FORM 10-QSB
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-50019
ASPENBIO, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1553387
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(State or other jurisdiction of (I.R.S. Identification No.)
Employer incorporation or organization)
1585 South Perry Street, Castle Rock, Colorado 80104
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(Address of principal executive offices) (Zip Code)
(303) 794-2000
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(Registrant's telephone number, including area code)
The number of shares of no par value common stock outstanding as of August
11, 2003, was 9,300,000.
ASPENBIO, INC.
Index
PART 1 - Financial Information
Page
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Item 1. Condensed Financial Statements - AspenBio, Inc.
Balance Sheet as of June 30, 2003 3
Statements of Operations For the Three and
Six Months Ended June 30, 2003 and 2002 4
Statements of Cash Flows For the Six
Months Ended June 30, 2003 and 2002 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Controls and Procedures 13
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
2
PART I - FINANCIAL INFORMATION
AspenBio, Inc.
Balance Sheet
June 30, 2003 (Unaudited)
Assets
Current assets:
Cash $ 15,259
Accounts receivable, net 65,259
Inventories 539,170
Restricted cash 425,000
----------
Total current assets 1,044,688
----------
Property and equipment, net 3,860,891
----------
Other assets:
Goodwill 387,239
Intangible assets, net 165,566
Other 14,195
----------
Total other assets 567,000
----------
$5,472,579
==========
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable and accruals $ 453,437
Stock subscriptions collected 75,000
Short-term notes:
Line of credit 225,700
Related parties 500,000
Current portion of long-term debt 246,587
-----------
Total current liabilities 1,500,724
-----------
Long-term debt, less current portion:
Mortgage payable, less current portion 3,069,347
Related party notes payable 958,651
Deferred revenue 200,000
Other liabilities 3,555
-----------
Total liabilities 5,732,277
-----------
Shareholders' equity (deficit):
Common stock, no par value,
15,000,000 shares authorized, 9,300,000
issued and outstanding 1,555,770
Accumulated deficit (1,815,468)
-----------
Total shareholders' equity (deficit) (259,698)
-----------
$ 5,472,579
===========
See Accompanying Notes to Condensed Financial Statements.
3
AspenBio, Inc.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
----------- ----------- -------- ----------
(Restated) (Restated)
Sales $ 140,858 $ 156,209 $386,665 $ 265,879
Cost of sales 152,013 60,339 216,173 82,795
----------- ----------- --------- ---------
Gross profit (loss) (11,155) 95,870 170,492 183,084
----------- ----------- --------- ---------
Operating expenses:
Selling, general and administrative 207,104 134,402 385,813 277,018
Research and development 264,247 75,446 322,562 213,992
----------- ----------- --------- ---------
Total operating expenses 471,351 209,848 708,375 491,010
----------- ----------- --------- ---------
Operating income (loss) (482,506) (113,978) (537,883) (307,926)
Interest expense 86,410 7,469 125,970 21,534
Expenses incurred with registration statement - 68,397 - 157,825
----------- ----------- --------- ---------
Income (loss) before income taxes (568,916) (189,844) (663,853) (487,285)
Income tax (benefit) - (4,969) - (10,267)
----------- ----------- --------- ---------
Net income (loss) $ (568,916) $ (184,875) $(663,853) $ (477,018)
=========== =========== ========= ==========
Basic and diluted net income
(loss) per share $ (.06) $ (.02) $ (.07) $ (.05)
=========== =========== =========== ==========
Basic and diluted weighted
average shares outstanding 9,300,000 9,300,000 9,300,000 9,103,868
=========== =========== ========= ==========
See Accompanying Notes to Condensed Financial Statements.
4
AspenBio, Inc.
Statements of Cash Flows
Six Months Ended June 30,
(Unaudited)
2003 2002
--------- ----------
(Restated)
Cash flows from operating activities:
Net loss $(663,853) $(477,018)
Adjustments to reconcile net loss to
net cash provided by (used in) by operating activities:
Depreciation and amortization 139,528 32,403
Amortization of deferred consulting cost - 32,880
Amortization of discount on note payable 16,000 -
(Increase) decrease in:
Accounts receivable 29,178 149,643
Inventories (27,711) (85,956)
Prepaid expenses and other assets - 836
Increase (decrease) in:
Accounts payable and accruals 145,977 (26,420)
Deferred revenue 200,000 -
Accrued income taxes - (11,000)
--------- ---------
Net cash provided by (used in)
operating activities (160,881) (384,632)
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (64,986) (206,894)
Purchases of intangible and other assets (38,402) (71,242)
--------- ---------
Net cash (used in) investing activities (103,388) (278,136)
--------- ---------
Cash flows from financing activities:
Increase in restricted cash (75,000) -
Proceeds from stock subscriptions collected 75,000 -
Proceeds from issuing common stock - 300,000
Proceeds from issuing notes payable 225,700 452,138
Repayment of debt (77,952) (26,036)
Payment of dividends - (48,999)
--------- ---------
Net cash provided by financing activities 147,748 677,103
--------- ---------
Net increase (decrease) in cash (116,521) 14,335
Cash at beginning of period 131,780 423,765
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Cash at end of the period $ 15,259 $ 438,100
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 36,300 $ 15,000
Income taxes $ - 6,900
Schedule of non-cash investing and financing activities:
Building improvements financed by construction loan $ 730,628 $ -
Construction loan refinanced into permanent mortgage $3,250,000 $ -
See Accompanying Notes to Condensed Financial Statements.
5
AspenBio, Inc.
Notes to Condensed Financial Statements
(Unaudited)
INTERIM FINANCIAL STATEMENTS
The accompanying financial statements of AspenBio, Inc. (the "Company" or
"AspenBio") have been prepared in accordance with the instructions to quarterly
reports on Form 10-QSB. In the opinion of Management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in financial position at
June 30, 2003, and for all periods presented have been made. Certain information
and footnote data necessary for fair presentation of financial position and
results of operations in conformity with accounting principles generally
accepted in the United States of America have been condensed or omitted. It is
therefore suggested that these financial statements be read in conjunction with
the summary of significant accounting policies and notes to financial statements
included in the Company's Annual Report on Form 10-KSB. The results of
operations for the period ended June 30, 2003 are not necessarily an indication
of operating results for the full year.
Note 1 - Global Development and Distribution Agreement
In March 2003, the Company entered into a global development and
distribution agreement with Merial Limited ("Merial"). The agreement provides
the third party with exclusive rights to market and distribute the Company's
new, patent-pending diagnostic blood test. The test is designed to be used
approximately 18 days after insemination to determine the early pregnancy status
of dairy and beef cattle. During June 2003, AspenBio determined that the results
of its large-scale field trial were not proceeding as anticipated. The trial
results continue to be analyzed and modifications to the test are ongoing.
AspenBio believes improvements to the test need to be achieved. Accordingly,
AspenBio expects the test will not be launched by October 2003 and that receipt
of the second development payment of $700,000 from Merial also will be delayed.
Such payment could be reduced or eliminated if Merial is not satisfied with the
test results or the product. Upon execution of the agreement the Company
received $200,000, which has been recorded as deferred revenue. Pursuant to the
agreement, if the Company terminates the agreement within three years from the
launch date, as defined in the agreement, monies paid by the third party must be
refunded on a pro-rata basis, under the provisions specified in the agreement.
Note 2 - Inventories
As of June 30, 2003, total inventories consisted of:
Finished goods $ 339,945
Goods in process 5,850
Raw materials 193,375
---------
Total inventories $ 539,170
=========
Note 3 - Property and Equipment
Property and equipment at June 30, 2003, consisted of the following:
Land $ 653,400
Land improvements 454,108
Building 2,573,081
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Equipment 461,095
------------
4,141,684
Less accumulated depreciation
and amortization 280,793
-----------
Property and equipment, net $ 3,860,891
===========
During January 2003, AspenBio completed the construction of its own building and
relocated into it, moving out of its prior leased space, which had been occupied
on a month-to-month basis.
Note 4 - Debt Agreements
In February 2003, the Company entered into a one-year $250,000 revolving line of
credit agreement with a bank, bearing interest at the prime rate plus 1% (with
an interest rate floor of 6.5%). The line of credit is collateralized by the
assets of the Company and guaranteed by the president of the Company.
During June 2003, the Company closed on a $3,250,000 permanent mortgage facility
on its land and building. The mortgage is held by a commercial bank and includes
a portion guaranteed by the U. S. Small Business Administration. The loan is
collateralized by the real property and is also personally guaranteed by the
Company's president. The approximate interest rate is 5% and the loan requires
monthly payments of approximately $23,700.
During June 2003, the Company's president agreed to consolidate the Company's
notes payable to him in the aggregate principal amount of $958,651, into one new
note with an interest rate of 6% per annum and the maturity date extended to
June 2008. An advance principal payment of $150,000 will be made to him if the
Company obtains sufficient financing to meet certain other needs.
Note 5 - Stockholders' Equity and Associated Agreements
During June 2003 the Company finalized agreements with four of its key
shareholders and employees that are designed to enhance the Company's efforts to
obtain additional financing. The agreements include lock-up arrangements with
the Company in which the stockholders have agreed not to sell or otherwise
transfer approximately 90% of their Company shareholdings through September 30,
2004. Each of these agreements includes provisions for partial release of shares
if certain price gateways are reached, with a minimum requirement of the
Company's stock trading at a price of at least $4.00 per share for 20
consecutive trading days. One of the employees has also granted the Company an
option to purchase up to 500,000 shares of the Company's common stock held at
$.20 per share through September 30, 2003.
The Company's president also agreed that 2,250,000 of the 4,246,757 shares of
the Company's common stock owned by him will be voted at shareholder meetings in
the same proportion as the other shares of the Company's common stock are voted.
This voting arrangement and the transfer restrictions as to these 2,250,000
shares will continue for a maximum period of 15 years. The agreement will be
earlier terminated under certain conditions, including if the Company does not
have sufficient funding in place by September 30, 2003.
Note 6 - Customer Concentration
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The Company has one customer, which represents more than 10% of the Company's
revenues. For the six-month periods ended June 30, 2003 and 2002, this customer
accounted for 61% and 12% of the Company's sales.
Note 7 - Restatement
During 2002, following an evaluation of its finished goods inventory, the
Company made a determination that labor and overhead had been excluded from the
price of finished goods in prior periods. The Company determined that in
connection with the August 2000 acquisition of Vitro Diagnostics, Inc., the
acquired inventory was understated by $194,883, and that goodwill was overstated
by an equal amount. In addition, the Company became aware of certain inventory
items that had been valued incorrectly as of December 31, 2001 and determined
that these inventory items were overstated by approximately $47,500. Also in
2001, the Company granted warrants for consulting services performed during the
period through March 2002. The amortization of these warrants totaling $32,880
has been recorded in the six months ended June 30, 2002. Previously deferred
registration offering costs of $157,825, were also charged to expense for the
six months ended June 30, 2002.
As a result of the above items, the Company has restated its previously issued
financial statements for the periods ended June 30, 2002, resulting in an
increase in the net loss and basic and diluted net loss per common share
outstanding of $(157,821) and $(.01) for the six months ended June 30, 2002 and
$(29,811) and $(-) for the three months ended June 30, 2002, respectively.
Note 8 - Stock Based Compensation and Earnings Per Share
The Company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations in accounting for its stock-based
employee compensation plans. Accordingly, no compensation expense has been
recognized for options granted at fair market value. The following table
illustrates the effect on net income (loss) and income (loss) per share if the
Company had applied the fair value recognition provisions of FASB Statement No.
123, Accounting for Stock-Based Compensation to its stock-based employee plans.
Three Months Six Months
Ended June 30, Ended June 30,
---------------- -----------------
2003 2002 2003 2002
---- ---- ---- ----
Net income (loss), as reported $(569,000) $(185,000) $(664,000) $(477,000)
Deduct: Total stock-based employee compen-
sation expense determined under fair value
based method for awards granted, modified
or settled, net of related tax effects (5,000) - (9,000) -
--------- --------- --------- -----------
Pro forma net income (loss) $(574,000) $(185,000) $(673,000) $(477,000)
========= ========= ========= ===========
Earnings (loss) per share:
Basic and diluted - as reported $(0.06) $(0.02) $(0.07) $(0.05)
===== ===== ===== =====
Basic and diluted - pro forma $(0.06) $(0.02) $(0.07) $(0.05)
===== ===== ===== ====
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ITEM 2.
ASPENBIO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Comparative Results for the Six-Month Periods Ended June 30, 2003 and
June 30, 2002
Sales for the six months ended June 30, 2003 totaled $387,000, which is a
$121,000 or 45% increase from the six months ended June 30, 2002. The increase
in sales is primarily attributable to expanded shipments to existing customers.
It is not unusual for the orders from our customers to vary by quarter depending
upon the customers' sales and production needs. We cannot predict future sales
volumes that could be expected from existing or other customers.
Costs of sales for the six months ended 2003 totaled $216,000, a $133,000 or
160% increase as compared to the 2002 period. The change in cost of sales
resulted from a combination of the higher sales levels during the period,
combined with additional overhead expenses we are incurring as a result of
moving into our new facility in January 2003. Gross profit percentage decreased
to 44% in the six months ended June 30, 2003, as compared to 69% in the 2002
period. The decrease is attributable to the higher operating costs in connection
with operating out of our new facility.
Selling, general and administrative expenses in the six months ended June 30,
2003, totaled $386,000, which is a $109,000 or 39% increase as compared to the
2002 period. The increase is a combination of additional personnel on staff,
higher operating expenses in our new facility and the costs of now being a
public reporting entity.
Research and development expenses in the 2003 period totaled $323,000, which is
a $109,000 or 51% increase as compared to the 2002 period. The increase is due
to the costs being incurred to develop an expanded line of technologies as
compared to the prior year. Current technologies being developed include the
bovine pregnancy tests and bovine pregnancy enhancement products, an E. Coli
infection treatment product, and several other technologies. Depending upon
available cash, we expect research and development expenses to increase for the
balance of 2003.
Interest expense for the six months ended June 30, 2003, increased to $126,000
or $104,000 more as compared to the 2002 period. The increase was primarily due
to higher debt levels to fund the new facility and working capital needs.
No income tax benefit was recorded on the loss for the six-month period ended
June 30, 2003, as management of the Company was unable to determine that it was
more likely than not that such benefit would be realized.
Comparative Results for the three-Month Periods Ended June 30, 2003 and
June 30, 2002
Sales for the three months ended June 30, 2003 totaled $141,000, which is a
$15,000 or 10% decrease from the 2002 period. The change in sales is primarily
attributable to the timing of existing customers' order placement. It is not
unusual for the orders from our customers to vary by quarter depending upon the
customers' sales and production needs.
Costs of sales for the three months ended 2003 totaled $152,000, a $92,000 or
153% increase as compared to the 2002 period. The change in cost of sales
resulted from overhead expenses we are incurring as a result of moving into our
new facility in January 2003. Gross profit percentage was negative in the 2003
period due to sales levels not being sufficient in the quarter to cover the
overhead expenses.
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Selling, general and administrative expenses in the three months ended June 30,
2003, totaled $207,000, which is a $73,000 or 54% increase as compared to the
2002 period. The increase is a combination of additional personnel on staff,
higher operating expenses in our new facility and the costs of now being a
public reporting entity.
Research and development expenses in the 2003 period totaled $264,000, which is
a $189,000 or 252% increase as compared to the 2002 period. The increase is due
to the costs being incurred to develop an expanded line of technologies as
compared to the prior year.
Interest expense for the three months ended June 30, 2003, increased to $86,000
or $79,000 more as compared to the 2002 period. The increase was primarily due
to higher debt levels to fund the new facility and working capital needs.
Liquidity and Capital Resources
The Company reported a net loss of $664,000 during the six months ended June 30,
2003. At June 30, 2003, the Company has a working capital deficit of $456,000.
Management believes that in order to continue with the technology development
activities and support the current level of operations, the Company will need to
continue to pursue its capital raising activities. Management's plans also
include continuing to fulfill the requirements under the global development and
distribution agreement signed in March 2003, to accomplish the milestones and
successful completion of the bovine pregnancy test to receive additional
development payments of up to $1,700,000 and generate increased product sales,
and raising additional capital.
Capital expenditures, primarily for production, laboratory and facility
improvement costs for the remainder of the fiscal year ending December 31, 2003,
are anticipated to total approximately $75,000 to $100,000. Funding for the
capital additions is contingent on the Company's ability to obtain additional
financing and available working capital.
AspenBio anticipates that spending for research and development for the fiscal
year ending December 31, 2003, will continue at a similar pace to those for the
three months ended June 30, 2003. The primary expenditures will be used to
continue to file patents on the Company's technologies as well as development
costs in support of the current pipeline products. The principal products
consist of the bovine pregnancy tests and bovine pregnancy enhancement products,
and an E. Coli infection treatment product.
During February 2003, the Company secured a $250,000 line of credit and as of
June 30, 2003, $225,000 had been drawn and was outstanding under the line of
credit.
During June 2003, the Company closed on a $3,250,000 permanent mortgage facility
on its land and building. The mortgage is held by a commercial bank and includes
a portion guaranteed by the U. S. Small Business Administration. The loan is
collateralized by the real property and is also personally guaranteed by the
Company's President. The approximate interest rate is 5% and the loan requires
monthly payments of approximately $23,700.
During June 2003, the Company's President agreed to consolidate the Company's
notes payable to him in the aggregate principal amount of $958,651, into one new
note with an interest rate of 6% per annum and the maturity date extended to
June 2008. An advance principal payment of $150,000 will be made to him if the
Company raises sufficient equity funding to meet certain other needs.
A $500,000 convertible note payable to a stockholder matured in July 2003 and
the parties are currently in discussions concerning possible alternatives
regarding that debt, which include a conversion of the debt, an extension of the
debt, repayment of the debt, or a possible combination of these alternatives.
Out of the proceeds of the $500,000 note, $350,000 was used as restricted cash
to help secure the building construction loan. Upon the refinancing of the
construction loan, the $350,000 cash balance is now available to either apply to
repay the note, or as working capital, should the holder elect to convert the
note to common stock.
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Operating Activities
Net cash consumed by operating activities was $161,000 during the six months
ended June 30, 2003. During March 2003, cash of $200,000 was received upon the
execution of the global development and distribution agreement, which has been
recorded as deferred revenue until the Company has completed the contingencies
under the agreement. Cash was consumed by the loss of $664,000, and cash
expended of $28,000 to increase inventories offset by $140,000 in depreciation
and a $146,000 increase in accounts payable.
Net cash outflows from operating activities consumed $385,000 during the six
months ended June 30, 2002. Cash was consumed by the loss of $477,000, offset by
$32,000 in depreciation and amortization expenses and cash expended of $86,000
to increase inventories. Operating cash flow benefited from a $150,000 reduction
in accounts receivable during the 2002 period due to lower sales levels.
Expenditures associated with the development of the bovine pregnancy test also
increased the rate of cash outflow.
Investing Activities
Net cash outflows from investing activities consumed $103,000 during the six
months ended June 30, 2003. The outflow was primarily attributable to purchases
of property and equipment and intangibles.
Net cash outflows from investing activities consumed $278,000 during the 2002
period. The outflow was attributable to purchases of property and equipment and
payments for licenses.
Financing Activities
Net cash inflows from financing activities generated $148,000 during the six
months ended June 30, 2003. The Company drew $226,000 under the new line of
credit. The construction loan was increased by $653,000, advanced directly to
finalize the construction of our new facility. The loan was converted into a
permanent mortgage in June 2003.
Net cash inflows from financing activities generated $677,000 during 2002.
During the period, the Company received $300,000 in connection with the
completion of sale of securities and we received $452,000 in stockholder debt.
During the period $26,000 was used to reduce debt and $49,000 was paid out in
dividends.
Recent Accounting Pronouncements
Accounting for Guarantees - In December 2002, the Financial Accounting Standards
Board ("FASB"); Interpretation 45,Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others (FIN 45) was issued. FIN 45 requires a guarantor entity, at the inception
of a guarantee covered by the measurement provisions of the interpretation, to
record a liability for the fair value of the obligation undertaken in issuing
the guarantee. The Company previously did not record a liability when
guaranteeing obligations. Interpretation 45 applies prospectively to guarantees
the Company issues or modifies subsequent to December 31, 2002. The Company has
historically not issued guarantees and therefore FIN 45 will not have a material
effect on its 2003 financial statements.
Variable Interest Entities - In January 2003, the FASB issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. FIN
46 clarifies the application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, for certain entities which do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties or in which equity
investors do not have the characteristics of a controlling financial interest
-11-
("variable interest entities"). Variable interest entities will be required to
be consolidated by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that absorbs a majority
of the entity's expected losses, receives a majority of its expected returns, or
both, as a result of holding variable interests, which are ownership,
contractual, or other pecuniary interests in an entity. FIN 46 applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after June
15, 2003, to variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. FIN 46 applies to public
enterprises as of the beginning of the applicable interim or annual period. The
Company's adoption of FIN 46 did not have any impact upon the Company's
financial condition or results of operations.
Derivative Instruments and Hedging Activities - In April 2003, the FASB issued
Statement of Financial Accounting Standards No. 149 ("SFAS 149"), "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities," which amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts. SFAS 149
will be effective for contracts entered into or modified after June 30, 2003 and
for hedging relationships designated after June 30, 2003. The provisions of SFAS
149 are to be applied prospectively. The Company does not anticipate the
adoption of SFAS No. 149 will have an appreciable impact of the Company's
financial statements.
Revenue Arrangements - In November 2002, the EITF reached a consensus on Issue
00-21, Accounting for Revenue Arrangements with Multiple-Deliverables ("EITF
00-21"). EITF 00-21 addresses how to account for arrangements that may involve
the delivery or performance of multiple products, services and/or rights to use
assets. The consensus mandates how to identify whether goods or services or both
which are to be delivered separately in a bundled sales arrangement should be
accounted for separately because they are "separate units of accounting." The
guidance can affect the timing of revenue recognition for such arrangements,
even though it does not change rules governing the timing or pattern of revenue
recognition of individual items accounted for separately. The final consensus
will be applicable to agreements entered into in fiscal years beginning after
June 15, 2003 with early adoption permitted. Additionally, companies will be
permitted to apply the consensus guidance to all existing arrangements as the
cumulative effect of a change in accounting principle in accordance with APB
Opinion No. 20, Accounting Changes. The Company does not believe the adoption of
EITF 00-21 will have a material impact on our financial position or results of
operations.
Financial Instruments - In May 2003 the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity. This statement establishes standards for how an issuer classifies and
measures in its financial position certain financial instruments with
characteristics of both liabilities and equity. In accordance with this
standard, financial instruments that embody obligations of the issuer are
required to be classified as liabilities. SFAS No. 150 is effective for all
financial instruments entered into or modified after May 31, 2003. For existing
financial instruments, SFAS No. 150 is effective at the beginning of the Company
fiscal quarter commencing July 1, 2003. The Company believes the adoption of
SFAS No. 150 will have no effect on the Company's financial position, results of
operations or cash flows.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements in Management's Discussion and Analysis of Results of
Operations and Financial Condition and other portions of this report are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and are subject to the safe harbor created
thereby. These statements relate to future events or the Company's future
financial performance and involve known and unknown risks, uncertainties and
other factors that may cause the actual results, levels of activity, performance
or achievements of the Company or its industry to be materially different from
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those expressed or implied by any forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as "may,"
"will," "could," "would," "should," "expect," "plan," "anticipate," "intend,"
"believe," "estimate," "predict," "potential" or other comparable terminology.
Please see the "Cautionary Note Regarding Forward-Looking Statements" in the
Company's Form 10-KSB for the year ended December 31, 2002 for a discussion of
certain important factors that relate to forward-looking statements contained in
this report. Although the Company believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to be correct. Unless otherwise required by
applicable securities laws, the Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Item 3. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company's President and Chief Financial Officer have reviewed and evaluated
the effectiveness of the Company's disclosure controls and procedures (as
defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as
of a date within 90 days of the filing date of this quarterly report on Form
10-QSB (the "Evaluation Date"). Based on that review and evaluation, the
President and Chief Financial Officer have concluded that, as of the Evaluation
Date, the Company's disclosure controls and procedures were adequate and
effective to ensure that material information relating to the Company and its
consolidated subsidiaries would be made known to them by others within those
entities in a timely manner, particularly during the period in which this
quarterly report on Form 10-QSB was being prepared, and that no changes are
required at this time.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 99.1, 99.2 and 99.3 are furnished.
(b) The following Form 8-K reports were filed disclosing information
under Item 5:
On April 7, 2003 the Company filed an 8-K for a news release covering
a distribution agreement entered into with Merial Limited.
On June 6, 2003 the Company filed an 8-K for a news release covering
bovine test developments.
On June 17, 2003 the Company filed an 8-K for a news release covering
the permanent financing on its headquarters and new technology
developments.
On June 24, 2003 the Company filed an 8-K for a news release covering
agreements with key shareholders.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AspenBio, Inc.
(Registrant)
Dated: August 14, 2003 By: /s/ Roger Hurst
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Roger Hurst, President