-----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, M3jMMGPVOpX8cezlgxk845zTDvj4vsH195Kv4pRVNtGoUsa589HQdH32H6XSnr4b EcM8iUb7oU8l2nRMn1M7AQ== 0000733337-97-000030.txt : 19970403 0000733337-97-000030.hdr.sgml : 19970403 ACCESSION NUMBER: 0000733337-97-000030 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19970402 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOPHARMACEUTICS INC CENTRAL INDEX KEY: 0000733337 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 133186327 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09370 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 990 STATION RD CITY: BELLPORT STATE: NY ZIP: 11713 BUSINESS PHONE: 5162865800 MAIL ADDRESS: STREET 1: 990 STATION ROAD CITY: BELLPORT STATE: NY ZIP: 11713 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED GENERICS INC /NV/ DATE OF NAME CHANGE: 19880824 FORMER COMPANY: FORMER CONFORMED NAME: PATIENT MEDICAL SYSTEMS CORP DATE OF NAME CHANGE: 19880615 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------------------------------------- FORM 10Q QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES AND EXCHANGE ACT OF 1934 For Quarter Ended December 31, 1995 Commission File Number 1-9370 BIOPHARMACEUTICS, INC DELAWARE 13-3186327 (State of Incorporation) (I.R.S. Employer Identification No.) 990 Station Road, Bellport, New York 11713 (Address of Principal Executive Office) (Zip Code) Registrant telephone number, including area code: (516) 286-5800 Indicate the number of shares outstanding of each of the issuer's classes of common stock as of December 31, 1995. Class Outstanding ----- ----------- Common Stock - $.00l Par Value 27,455,093 Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities and Exchange Act of 1934 during the preceding twelve 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 ninety days. Yes __X__ No _____ 1 BIOPHARMACEUTICS, INC. INDEX PART Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheet December 31, 1995 (Unaudited) and September 30, 1995 (Audited) Consolidated Statement of Operations Three Months Ended December 31, 1995 and 1994 (Unaudited) Consolidated Statement of Shareholders' Equity for the Three Months Ended December 31, 1995 Consolidated Condensed Statement of Cash Flows for the Three Months Ended December 31, 1995 and 1994 Notes to Condensed Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II Item 6. Reports on 8-K: Court order dated November 1, 1995, enjoining Biopharmaceutics, Inc. and Biopharm Lab, Inc. from exploiting licensed rights in the "Treo" skin care product with respect to the 1996 selling season. Filed November 13, 1995. Court order dated November 17, 1995, reducing the fine imposed against Patient Medical Systems Corp. (now known as Biopharmaceutics, Inc.) to $50,000, from an original amount of $175,000. Fiked December 1, 1995. Court order dated December 20, 1995, dismissing all claims by Biopharmaceutics, Inc. and Biopharm Lab, Inc. against Primavera Laboratories, Inc. and Avon Products, Inc. and granted the counterclaim by Primavera Laboratories, Inc. Filed December 28, 1995. 2 ITEM 1. FINANCIAL STATEMENTS BIOPHARMACEUTICS, INC. CONSOLIDATED CONDENSED BALANCE SHEET December 31, September 30, 1995 1995 (Unaudited) (Audited) ---------- ---------- ASSETS Current assets: Cash $ 16,284 $ 86,664 Receivables, less allowance for doubtful accounts 201,216 268,957 Inventories 389,899 493,671 Prepaid expenses and other assets 31,998 27,953 ---------- ---------- Total current assets 639,397 877,245 Property, plant and equipment, at cost, net of accumulated depreciation 386,928 443,267 Licensing costs, net of accumulated amortization 70,301 70,301 Sundry 29,619 30,119 ---------- ---------- $1,126,345 $1,420,932 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY IN ASSETS) Current liabilities: Accounts payable $1,112,903 $1,027,865 Accrued expenses 897,425 1,043,676 Customer credit balances 267,016 196,320 Medicare judgement payable 25,000 50,000 Current maturities of long-term debt 175,000 190,000 --------- ---------- Total current liabilities 2,477,344 2,507,861 Long-term debt 130,982 130,982 Convertible debentures payable 1,000,000 1,000,000 Shareholders' equity (defiency in assets): Common Stock - par value $.00l per share Authorized - 50,000,000 shares Issued - 27,868,821 shares, 26,535,750 in 1995 27,868 26,536 Additional paid-in capital 27,348,945 27,149,038 Deficit (28,355,008) (27,889,599) ---------- ---------- (978,195) (714,025) Less Treasury Stock, at cost (413,728 shares) (944,612) (944,612) Notes receivable from officers and employees (559,274) (559,274) ---------- ---------- (2,482,081) (2,217,911) ---------- ---------- $1,126,245 $1,420,932 ========== ========== The accompanying notes are an integral part of these financial statements. 3 BIOPHARMACEUTICS, INC. CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended December 31, 1995 1994 Revenues: Net sales $ 457,084 $ 486,159 Costs and expenses: Cost of sales 634,932 626,251 Selling, general and administrative 254,061 500,557 ---------- ---------- 888,993 1,126,808 ---------- ---------- (431,909) (640,649) Other income (deductions): Other income 2,500 --- Interest expense (36,000) (36,000) ---------- ----------- (33,500) (36,000) ---------- ----------- Net income (loss) from continuing operations (465,409) (676,649) Discontinued operations Operating profit --- 32,168 ---------- ---------- Net loss $ (465,409) $ (644,481) ========== ========== Primary income (loss) per share Continuing operations $(0.02) $(0.03) Discontinued operations 0.00 0.00 ---- ---- $(0.02) $(0.03) ==== ==== Average shares outstanding 27,071,755 21,941,190 The accompanying notes are an integral part of these financial statements. 4 BIOPHARMACEUTICS, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY IN ASSETS) (UNAUDITED) THREE MONTHS ENDED DECEMBER 31, 1995
Common Stock Additional Number of Par Paid-In Treasury Notes Receivable Shares Value Capital Deficit Stock Officers & Employees Total ------ ----- ---------- ---------- --------- -------------------- ----------- Balance, September 30, 1995 26,535,750 $26,536 $27,149,038 $(27,889,599) $(944,612) $(559,274) $(2,217,911) Shares issued in connection with the Company's Regulation S offering, net of related expenses 1,333,071 1,332 199,907 --- --- --- 201,239 Net loss for the three months ended December 31, 1995 --- --- --- (465,409) --- --- (465,409) ---------- ------- --------- ----------- ---------- ---------- ------------ Balance, December 31, 1995 27,868,821 $27,868 $27,348,945 $(28,355,008) $(944,612) $(559,274) $(2,482,081) ========== ======= =========== ============ ========= ========== =========== The accompanying notes are an integral part of these financial statements.
5 BIOPHARMACEUTICS, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH AND EQUIVALENTS (UNAUDITED) THREE MONTHS ENDED DECEMBER 31, 1995 1994 ---------- ---------- Cash flows from operating activities: Loss from continuing operations $ (465,409) $ (676,649) Profit from discontinued operations --- 32,168 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 60,000 204,124 Chanes in certain assets and liabilities: Accounts receivable 67,741 (4,276) Inventories 103,772 (117,608) Other current assets (4,065) (27,139) Accounts payable and accrued expenses (61,213) (81,392) Customer credit balances 70,696 --- Sundry non current asssets 500 --- Payment against settlement of litigation (15,000) --- Payment against Medicare settlement (25,000) --- ---------- ---------- Net cash provided by (used in) operating activities (267,957) (670,772) ---------- ---------- Cash flows from investing activities: Purchase of property plant and equipment (3,662) (17,116) ---------- ---------- Net cash provided by (used in) investing activities (3,662) (17,116) ---------- --------- Cash flows from financing activities: Proceed of Company's Regulation S offering, net of related expenses 201,239 743,893 Proceeds from sale of warrants --- 3,000 ---------- ---------- Net cash provided by (used in) financing activities 201,239 746,893 ---------- ---------- Net change in cash (70,380) 59,005 Cash at beginning of period 86,664 129,004 ---------- ---------- Cash at end of period $ 16,284 $ 188,009 ========== ========== The accompanying notes are an integral part of these financial statements. 6 BIOPHARMACEUTICS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) DECEMBER 31, 1995 A. Consolidated Condensed Financial Statements The Consolidated Condensed Balance Sheet as of December 31, 1995 and the Consolidated Condensed Statement of Operations for the period ended December 31, 1995 and 1994, and the Consolidated Condensed Statement of Shareholders' Equity for the three month period ended December 31, 1995, and the Consolidated Statements of Cash Flows for the periods ended December 31, 1995 and 1994 have been prepared by the Company without audit. In the opinion of Management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at December 31, 1995 and for all periods presented have been made. For information concerning the Company's significant accounting policies and Basis of Presentation, reference is made to the Company's Annual Report on Form 10-K for the year ended September 30, 1995. Results of operations for the period ended December 31, 1995 are not necessarily indicative of the operating results to be expected for the full year and such results are subject to year-end adjustment and independent audit. The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The Consolidated Statements of Operations for all periods reflect the ongoing operations of the Company. 7 BIOPHARMACEUTICS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operating requirements for the last three years primarily by the issuance of common shares; $2,384,806 in 1993, $4,433,790 in 1994, $2,054,722 in 1995, convertible debentures of $800,000 in 1992 and the settlement of claims against past management $924,076 in 1992. As of September 30, 1995, the Company has cash of approximately $86,000 and subsequently thereto through December 1995 received $217,000 from the sale of common stock under Regulation S. As a result of the United States District Court's decision on December 20, 1995, the Company is enjoined from selling Treo in 1996 and therefore the Company wrote-off assets associated with Treo as a discontinued operation as of September 30, 1995. The Company had anticipated a negative cash flow from the product line of $150,000 to $600,000 in fiscal 1996. The Company signed a Letter of Intent on January 3, 1996 to acquire a product line from London International US Holdings, Inc. (LIUSH) which should generate sales in excess of the Company's 1995 total sales and would generate substantial working capital to Biopharm. The cost will approximate $3,600,000 and will be financed by a combination of Regulation S common stock sales, registered stock sales and notes to be paid over a number of years. The brands acquired have been on the market for more than ten years each and are sold under the names Vaginex*, Koromex*, Koroflex*, and Feminique*. LIUSH is the largest condom manufacturer in the U.S. and had decided to sell its Feminine Hygiene brands in order to concentrate its efforts on its core business. Sales of these brands are being made to food and drug chains, drug wholesalers, distributors and the U.S. military. The Company intends to use its former Treo reps to sell the newly acquired lines.Nine of the former ten rep organizations have already agreed to sell the new lines. Each of these rep organizations already calls on the key accounts carrying the lines. The Company expects its reps to expand sales of the lines by making a more concerted than that made by LIUSH, expanding the customer base and by receiving greater support from the Company in promoting the products. The Company also anticipates that the approval of additional seven products by the Food and Drug Administration ("FDA") in 1995, which increased the number of products offered by the Company to its customers and with the addition of three significant new customers, should enable the Company to increase sales and provide a basis for profitability in fiscal 1996. *Registered Trademark 8 BIOPHARMACEUTICS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (Cont'd.) The Company has re-evaluated its investment in Amswiss Scientific, Inc. ("Amswiss") assets as of September 30, 1995. Due to the Company's present lack of working capital, the cost of the New Drug Application ("NDA") filing, and recent developments in cancer research along with new diagnostic techniques for cervical cancer that significantly reduce potential future sales of the Amswiss Drugs, the Company has decided to write-off the intangibles with a charge to its consolidated statement of operations aggregating $5,526,587. At September 30, 1995, the Company decided not to proceed with the filing of the NDA's and in addition, as a result of this decision, the Company recorded the forfeiture of the aforementioned 800,000 common shares and warrants which resulted in a charge of common stock and additional paid-in capital aggregating $1,381,647. Company management has decided it would be more beneficial for the Company to invest any funds raised or any funds available into the acquisition and development of the Feminine Hygiene Products. Until the Company's pharmaceutical sales and sales of the soon to be acquired Feminine Hygiene Products produce positive cash flow and profitable operations, the Company will be unable to finance the NDA for DBD. DBD is a cytotoxic, chemotheraphy agent used in the treatment of cancer. The Company believes that the foregoing, along with the additional capital raised through December 1995 and the possibility of recoveries from the appeal of the Primavera/Avon suit, will be adequate to meet its current objectives. Sinking fund requirements in the convertible debentures in 1996 should be satisifed by either refunding or converstion of the debentures into common stock. RESULTS OF OPERATIONS Sales for the quarter ended December 31, 1995 decreased 6% to $457,084 compared to $486,159 for the comparable quarter of fiscal 1994. Sales for the prior quarter ended September 30, 1994 totaled $330,784. Gross margin for the quarter of a negative 40% compared to a negative 29% for the comparable quarter. Gross margin for the prior quarter totaled a negative 79%. Negative margins are attributable to sales levels not high enough to absorb fixed overheads in manufacturing. Selling, general and administrative expenses decreased to $254,061 from $500,557 in the first quarter of 1995 due primarily to a decrease in legal expenses of $60,377 and a reducion of amortization of licenses of $143,046 since the underlying intangibles were written off at September 30, 1995. Interest expense of $36,000 compared to $36,000 in fiscal 1994. 9 SIGNATURES Pursuant to the requirements of Section 13 of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. /s/ Edward Fine -------------------- BIOPHARMACEUTICS, INC. REGISTRANT By: EDWARD FINE, President and Chief Executive Officer /s/ William C. Kugler -------------------- WILLIAM C. KUGLER Vice President and Chief Financial Officer Dated: February 14, 1996 10 -----END PRIVACY-ENHANCED MESSAGE-----