Management`s Discussions: 10QSB, BIOPOOL INTERNATIONAL INC
(Edgar Online via COMTEX)
Company Name: BIOPOOL INTERNATIONAL INC
(SYMBOL:BIPL)
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Founded in 1987,
Biopool International develops, manufactures, and markets a full range of
test
kits to assess and diagnose disorders of blood coagulation, thrombotic risk
factors, fibrinolysis, platelet function, and the vascular system, as well
as
specialty toxicology controls used to monitor and measure the presence of
drugs
of abuse. Effective with our merger with Xtrana, the Company also develops
nucleic acid-based tests for use in drug discovery, detection of
environmental
and food contaminants, forensics and identity testing, human and animal
diseases, genetic predisposition to disease, and other applications.
MERGER WITH XTRANA, INC.
On August 10, 2000, stockholders approved the merger with Xtrana, Inc.
Xtrana
was incorporated in Delaware in 1997. Xtrana, based in Denver, Colorado,
has
developed new proprietary nucleic acid (DNA/RNA) testing technology, which
it
plans to commercialize. Potential markets for this testing technology
include
the detection of food and environmental contamination, forensics and
paternity
identity testing, infectious human disease testing including bacterial
warfare,
and research and other clinical applications. In connection with the
merger, we
issued 9,369,461 shares of common stock, 936,946 shares of which are held
in
escrow subject to the achievement of certain sales objectives for the
Xtrana
business as described in the Company's current report on Form 8-K filed
with the
Securities and Exchange Commission on August 11, 2000, and amended on
October
24, 2000. We recognized $913,600 in costs associated with the merger, all
of
which were capitalized as of August 10, 2000.
SALE OF BLOOD GROUP SEROLOGY DIVISION
On April 30, 1999, we consummated the sale of certain business assets of
BCA for
$4.45 million in cash. BCA ceased operations to our benefit effective May
1,
1999, but continued to convert certain inventory items on behalf of the
buyer
through June 30, 1999. The Consolidated Statements of Operations have been
restated to reflect ongoing operations. The sale of BCA will reduce the
Company's future sales by approximately 50%; however, the impact on future
net
income will be negligible.
RESULTS OF OPERATIONS
Sales were $2.4 million for the three-month period and $7.7 million for the
nine-month period ended September 30, 2000, compared with $2.0 million and
$6.5
million for the corresponding periods of 1999. The 2000 sales represent
increases of 20% and 18%, respectively, over the 1999 periods. These
increases
primarily resulted from further development of our private label products
and
increased penetration of international markets.
Cost of goods sold was $1.4 million for the three months and $3.9 million
for
the nine months ended September 30, 2000, compared with $1.0 million and
$3.3
million for the same periods in 1999. Gross margin was 42% for the
three-month
period and 50% for the nine-month period ended September 30, 2000, compared
with
50% and 49% for the corresponding periods in 1999. Gross margins were
reduced by
3% for the three-month period in 2000 as a result of the addition of the
Xtrana
business. Historically, the Xtrana operations have generated gross margin
levels
in excess of 50%. For the period ended September 30, 2000, Xtrana margins
were
negative due to the expiration of certain grants. The Company expects these
trends to continue through the end of 2000, when it is anticipated that new
grants will begin to come on line and revenue from the sale of XtraAmp(TM),
Xtrana's first commercial product, wiLL begin to have a positive impact.
Margins
were also negatively impacted as a result of reduced fixed overhead
absorption
to inventory as a part of a program to reduce inventory.
Operating expenses were $1.3 million and $3.3 million for the three months
and
nine months ended September 30, 2000, compared with $0.9 million and $2.5
million for the same periods of 1999. Operating expenses increased by $0.3
million during the third quarter as a result of the addition of the Xtrana
business. The remaining increase was due to certain bonus payments and
severance
obligations resulting from the merger of $0.1 million and increased
spending on
marketing, research and development, and quality assurance.
The 2000 Other income primarily relates to interest income. The 1999 Other
expenses primarily related to costs incurred to move our Swedish operations
(Biopool Sweden) into larger facilities.
The 1999 Gain on Sale of discontinued operations reflect the sale of
inventory
and receivables in the second quarter of 1999 and the anticipated sale of
the
facilities, which occurred in the second quarter of 2000.
FINANCIAL CONDITION
As of September 30, 2000, working capital was $7.2 million, with a current
ratio
of 6.7 to 1.0. In May 2000, we sold the BCA facilities for $2 million cash.
We
have a $2 million revolving credit facility that is unused and available.
Our current availability of cash, unused line of credit, working capital,
and
cash flow from operations are adequate to meet our ongoing needs for at
least
the next twelve months. However, we may investigate and pursue additional
financing options in the near term to accelerate the development and
commercialization of the Xtrana technologies.
We issued 8,829,461 shares of Biopool Common Stock to the Xtrana
stockholders on
August 10, 2000 and 815,000 warrants to certain financial advisors. This
issuance will have a dilutive effect on earnings per share in the near
term.
FORWARD LOOKING STATEMENTS
Except for the historical information contained herein, this report
contains
forward-looking statements (identified by the words "estimate,"
"anticipate,"
"expect," "believe," and similar expressions) which are based upon
management's
current expectations and speak only as of the date made. These
forward-looking
statements are subject to risks, uncertainties and factors that could cause
actual results to differ materially from the results anticipated in the
forward-looking statements and include, but are not limited to,
competitors'
pricing strategies and technological innovations, changes in health care
and
government regulations, litigation claims, foreign currency fluctuation,
product
acceptance, as well as other factors discussed in the Company's last Report
on
Form 10-KSB.
(c) 1995-1999 Cybernet Data Systems, Inc. All Rights Reserved.
Received by Edgar Online: Nov. 14, 2000
CIK Code: 0000830736
SEC Accession Number: 0000830736-00-000012
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