-----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, I7dFBv8pPWX04YjxFvBoxoTYvCwnbr78Q7DvXApoGJ+eOQFK3Iq3sUL3mVSjkSAK RlZ9d1h5XYcgmfiqFH9ZMg== 0000733337-97-000034.txt : 19970509 0000733337-97-000034.hdr.sgml : 19970509 ACCESSION NUMBER: 0000733337-97-000034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970508 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: 97597833 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, 1997 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, 1997. Class Outstanding Common Stock - $.001 Par Value 41,657,350 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, 1997 (Unaudited) and September 30, 1996 (Audited) Statements of Operations Three Months and Six Months Ended March 31, 1997 and 1996 (Unaudited) Consolidated Statement of Shareholders' Equity for the Six Months Ended March 31, 1997 Consolidated Condensed Statement of Cash Flows for the Six Months Ended March 31, 1997 and 1996 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: Appointment of Mr. Barry Weisberg to the Board of Directors as of February 19, 1997. Filed February 21, 1997. 2 ITEM 1. FINANCIAL STATEMENTS -------------------- BIOPHARMACEUTICS, INC. CONSOLIDATED CONDENSED BALANCE SHEET
March 31, September 30, 1997 1996 (Unaudited) (Audited) ----------- ----------- ASSETS Current assets: Cash $ 108,710 $ 44,775 Trade receivables, less allowance for doubtful accounts 687,726 587,457 Note receivable 0 150,000 Inventories 533,914 538,359 Prepaid expenses and other assets 159,713 136,839 ---------- ---------- Total current assets 1,490,063 1,457,430 Property, plant and equipment, at cost, net of accumulated depreciation 269,946 333,653 Investment in restricted securities 250,750 250,750 Intangible assets, at cost, net of accumulated amortization 3,583,025 3,677,225 Licensing costs, net of accumulated amortization 63,101 64,901 Sundry 30,119 32,729 ----------- ----------- $5,687,004 $5,816,688 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable-trade $ 974,235 $ 938,577 Accrued expenses 652,383 727,238 Current maturities of long-term debt 682,100 732,100 ---------- ---------- Total current liabilities 2,308,718 2,397,915 Long-term debt 1,550,792 1,622,792 Convertible debentures payable 1,102,941 1,402,941 Shareholders' equity: Common Stock - par value $.00l per share Authorized - 75,000,000 shares Issued - 42,071,078 shares, 40,871,078, 1996 42,071 40,871 Additional paid-in capital 30,070,261 29,771,461 Deficit (27,883,893) (27,915,406) ---------- ---------- 2,228,439 1,896,926 Less Treasury Stock, at cost (413,728 shares 1994) (944,612) (944,612) Notes receivable from officers and employees (559,274) (559,274) ---------- ---------- 724,553 393,040 ---------- ---------- $5,687,004 $5,816,688 ========== ========== 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, 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Revenues: Net sales $1,500,963 $ 624,853 $2,759,481 $1,081,937 Costs and expenses: Cost of sales 961,940 613,109 1,802,449 1,248,041 Selling, general and administrative 382,867 298,538 678,216 552,599 Amortization of intangibles 48,000 1,800 96,000 1,800 1,392,807 913,447 2,576,665 1,802,440 108,156 (288,594) 182,816 (720,503) Other income (deductions): Other income 0 2,500 0 5,000 Interest expense (including interest to officer) (91,602) (36,000) (151,303) (72,000) ---------- ---------- ---------- ---------- (91,602) (33,500) (151,303) (67,000) Net income (loss) from continuing operations 16,554 (322,094) 31,513 (787,503) Discontinued operations: Operating profit (loss) 0 (15,708) 0 (15,708) Net income (loss) $16,554 $(337,802) $31,513 $(803,211) ========== ========== ========== ========== Primary income (loss) per share Continuing operation $0.00 $(0.01) $0.00 $(0.03) Discontinued operations 0.00 (0.00) 0.00 (0.00) Net income (loss) $0.00 $(0.01) $0.00 $(0.03) Average shares outstanding 40,657,350 31,138,513 41,057,350 29,105,134 The accompanying notes are an integral part of these financial statements.
4 BIOPHARMACEUTICS, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) SIX MONTHS ENDED MARCH 31, 1997
Common Stock Additional Number of Par Paid-In Treasury Notes Receivable Shares Value Capital Deficit Stock Officers & Employees Total --------- ------- ----------- ------------- --------- -------------------- -------- Balance, September 30, 1996 40,871,078 $40,871 $29,771,461 $(27,915,406) $(944,612) $(559,274) $393,040 Shares issued in exchange for convertible debentures 1,200,000 1,200 298,800 --- --- --- 300,000 Net income for the six months ended March 31, 1997 --- --- --- 31,513 --- --- 31,513 ---------- ------- ---------- ------------ --------- --------- -------- Balance, March 31, 1997 42,071,078 $42,071 $30,070,261 $(27,883,893) $(944,612) $(559,274) $724,553 ========== ======= =========== ============ ========= ========= ======== 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, 1997 1996 ---------- ---------- Cash flows from operating activities: Income (loss) from continuing operations $31,513 $(787,503) Profit (loss) from discontinued operations --- (15,708) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 174,000 106,800 Changes in certain assets and liabilities: Accounts receivable (100,269) (74,146) Notes receivable 150,000 Inventories 4,445 (221,837) Other current assets (22,874) (37,974) Other assets 2,610 182,791 Accounts payable and accrued expenses (39,197) 256,580 Customer credit balances --- 165,924 Payment against settlement of litigation (60,000) (45,000) Payment against Medicare settlement --- (25,000) ---------- ---------- Net cash provided by (used in) operating activities 140,228 (495,073) ---------- ---------- Cash flows from investing activities: Purchase of property plant and equipment (14,293) (10,799) Trademarks and tradenames acquired (3,682,325) ---------- ---------- Net cash provided by (used in) investing activities (14,293) (3,693,124) ---------- ---------- Cash flows from financing activities: Proceed of Company's Regulation S offering, net of related expenses --- 2,461,686 Long term debt incurred --- 2,000,000 Repayments of long-term debt (62,000) --- Net cash provided by (used in) financing activities (62,000) 4,461,686 ---------- ---------- Net change in cash 63,935 273,489 Cash at beginning of period 44,775 86,664 ---------- ---------- Cash at end of period $108,710 $360,153 ========== ========== The accompanying notes are an integral part of these financial statements. 6 BIOPHARMACEUTICS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1997 A. Consolidated Condensed Financial Statements The Consolidated Condensed Balance Sheet as of March 31, 1997 and the Consolidated Condensed Statement of Operations for the period ended March 31, 1997 and 1996, and the Consolidated Condensed Statement of Shareholders' Equity for the six month period ended March 31, 1997, and the Consolidated Statements of Cash Flows for the periods ended March 31, 1997 and 1996 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, 1997 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, 1996. Results of operations for the period ended March 31, 1997 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 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, and $2,547,658 in 1996; convertible debentures of $800,000 in 1992 and the settlement of claims against past management $924,076 in 1992. As of March 31, 1997, the Company had cash of approximately $109,000. As a result of the United States District Court's decision on December 20, 1995, the Company's license for Treo had been terminated and therefore the Company wrote-off assets associated with Treo as a discontinued operation as of September 30, 1995. On December 13, 1996 the Company's subsidiary, Biopharm Lab, Inc. (the distributor of Treo), filed a Chapter 7 Bankruptcy Petition in the United States District Court, Eastern District. The Company completed its acquisition of a product line from London International U.S. Holdings, Inc.(LIUSH) which has previously generated sales in excess of the Company's 1995 total sales and should generate substantial working capital to the Company. The cost of approximately $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 Vaginex*, Koromex*, Koroflex*, and Feminique*. LIUSH is one of the largest condom manufacturers 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 is using nine independent manufacturers rep organizations to sell the Feminine Hygiene products. 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 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 products by the FDA in fiscal year 1997, which will increase the number of products offered by Biopharm to its customers and with the addition of three new customers, Biopharm is expected to increase sales and provide a basis for profitability in fiscal 1997. The Company believes that the foregoing, along with the additional capital raised through September 1996 will be adequate to meet its current objectives. Sinking fund requirements in the convertible debentures in 1996 were waived by the holder and eliminated in the conversion of the debentures to a new series on December 15, 1996. RESULTS OF OPERATIONS ---------------------- Sales for the second quarter ended March 31, 1997 were $1,500,963 representing an increase of 140% over the $624,853 shipped in the comparable quarter in 1996. Sales for the prior quarter ended December 31, 1996 totaled $1,258,518. For the half year ended March 31, 1997, sales totaled $2,759,481 versus $1,081,937 shipped in the first half of fiscal year 1996. Sales of Feminine Hygiene products of $912,016 represents a 1,000% increase over the comparable quarter since the product line was acquired in March 1996. Sales of Feminine Hygiene products for the first half totaled $1,695,551 versus $90,458 for the comparable half year. Sales of generic products increased 10% for the quarter to $588,947 compared to the $534,395 shipped in 1996. For the six months ended March 31, 1997 generic sales totaled $1,063,930 compared to $991,479 shipped in 1996. By comparison to the prior quarter, sales of feminine hygiene products totaled $783,535 and generic products totaled $474,983. *Registered Trademark 8 Gross margin for the quarter was 36% compared to 1.9% in the comparable 1996 quarter. Gross margin for the prior quarter totaled 33%. For the six months ended March 31, 1997, gross margin was 35% and a negative 15% respectively. Negative margins in 1996 were attributable to sales levels not being high enough to absorb fixed overheads in manufacturing. Selling, general and administrative expenses increased to $382,867 from $298,538 in the fiscal 1996 quarter due primarily to selling expenses for the feminine hygiene product line which was only acquired in the comparable quarter. For the first half selling, general and administrative expenses increased to $678,216 vs. $552,599 in the comparable half for similar reasons. Amortization of intangibles primarily represents trademarks and tradenames for the feminine hygiene line which was acquired in March 1996. Interest expense of $91,602 for the quarter includes the financing of the feminine hygiene acquisition, interest expense of the convertible debentures. Interest expense for the comparable quarter represented only debenture obligations. For the six months ended March 31, 1997, interest expense of $151,303 included the financing of the acquisition, interest on the convertible debentures and adjustment for prior interest accrued which was no longer payable. The comparable half year included only debenture obligations. PART II Other Information Item 1. Legal Proceedings Amswiss Scientific, Inc.--Amswiss Scientific, Inc. (Amswiss) commenced an action against the Company in the U.S. District Court for the southern district of New York on December 16, 1996. Amswiss asserted a claim for an amount to be ascertained at trial, but believed by Amswiss to be at least two million dollars, plus cost and attorney's fees arising from the alleged failure of the Company to file a Registration Statement with the Securities and Exchange Commission for certain shares and warrants of the Company owned by Amswiss. Item 2. Changes in Securities-Not applicable Item 3. Default upon Senior Securities-Not applicable Item 4. Submission of materials to a vote of security holders-Not applicable Item 5. Other information-Not applicable. Item 6. Exhibits and Reports on Form 8-K: Exhibits - None Reports on Form 8-K: Appointment of Mr. Barry Weisberg to the Board of Directors on February 19, 1997. Filed February 21, 1997. 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: May 7, 1997 10 EX-27 2 ART. 5 FDS FOR 2ND QUARTER Q-2
5 1 6-MOS SEP-30-1997 MAR-31-1997 $108,710 0 687,726 0 533,914 1,490,063 2,525,519 2,255,573 5,687,004 2,308,718 2,653,733 0 0 724,553 0 5,687,004 2,759,481 2,759,481 1,802,449 2,576,665 0 0 151,303 31,513 0 31,513 0 0 0 31,513 0 0
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