FORM 10-Q
Amendment No.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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 1-12830
BioTime, Inc.
(Exact name of registrant as specified in its charter)
California 94-3127919
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
935 Pardee Street
Berkeley, California 94710
(Address of principal executive offices)
(510) 845-9535
(Registrant's telephone number, including area code)
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 APPLICABLE ONLY TO CORPORATE
ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 3,190,193 common shares, no
par value, as of February 13, 1997.
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PART 1--FINANCIAL INFORMATION
Item 1. Financial Statements
BIOTIME, INC,
(A Development Stage Company)
CONDENSED BALANCE SHEETS
(Unaudited)
December 31, June 30,
ASSETS 1996 1996
-------------- ----------------
CURRENT ASSETS
Cash and cash equivalents $ 1,832,976 $ 2,443,121
Research and development supplies on hand (Note 2) 200,000 200,000
Prepaid expenses and other current assets 159,439 214,094
-------------- ----------------
Total current assets 2,192,415 2,857,215
EQUIPMENT, Net of accumulated depreciation of $118,466 and $98,219 81,313 101,559
OTHER ASSETS (Note 2) 44,044 9,700
-------------- ----------------
TOTAL ASSETS $ 2,317,772 $ 2,968,474
============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES--Accounts payable $ 321,912 $ 129,229
-------------- ----------------
COMMITMENTS
SHAREHOLDERS' EQUITY:
Preferred Shares, no par value, undesignated as to Series,
authorized 1,000,000 shares; none outstanding
Common Shares, no par value, authorized 5,000,000 shares; issued
and outstanding 2,831,084 and 2,756,521 11,464,033 10,834,575
Contributed Capital 93,972 93,972
Deficit accumulated during development stage (9,562,145) (8,089,302)
-------------- ----------------
Total shareholders' equity 1,995,860 2,839,245
-------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,317,772 $ 2,968,474
============== ================
See notes to condensed financial statements.
2
BIOTIME, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended Period from Inception
December 31, December 31, (November 30, 1990)
1996 1995 1996 1995 to December 31, 1996
-------------- ------------ ------------- -------------- ----------------------
EXPENSES:
Research and development $ (485,659) $ (291,646) $ (917,825) $ (539,858) $ (5,690,853)
General and administrative (288,630) (206,631) (594,983) (340,004) (4,615,758)
-------------- ------------ ------------- -------------- ---------------
Total expenses (774,289) (498,277) (1,512,808) (879,862) (10,306,611)
-------------- ------------ ------------- -------------- ---------------
INCOME:
Interest 19,767 33,802 39,610 76,600 718,308
Other 35 1,080 355 2,460 50,989
-------------- ------------ ------------- -------------- ---------------
Total income 19,802 34,882 39,965 79,060 769,297
-------------- ------------ ------------- -------------- ---------------
NET LOSS $ (754,487) $ (463,395) $ (1,472,843) $ (800,802) $ (9,537,314)
============== ============ ============= ============== ===============
NET LOSS PER SHARE $ ( .27) $ ( .18) $ ( .53) $ ( .31) $ ( 4.73)
============== ============ ============= ============== ===============
NUMBER OF SHARES USED FOR
CALCULATION OF NET LOSS
PER SHARE 2,794,093 2,591,014 2,784,465 2,591,862 2,015,901
============== ============ ============= ============== ===============
See notes to condensed financial statements.
3
BIOTIME, INC.
(A Development Stage Company)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Series A Convertible Deficit
Preferred Shares Common Shares Accumulated
--------------------- ---------------------- During
Number of Number of Contributed Developmemt
Shares Amount Shares Amount Capital Stage
--------- --------- --------- ---------- ----------- ---------------
BALANCE, November 30, 1990
(date of inception)
NOVEMBER 1990
Common shares issued for cash 437,587 $ 263
DECEMBER 1990:
Common shares issued for
stock of a separate entity at fair value 350,070 137,400
Contributed equipment at appraised
value $ 16,425
Contributed cash 77,547
MAY 1991:
Common shares issued for cash
less offering costs 33,725 54,463
Common shares issued for stock
of a separate entity at fair value 33,340 60,000
JULY 1991:
Common shares issued for
services performed 10,000 18,000
AUGUST-DECEMBER 1991
Preferred shares issued for
cash less offering costs
of $125,700 120,000 474,300
MARCH 1992:
Common shares issued for
cash less offering costs of $1,015,873 724,500 4,780,127
Preferred shares converted
into common shares (120,000) (474,300) 120,000 474,300
Dividends declared and paid
on preferred shares (24,831)
MARCH 1994:
Common shares issued for cash less
offering costs of $865,826 935,200 3,927,074
NET LOSS SINCE INCEPTION (3,721,389)
--------- --------- --------- ----------- --------- -----------
BALANCE AT JUNE 30, 1994 $ -- 2,644,422 $ 9,451,627 $ 93,972 $(3,746,220)
See notes to financial statements. (Continued)
4
BIOTIME, INC.
(A Development Stage Company)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Series A Convertible Deficit
Preferred Shares Common Shares Accumulated
-------------------- ------------------------ During
Number of Number of Contributed Development
Shares Amount Shares Amount Capital Stage
--------- --------- ------------ ---------- ---------- ---------------
AUGUST 1994 - JUNE 1995
Common shares repurchased
with cash (84,600) (190,029)
NET LOSS (2,377,747)
--------- --------- --------- ----------- -------- --------------
BALANCE AT JUNE 30, 1995 -- $ -- 2,559,822 $ 9,261,598 $ 93,972 $ (6,123,967)
JULY - SEPTEMBER 1995
Common shares repurchased
with cash (6,200) (12,693)
Common shares warrants and options
granted for services 356,000
APRIL - JUNE 1996
Common shares issued for
cash (exercise of options and warrants) 165,507 1,162,370
Common shares issued for cash
(lapse of recission) 37,392 67,300
NET LOSS (1,965,335)
--------- --------- --------- ----------- --------- -------------
BALANCE AT JUNE 30, 1996 -- $ -- 2,756,521 $10,834,575 $ 93,972 $ (8,089,302)
JULY - DECEMBER 1996
Common shares issued for cash
(exercise of options and warrants) 74,563 524,458
Common shares warrants and options
granted for service (Note 2) 105,000
NET LOSS (1,472,843)
--------- --------- --------- ------------ --------- ------------
BALANCE AT DECEMBER 31, 1996 -- $ -- 2,831,084 $ 11,464,033 $ 93,972 $ (9,562,145)
========= ========= ========= ============ ========= ==============
See notes to financial statements. (Concluded)
5
BIOTIME, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended Period from Inception
December 31, (November 30, 1990) to
1996 1995 December 31, 1996
------------- ------------ ----------------------
OPERATING ACTIVITIES:
Net loss $(1,472,843) $ (800,802) $(9,537,314)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 20,248 17,847 134,866
Cost of Services - options and warrants 140,549 326,481
Changes in operating assets and liabilities:
Research and development supplies on hand (125,000) (200,000)
Prepaid expenses and other current
assets (15,240) 24,421 (41,266)
Deposits (9,700)
Organizational costs (4,196)
Accounts payable 192,683 (222,762) 320,182
----------- ------------ -----------
Net cash used in operating activities (1,134,603) (1,106,296) (9,010,947)
----------- ------------ -----------
INVESTING ACTIVITIES:
Sale of investments 197,400
Purchase of short-term investments (9,946,203)
Redemption of short-term investments 9,934,000
Purchase of equipment and furniture (1,392) (183,353)
----------- ------------ -----------
Net cash used in investing activities -- (1,392) 1,844
----------- ------------ -----------
FINANCING ACTIVITIES:
Issuance of preferred shares for cash 600,000
Preferred shares placement costs (125,700)
Issuance of common shares for cash 10,710,926
Net proceeds from exercise of common share options
and warrants 524,458 1,686,828
Common shares placement costs (1,881,699)
Contributed capital - cash 77,547
Dividends paid on preferred shares (24,831)
Repurchase Common Shares (14,420) (200,992)
----------- ------------ -----------
Net cash provided by (used in) financing activities 524,458 (14,420) 10,842,079
----------- ------------ -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (610,145) (1,122,108) 1,832,976
CASH: AND CASH EQUIVALENTS:
At beginning of period 2,443,121 3,440,896 --
----------- ------------ -----------
At end of period $ 1,832,976 $ 2,318,78 $ 1,832,976
=========== ============ ===========
See notes to condensed financial statements. (Continued)
6
BIOTIME, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended Period from Inception
December 31, (November 30, 1990) to
1996 1995 December 31, 1996
------------- ------------ ----------------------
NONCASH FINANCING AND
INVESTING ACTIVITIES:
$ 16,425
Receipt of contributed equipment
Issuance of common shares
in exchange for shares of
common stock of Cryomedical
Sciences, Inc. in a stock-for-stock
transaction $ 197,400
Granting of options and warrants for services 105,000 461,000
Accrued public offering costs 54,458
See notes to condensed financial statements. (Concluded)
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BIOTIME, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. GENERAL AND DEVELOPMENT STAGE ENTERPRISE
General - BioTime, Inc. (the Company) was organized November 30, 1990
as a California corporation. The Company is a biomedical organization,
currently in the development stage, which is engaged in research and
development of synthetic plasma expanders, blood substitute solutions,
and organ preservation solutions, for use in surgery, trauma care,
organ transplant procedures, and other areas of medicine.
The interim condensed financial statements presented have been prepared
by BioTime, Inc. (the Company) without audit and, in the opinion of
management, reflect all adjustments necessary (consisting only of
normal recurring adjustments) to present fairly the financial position,
results of operations and cash flows at December 31, 1996 and for all
periods presented. The results of operations for any interim period are
not necessarily indicative of results for a full year.
The Balance Sheet as of June 30, 1996, has been derived from the
financial statements that have been audited by the Company's
independent public accountants. The condensed financial statements and
notes are presented as permitted by the Securities and Exchange
Commission and do not contain certain information included in the
annual financial statements and notes of the Company. It is suggested
that the accompanying condensed financial statements be read in
conjunction with the audited financial statements and the notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, filed with the Securities and Exchange
Commission.
The preparation of the Company's condensed financial statements in
conformity with generally accepted accounting principles necessarily
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities in the condensed balance sheet dates and the
reported amounts of income and expenses for the periods presented.
Development Stage Enterprise - Since inception, the Company has been
engaged in research and development activities in connection with the
development of synthetic plasma expanders, blood substitute solutions
and organ preservation products. The Company has not had any
significant operating revenues and has incurred operating losses of
$9,537,314 from inception to December 31, 1996. The successful
completion of the Company's product development program and,
ultimately, achieving profitable operations is dependent upon future
events including maintaining adequate capital to finance its future
development activities, obtaining
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regulatory approvals for the products it develops and achieving a level
of sales adequate to support the Company's cost structure.
The Company successfully completed two public offerings of its common
shares and, at December 31, 1996, had remaining cash and cash
equivalents of over $1,800,000. Management believes that additional
funds may be required for the successful completion of its product
development activities.
2. SHAREHOLDERS' EQUITY
The Board of Directors of the Company adopted the 1992 Stock Option
Plan (the "Plan") in September 1992, which was approved by the
shareholders at the 1992 Annual Meeting of Shareholders, on December 1,
1992. Under the Plan, as amended, the Company has reserved 400,000
Common Shares for issuance under options granted to eligible persons.
No options may be granted under the Plan more than ten years after the
date the Plan was adopted by the Board of Directors, and no options
granted under the Plan may be exercised after the expiration of ten
years from the date of grant.
At December 31, 1996, options for the purchase of 219,000 shares under
the Plan were held by employees, officers, directors, members of the
scientific advisory board and certain consultants. Such options are
exercisable at prices ranging from $1.99 to $18.81 beginning from one
to two years after the grant date and expire after five to ten years
from the grant date. Certain options require the achievement of
performance criteria. During the quarter ended December 31, 1996,
options to purchase a total of 10,000 common shares were issued to
consultants at an average option price of $18.81 per share. The
estimated fair value of the services totaled $20,000 and was recognized
in the period. At December 31, 1996, 209,000 options were exercisable
at prices ranging from $1.99 to $18.81. Options for 90,000 common
shares have been exercised as of December 31, 1996.
In September 1996, the Company entered into an agreement with an
individual to act as an advisor to the Company. In exchange for
services, as defined, to be rendered by the advisor through September
1999, the Company issued warrants, with five year terms, to purchase
40,000 common shares at a price of $18.75 per share. Warrants for
25,000 common shares vested and became exercisable and transferable
when issued; warrants for the remaining 15,000 common shares vest
ratably through September 1997 and become exercisable and transferable
as vesting occurs. The estimated value of the services to be performed
is $60,000 and that amount has been capitalized and is being amortized
over the term of the agreement.
During September 1995, the Company entered into an agreement with a
firm to act as its financial advisor. In exchange for financial
consulting services associated in part with a plan to secure additional
capital, the Company issued to the financial advisor warrants to
purchase 100,000 common shares at a price of $6 per share, and the
Company agreed to
9
issue additional warrants to purchase up to an additional 200,000
common shares at a price equal to the greater of (a) 150% of the
average market price of the common shares during the three months prior
to grant or (b) $6 per share. The additional warrants were to be issued
in equal quarterly installments over a two year period, beginning
October 15, 1995. The Company may terminate the financial advisory
agreement on 30 days notice, in which case the next warrant issuance
would be accelerated to the date on which notice of termination is
given, but no additional warrants would be issued. As of December 31,
1996, the total number of warrants to purchase Common Shares issued was
225,000; 150,000 of which aree exercisable at a price of $6 per share,
25,000 of which are exercisable at a price of $7.32 per share, 25,000
of which are exercisable at a price of $30.04 per share, and 25,000 of
which are exercisable at $29.33 per share. As of January 15, 1997,
warrants to purchase an additional 25,000 shares were issued, which are
exercisable at a price of $32.65 per share.
During the quarter ended December 31, 1996, the Company recognized
$50,136 in amortization expense for capitalized service costs related
to consulting agreements.
3. SUBSEQUENT EVENTS
On February 4, 1997, the Company completed a subscription rights
offering, raising $5,662,180 through the sale of 283,109 common shares.
In addition, from December 26, 1996 through February 10, 1997, the
Company received $772,271 through the exercise of certain underwriters'
warrants.
10
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.
BIOTIME, INC.
/s/ Paul E. Segall
Date: February 19, 1997 --------------------------------------------
Paul E. Segall, Ph.D.
Chief Executive Officer
/s/ Victoria Bellport
Date: February 19, 1997 --------------------------------------------
Victoria Bellport
Chief Financial Officer
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