U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| For the quarterly period ended March 31, 2003 | ||
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| OR | ||
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| Commission file number 0-11303 | ||
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| SYNBIOTICS CORPORATION | ||
| (Exact name of registrant as specified in its charter) | ||
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| California |
95-3737816 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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| 11011 Via Frontera |
92127 | |
| (Address of principal executive offices) |
(Zip Code) | |
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| Registrant’s telephone number, including area code: (858) 451-3771 | ||
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 o |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
| Yes o |
No x |
As of May 14, 2003, 19,619,621 shares of common stock were outstanding.
SYNBIOTICS CORPORATION
INDEX
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Page |
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| Part I |
Item 1. |
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Condensed Consolidated Balance Sheet - March 31, 2003 and December 31, 2002 |
1 |
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2 | |
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Condensed Consolidated Statement of Cash Flows - Three months ended March 31, 2003 and 2002 |
3 |
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4 | |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 |
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Item 3. |
15 | |
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Item 4. |
16 | |
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| Part II |
Item 1. |
16 | |
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Item 2. |
16 | |
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Item 3. |
16 | |
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Item 4. |
16 | |
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Item 5. |
16 | |
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Item 6. |
17 |
PART I – FINANCIAL INFORMATION
Synbiotics Corporation
Condensed Consolidated Balance Sheet
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March 31, |
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December 31, |
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(unaudited) |
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(audited) |
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| Assets |
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| Current assets: |
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| Cash and equivalents |
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$ |
1,345,000 |
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$ |
869,000 |
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| Accounts receivable |
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3,509,000 |
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2,455,000 |
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| Inventories |
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5,348,000 |
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5,438,000 |
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| Other current assets |
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1,033,000 |
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673,000 |
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11,235,000 |
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9,435,000 |
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| Property and equipment, net |
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1,435,000 |
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1,409,000 |
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| Goodwill |
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1,397,000 |
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1,397,000 |
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| Intangibles, net |
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2,564,000 |
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2,737,000 |
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| Other assets |
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661,000 |
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458,000 |
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$ |
17,292,000 |
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$ |
15,436,000 |
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| Liabilities and Shareholders Equity: |
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| Current liabilities: |
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| Accounts payable and accrued expenses |
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$ |
5,517,000 |
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$ |
4,919,000 |
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| Current portion of long-term debt |
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5,610,000 |
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1,475,000 |
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11,127,000 |
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6,394,000 |
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| Long-term debt |
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4,516,000 |
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| Other liabilities |
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2,003,000 |
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1,962,000 |
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2,003,000 |
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6,478,000 |
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| Shareholders’ equity: |
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| Common stock, no par value, 70,000,000 shares authorized, 19,620,000 and 17,954,000 shares issued and outstanding at March 31, 2003 and December 31, 2002 |
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46,263,000 |
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46,050,000 |
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| Series C preferred stock, $1,000 liquidation preference per share (aggregating $2,800,000 at March 31, 2003 and December 31, 2002), 4,000 shares authorized, 2,800 shares issued and outstanding at March 31, 2003 and December 31, 2002 |
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2,604,000 |
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2,604,000 |
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| Common stock warrants |
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1,035,000 |
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1,035,000 |
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| Accumulated other comprehensive loss |
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(760,000 |
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(958,000 |
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| Accumulated deficit |
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(44,980,000 |
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(46,167,000 |
) |
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| Total shareholders’ equity |
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4,162,000 |
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2,564,000 |
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$ |
17,292,000 |
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$ |
15,436,000 |
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See accompanying notes to condensed consolidated financial statements.
-1-
Synbiotics Corporation
Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (unaudited)
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Three Months Ended March 31, |
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2003 |
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2002 |
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| Revenues: |
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| Net sales |
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$ |
6,148,000 |
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$ |
6,456,000 |
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| License fees |
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75,000 |
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| Royalties |
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2,000 |
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3,000 |
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6,150,000 |
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6,534,000 |
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| Operating expenses: |
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| Cost of sales |
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2,963,000 |
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2,780,000 |
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| Research and development |
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265,000 |
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360,000 |
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| Selling and marketing |
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1,065,000 |
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1,308,000 |
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| General and administrative |
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818,000 |
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4,758,000 |
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| Patent litigation settlement |
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(515,000 |
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4,596,000 |
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9,206,000 |
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| Income (loss) from operations |
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1,554,000 |
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(2,672,000 |
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| Other income (expense): |
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| Interest, net |
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(135,000 |
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(167,000 |
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| Income (loss) before income taxes |
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1,419,000 |
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(2,839,000 |
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| Provision for income taxes |
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21,000 |
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198,000 |
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| Income (loss) from continuing operations |
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1,398,000 |
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(3,037,000 |
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| Discontinued operations, net of tax |
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(66,000 |
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| Income (loss) before cumulative effect of a change in accounting principle |
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1,398,000 |
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(3,103,000 |
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| Cumulative effect of a change in accounting principle, net of tax |
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(7,649,000 |
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| Net income (loss) |
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1,398,000 |
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(10,752,000 |
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| Translation adjustment |
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198,000 |
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(145,000 |
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| Comprehensive income (loss) |
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$ |
1,596,000 |
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$ |
(10,897,000 |
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| Basic income (loss) per share: |
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| Income (loss) from continuing operations |
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$ |
0.07 |
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$ |
(0.32 |
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| Discontinued operations, net of tax |
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(0.01 |
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| Cumulative effect of a change in accounting principle, net of tax |
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(0.79 |
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| Net income (loss) |
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$ |
0.07 |
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$ |
(1.12 |
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| Diluted income (loss) per share: |
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| Income (loss) from continuing operations |
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$ |
0.03 |
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$ |
(0.32 |
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| Discontinued operations, net of tax |
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(0.01 |
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| Cumulative effect of a change in accounting principle, net of tax |
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(0.79 |
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| Net income (loss) |
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$ |
0.03 |
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$ |
(1.12 |
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See accompanying notes to condensed consolidated financial statements.
-2-
Synbiotics Corporation
Condensed Consolidated Statement of Cash Flows (unaudited)
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Three Months Ended March 31, |
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2003 |
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2002 |
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| Cash flows from operating activities: |
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| Net income (loss) |
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$ |
1,398,000 |
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$ |
(10,752,000 |
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| Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: |
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| Depreciation and amortization |
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333,000 |
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419,000 |
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| Receivable from patent litigation settlement |
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(515,000 |
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| Retention bonus payable in common stock |
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2,641,000 |
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| Cumulative effect of a change in accounting principle |
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7,769,000 |
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| Changes in assets and liabilities: |
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| Accounts receivable |
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(1,000,000 |
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(863,000 |
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| Inventories |
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153,000 |
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(933,000 |
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| Other assets |
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58,000 |
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(216,000 |
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| Accounts payable and accrued expenses |
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505,000 |
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555,000 |
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| Deferred revenue |
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(75,000 |
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| Other liabilities |
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40,000 |
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36,000 |
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| Net cash provided by (used for) operating activities |
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972,000 |
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(1,419,000 |
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| Cash flows from investing activities: |
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| Acquisition of property and equipment |
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(133,000 |
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(64,000 |
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| Net cash used for investing activities |
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(133,000 |
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(64,000 |
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| Cash flows from financing activities: |
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| Payments of long-term debt |
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(381,000 |
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(300,000 |
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| Proceeds from issuance of mandatorily redeemable preferred stock, net |
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