been awarded, options for 1,247,780 shares have been exercised, and options for 1,383,995 shares are outstanding. Of the options awarded and outstanding, options for 1,171,245 shares are incentive stock options, and options for 212,750 are non-qualified stock options. There were options to purchase 32,728 shares granted, options to purchase 557,140 shares exercised and options to purchase 154,581 shares surrendered during the quarter ended September 30, 1997. The following table summarizes outstanding options to purchase shares of the Company's common stock as of September 30, 1997: QUALIFIED STOCK OPTIONS
Titles of Securities Weighted Average Issuable: Common Stock Shares Under Option Exercise Price Per Share - ------------------------------------------ ----------------------- ------------------------- Number exercisable at September 30, 1997: 561,784 $3.09 Number exercisable thereafter: 609,461 $3.35
NON-QUALIFIED STOCK OPTIONS
Titles of Securities Weighted Average Issuable: Common Stock Shares Under Option Exercise Price Per Share - ------------------------------------------ ------------------------ ------------------------ Number exercisable at September 30, 1997: 110,250 $2.98 Number exercisable thereafter: 102,500 $2.76
As of September 30, 1997, warrants to purchase an aggregate of 2,691,416 shares were outstanding. There were no warrants granted, warrants to purchase 105,000 shares exercised, and no warrants surrendered during the quarter ended September 30, 1997. The following table summarizes warrants outstanding for the purchase of shares of the Company's Common Stock as of September 30, 1997: WARRANTS
Titles of Securities Shares Subject Weighted Average Issuable: Common Stock to Warrants Exercise Price Per Share - ------------------------------------------ ------------------------ ------------------------ Number exercisable at September 30, 1997: 2,691,416 $2.26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION The Company is a product development company dedicated to women's healthcare. The Company has two core technologies, one related to feminine protection, the other related to diagnostic products. The Company has not had material revenues from operations. At its current stage of operations, the Company's financial position and operating results may be materially affected by a number of factors, including the availability of additional capital, competition and technological change. PAGE 6 7 Results of Operations In the first half of 1997, the Company has focused its efforts on plans for its marketing roll-out of the interlabial pad, which is scheduled for early 1998. During the quarter ended September 30, 1997, the Company has begun implementing its marketing plan by establishing a sales force, securing warehousing, aligning production scheduling. There have been no material net operating revenues to date, nor does the Company expect to have any material net operating revenues during the remainder of 1997. Other income was approximately $2,027,756 in the nine months ended September 30, 1997, due primarily to a license of certain technology to The Procter & Gamble Company in May 1997. There was no other income in the comparable periods in 1996. For the quarter ended September 30, 1997, the Company's net loss increased $28,868, or 4.0%, to $746,590 compared to $717,722 during the same period in the prior year. This increase in net loss is attributed to the marketing and sales preparation for the interlabial pad marketing roll-out. For the nine month period ended September 30, 1997, the Company's net loss declined $2,464,811, or 88.0%, to $335,555 from $2,800,366 for the same period in the prior year. The year-to-date loss for 1997 in comparison with the loss during 1996 for the same period is impacted by the $2 million received from Procter and Gamble for the rights to certain licenses and technologies. Higher revenues in 1996 were principally associated with non-recurring sales in China. The Company reduced operating expenses by $40,081 and $935,433 in the three and nine months periods ended September 30, 1997, respectively, from comparable periods of the prior year. The reduction of expenses was attributable to the reduction in external consultants and elimination of marketing expenses related to the test market in Florida. The Company expects operating expenses to increase significantly during the last quarter of 1997 and beyond, as the Company commences the marketing roll-out of its interlabial pad. Liquidity and Capital Resources As of September 30, 1997, the Company had cash and cash equivalents of $1,878,612 and working capital of $1,629,746. The Company's net cash position was reduced by $639,279 between June 30 and September 30 as a result of the Company's preparation for the marketing roll-out of its interlabial pad in early 1998. The Company expects to continue to incur losses each month during the remainder of 1997 and through 1998, as the costs of marketing during the roll-out of its interlabial pad will continue to exceed income from product sales. In order to carry out its marketing plan for its interlabial pad, the Company estimates that it will need to raise substantial capital over the next two years. The Company does not expect significant amounts of debt financing to be available to it in the near term and expects that it will have to issue additional equity to meet its financing needs. The Company may not be able to secure investment on terms favorable to the Company, or at all. Inability of the Company to obtain financing will adversely affect the Company. Certain statements in this Form 10-QSB contain "forward-looking" information (as defined in Section 27A of the Securities Act of 1993, as amended) that involve risks and uncertainties which could cause actual results to differ materially from those predicted in the forward looking statements. Such risks and uncertainties include, PAGE 7 8 but are not limited to: the effect of economic conditions generally and within the women's healthcare industry, lack of revenues from products, uncertainty associated with product development, continuing operating losses, results of financing efforts, availability and cost of raw materials and labor, potential need for additional capital equipment, market acceptance risks, risks of international business, the impact of competitive products and pricing and the additional factors listed from time to time in the Company's SEC reports, including but not limited to, the Company's report on Form 10-KSB for the fiscal year ended December 31, 1996. PAGE 8 9 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 3.1(1) Articles of incorporation, as amended 3.2(1) Bylaws, as amended 4.1(1) Stock Purchase Agreement between the Company and certain investors dated December 6, 1996. 11.1 Statement Re: computation of per share earnings 27.1 Financial Data Schedule (1) Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1997. b) Reports on Form 8-K None. PAGE 9 10 SIGNATURES In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. A-Fem Medical Corporation Date: November 13, 1997 S/J. PETER BURKE --------------------------------- J. Peter Burke President, Chief Operating Officer and Chief Financial Officer (authorized officer and principle financial and chief accounting officer) PAGE 10 11 EXHIBIT INDEX Exhibits 3.1(1) Articles of incorporation, as amended 3.2(1) Bylaws, as amended 4.1(1) Stock Purchase Agreement between the Company and certain investors dated December 6, 1996. 11.1 Statement Re: computation of per share earnings 27.1 Financial Data Schedule (1) Incorporated by reference to the exhibits to the Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1997. EX-11.1 2 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11.1 A-FEM MEDICAL CORPORATION CALCULATIONS OF NET INCOME PER SHARE
For the three months ended For the nine months ended September 30 September 30 -------------------------- --------------------------- 1997 1996 1997 1996 ---------- --------- ---------- ----------- Actual weighted average shares outstanding for the period 12,345,115 9,198,742 11,325,314 9,035,089 Dilutive common stock, options and warrants using the treasury stock method(1) -- -- -- -- ---------- --------- ---------- ----------- Total shares used in per share calculations 12,345,115 9,198,742 11,325,314 9,035,089 ---------- --------- ---------- ----------- Net loss ($746,590) ($717,722) ($335,556) ($2,800,366) ---------- --------- ---------- ----------- Net loss per share ($0.06) ($0.08) ($0.03) ($0.31) ========== ========= ========== ===========
(1) Warrants and options outstanding are not included, as the effect would be anti-dilutive. EX-27.1 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 1,958,327 0 24,554 0 101,828 2,290,014 1,067,452 338,768 3,134,427 660,268 0 0 0 125,936 2,144,691 3,134,427 2,374 2,374 71,407 71,407 694,532 0 5,527 (746,590) 0 (746,590) 0 0 0 (746,590) (0.06) 0
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