-----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, BaK/aGWTaSis94ZbXnvrfaI9DWZ+t0X4p0QbdSTN44A4AZcTgkLhSC0viWmhP9rY hdUR4R+6AAP6/c0pGXNeFw== 0000733337-97-000026.txt : 19970328 0000733337-97-000026.hdr.sgml : 19970328 ACCESSION NUMBER: 0000733337-97-000026 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19970327 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 March 31, 1996 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 March 31, 1996. Class Outstanding ----- ----------- Common Stock - $.00l Par Value 39,207,922 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 I Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheet March 31, 1996 (Unaudited) and September 30, 1995 (Audited) Consolidated Statement of Operations Three and Six Months Ended March 31, 1996 and 1995(Unaudited) Consolidated Statement of Shareholders' Equity (Deficiency in Assets) for the Six Months Ended March 31, 1996 Consolidated Condensed Statement of Cash Flows for the Six Months Ended March 31, 1996 and 1995 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 Form 8-K: Acquisition or Disposition of Assets: Letter of Intent to purchase three branded consumer product lines from London International US. Holdings, Inc., for the sum of $3,600,000. The purchase includes all trade names, trademarks, patents, and all saleable finished goods inventory related to the Feminine Hygiene Products Business. Filed January 18, 1996. Resignation of Registrant's Director: Dr. Alfred Stracher resigned from the Board of Director of Biopharmaceutics, Inc. as of December 4, 1995. Filed January 18, 1996. Acquisition or Disposition of Assets: On March 15, 1996 the Company completed its acquisition of the feminine hygiene product lines from London International US Holdings, Inc. for the sum of $3,600,000 plus the cost of all saleable goods inventories and raw materials related to non-manufactured products. The purchase price includes all trade names, trademarks, patents, and all saleable finished goods inventory related to the Feminine Hygiene Product Business. The aggregate purchase price included a payment of $1,600,000 and $2,000,000 in a promissory note payable $500,000 on or before April 1, 1997; $660,000 on or before April 1, 1998 and $840,000 on April 1, 1999 with interest at 8.5%, payable semi-annually through October 1997, then quarterly. Filed March 26, 1996. 2 ITEM 1. FINANCIAL STATEMENTS BIOPHARMACEUTICS, INC. CONSOLIDATED CONDENSED BALANCE SHEET
March 31, September 30, 1996 1995 (Unaudited) (Audited) ---------- ----------- ASSETS Current assets: Cash $ 360,153 $ 86,664 Trade receivables, less allowance for doubtful accounts 343,103 268,957 Inventories 715,508 493,671 Prepaid expenses and other assets 65,927 27,953 ---------- ---------- Total current assets 1,484,691 877,245 Property, plant and equipment, at cost, net of accumulated depreciation 349,066 443,267 Trademarks and patents 3,682,325 --- Licensing costs, net of accumulated amortization 68,501 70,301 Sundry 30,119 30,119 ---------- ---------- $5,614,702 $1,420,932 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY IN ASSETS) Current liabilities: Account payable $1,529,616 $1,027,865 Accrued expenses 798,505 1,043,676 Customer credit balances 362,244 196,320 Medicare judgment payable 25,000 50,000 Current maturities of long-term debt 145,000 190,000 ---------- --------- Total current liabilities 2,860,365 2,507,861 Long-term debt 313,773 130,982 Convertible debentures payable 1,000,000 1,000,000 Promissory note payable 2,000,000 --- Shareholders' equity (deficiency in assets): Common Stock - par value $.00l per share Authorized - 50,000,000 shares Issued - 39,621,650 shares, 26,535,750 in 1995 39,622 26,536 Additional paid-in capital 29,597,638 27,149,038 Deficit (28,692,810) (27,889,599) ---------- ---------- 944,450 (714,025) Less Treasury Stock, at cost (413,728 shares) (944,612) (944,612) Notes receivable from officers and employees (559,274) (559,274) ---------- ---------- (599,436) (2,217,911) $5,614,702 $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 Six Months Ended March 31, March 31, --------- --------- 1996 1995 1996 1995 (Restated) (Restated) ---------- ---------- --------- ---------- Sales $ 624,853 $ 524,778 $1,081,937 $1,010,937 Costs and expenses: Cost of sales 613,109 655,885 1,248,041 1,282,136 Selling, general and administrative 298,538 255,933 552,599 613,444 Amortization of licenses 1,800 143,046 1,800 286,092 ---------- ---------- ---------- ---------- 913,447 1,054,864 1,802,440 2,181,672 ---------- ---------- ---------- ---------- (288,594) (530,086) (720,503) (1,170,735) Other income (deductions): Other Income 2,500 --- 5,000 --- Interest expense (36,000) (36,000) (72,000) (72,000) ---------- ---------- ---------- ---------- (33,500) (36,000) (67,000) (72,000) ---------- ---------- ---------- ---------- Net (loss) from continuing operations (322,094) (566,086) (787,503) (1,242,735) Discontinued operations Operating profit (loss) (15,708) 622,504 (15,708) 654,672 ---------- ---------- ---------- ---------- Net loss $ 337,802) $ 56,418 $ (803,211) $ (588,063) ========== ========== ========== ========== Primary income (loss) per share Continuing operations $(0.01) $(0.02) $(0.03) $(0.06) Discontinued operations 0.00 0.03 0.00 0.03 ---- ---- ---- ---- $(0.01) $ 0.00 $(0.03) $(0.03) ===== ===== ===== ===== Average shares outstanding 31,138,513 23,029,706 29,105,134 22,485,448 The accompanying notes are an integral part of these financial statements.
4 BIOPHARMACEUTICS, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY IN ASSETS) (UNAUDITED) SIX MONTHS ENDED MARCH 31, 1996
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 13,085,900 13,086 2,448,600 --- --- --- 2,461,686 Net loss for six months ended March 31, 1996 --- --- --- (803,211) --- --- (803,211) ---------- ------- ----------- ------------ --------- --------- --------- Balance, March 31, 1996 39,621,650 $39,622 $29,597,638 $(28,692,810) $(944,612) $(559,274) $(559,436) ========== ======= =========== ============ ========= ========= ========= 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) SIX MONTHS ENDED MARCH 31,
1996 1995 ---- ---- Cash flows from operating activities: Loss from continuing operations $ (787,503) $(1,242,735) Profit (loss) from discontinued operations (15,708) 654,672 Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 106,800 204,124 Changes in certain assets and liabilities: Accounts receivable (74,146) (4,276) Inventories (221,837) (117,608) Other current assets (37,974) (27,139) Accounts payable and accrued expenses 256,580 (81,392) Customer credit balances 165,924 --- Sundry non current assets 182,791 --- Payment against settlement of litigation (45,000) --- Payment against Medicare settlement (25,000) --- ---------- ----------- Net cash provided by (used in) operating activities (495,073) (614,354) Cash flows from investing activities: Purchase of property plant and equipment (10,799) (17,116) Trademarks and tradenames acquired (3,682,325) --- --------- ----------- Net cash provided by (used in) operating activities (3,682,124) (17,116) ---------- ---------- Cash flows from financing activities: Proceed of Company's Regulation S offering, net of related expenses 2,461,686 743,893 Proceeds from sale of warrants --- 3,000 Promissory note issued in trademark acquisition 2,000,000 --- ---------- ----------- Net cash provided by (used in) financing activities 4,461,686 746,893 ---------- ----------- Net change in cash 273,489 115,423 Cash at beginning of period 86,664 129,004 ---------- ----------- Cash at end of period $ 360,153 $ 244,427 ========== =========== The accompanying notes are an integral part of these financial statements.
6 BIOPHARMACEUTICS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1996 A. Consolidated Condensed Financial Statements The Consolidated Condensed Balance Sheet as of March 31, 1996 and the Consolidated Condensed Statement of Operations for the period ended March 31, 1996 and 1995 and the Consolidated Condensed Statement of Shareholders' Equity for the six month period ended March 31, 1996, and the Consolidated Statements of Cash Flows for the periods ended March 31, 1996 and 1995 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 March 31, 1996 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 March 31, 1996 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. B. Restatement of Prior Year's Statement of Operations Prior years Consolidated Statement of Operations has been restated to conform to write-off of Biopharm Lab, Inc. to discontinued operations in the Company's audited financial statements at September 30, 1995. 7 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 four years primarily by the issuance of common shares; $2,384,806 in 1993, $4,433,790 in 1994, $2,054,722 in 1995 and $2,461,686 in the first half of 1996, convertible debentures of $800,000 in 1992 and the settlement of claims against past management of $924,076 in 1992. As of March 31, 1996, the Company had cash of approximately $360,000. The Company completed its acquisition of a product line from London International US Holdings, Inc. ("LIUSH) which should generate sales in excess of the Company's 1995 total sales and should generate substantial working capital to the Company. The cost of $3,600,000 was financed by a combination of Regulation S common stock sales and notes for $2,000,000 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 of Vaginex(R), Koromex(R), Koroflex(R), and Feminique(R). LIUSH is the largest condom manufacturer in the US 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 US military. The Company will use the former Treo reps to sell the newly acquired 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 effort than that previously made by LIUSH, expanding the customer base and by receiving greater support from Quality Health Products in promoting the products. The Company also anticipates that the approval of the additional seven products by the Food and Drug Administration ("FDA") in 1995, which increased the number of products manufactured by the Company for 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. The Company believes that the foregoing, along with the additional capital raised through March 1996 will be adequate to meet its current objectives. Sinking fund requirements for the convertible debentures in 1996 should satisfy by either refunding or conversion of the debentures into common stock. RESULTS OF OPERATIONS Sales for the quarter ended March 31, 1996 totaled $624,853, an increase of 19% over restated sales of $524,778 for the second quarter in 1995. The increase was primarily attributed to the new product line acquired on March 15, 1996 from London International US Holdings, Inc. Sales for the six months increased $71,000 to $1,081,937 in the prior year. Sales for the prior quarter totaled $457,000. Gross profit for the quarter improved to a positive 2% compared to a negative 24% for the comparable quarter in 1995. Margins for the prior quarter totaled a negative 40%. On a six month basis, gross profit totaled a negative 15% versus a negative 26% for the six months ended March 31, 1995. Negative margins were attributable to sales levels not being high enough to absorb fixed overheads in manufacturing. Selling, general and administrative expenses increased to $298,538 versus $255,933 in the comparable quarter due primarily to legal and accounting expenses in the quarter. For the six month period, selling, general and administrative expenses dropped $60,845 to $552,599 due to lower legal expenses in the first quarter. Amortization of licenses declined from $143,046 in the 1995 quarter to $1,800 due to the write-off of the Amswiss rights in September 1995. Interest expense was in line with the prior quarters. 8 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: May 10, 1996 9 -----END PRIVACY-ENHANCED MESSAGE-----