-----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, ANzQB/a4/zwTCMKqWSoLfBHx+yhEYfVPgiT4pNO39Xffqrm+KqL6XKxzfe0qm9DL JYp4O+nEBE+vxegtKHwxBg== 0000949459-96-000149.txt : 19960913 0000949459-96-000149.hdr.sgml : 19960913 ACCESSION NUMBER: 0000949459-96-000149 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960912 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOSPECIFICS TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000875622 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 113054851 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19879 FILM NUMBER: 96629073 BUSINESS ADDRESS: STREET 1: 35 WILBUR ST CITY: LYNBROOK STATE: NY ZIP: 11563 BUSINESS PHONE: 5165937000 MAIL ADDRESS: STREET 1: 35 WILBUR STREET CITY: LYNBROOK STATE: NY ZIP: 11563 10QSB/A 1 AMENDED QUARTERLY REPORT FOR 07/31/96 U.S. Securities and Exchange Commission Washington D.C. 20549 FORM 10-QSB/A (Mark One) [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: July 31, 1996 ------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT Commission File number: 0-19879 ------- BioSpecifics Technologies Corp. ------------------------------- (Exact name of Small Business Issuer as Specified in Its Charter) Delaware 11-3054851 -------- ---------- (State of Incorporation) (IRS Employer I.D. Number) 35 Wilbur St. Lynbrook, NY 11563 ------------------ (Address of principal executive offices) (516) 593-7000 -------------- (Issuer's telephone number, including area code) Check whether the issuer: (1) has filed all reports required 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: State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,883,396 shares of Common -------------------------- Stock, $0.001 par value as of September 1, 1996. - ------------------------------------------------ Page 1 of 12 INDEX ----- Page ---- PART I - FINANCIAL INFORMATION 3 Item 1. Financial Statements 3 Consolidated Financial Statements: Balance Sheets as of July 31, 1996 (unaudited) and January 3 31, 1996 Statements of Operations for the Three and Six Months Ended July 31, 1996 and 1995 (unaudited) 4 Statements of Cash Flows for the Six Months Ended July 31, 1996 and 1995 (unaudited) 5 Notes to Consolidated Interim Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II - Other Information 11 SIGNATURES 12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements BioSpecifics Technologies Corp. and Subsidiaries Consolidated Balance Sheets
(Unaudited) July 31, January 31, ASSETS 1996 1996 ----------- ----------- Cash and cash equivalents $ 3,044,514 $ 2,288,316 Marketable securities 1,887,708 2,395,534 Accounts receivable 1,212,257 1,186,526 Inventory 1,519,220 1,435,767 Prepaid expenses & other current assets 375,737 340,616 ........... ........... Total current assets 8,039,436 7,646,759 Property, plant, and equipment - net 906,056 981,082 Other assets 596,514 639,046 ........... ........... TOTAL ASSETS $ 9,542,006 $ 9,266,887 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 538,013 $ 993,577 Notes payable to related parties 11,040 10,570 Income taxes payable 278,300 140,090 Deferred revenue 130,000 130,000 ........... ........... Total current liabilities 957,353 1,274,237 Minority interest in subsidiaries 167,583 148,458 STOCKHOLDERS' EQUITY Series A Preferred stock, $.50 par value; 700,000 shares authorized; none outstanding -- -- Common stock, $.001 par value; 10,000,000 shares authorized; 4,883,396 shares issued and outstanding at July 31, 1996 and January 31, 1996 4,883 4,883 Additional paid-in capital 3,556,145 3,556,145 Retained earnings 5,038,552 4,465,674 ........... ........... 8,599,580 8,026,702 Less: Treasury stock - 10,000 shares at cost (182,510) (182,510) ........... ........... Stockholders' equity - net 8,417,070 7,844,192 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,542,006 $ 9,266,887 =========== =========== See accompanying notes to consolidated financial statements.
3 Biospecifics Technologies Corp. and Subsidiaries Consolidated Statements of Operations
(Unaudited) (Unaudited) Three months ended Six months ended July 31, July 31, 1996 1995 1996 1995 ------------------------------------------------------------ Revenues: Net sales $1,150,458 $999,310 $2,000,661 $1,150,135 Royalties 726,844 465,176 $1,197,141 $845,228 License fees 20,000 - - 20,000 - - ............................................................ Total Revenues 1,897,302 1,464,486 3,217,802 1,995,363 ------------------------------------------------------------ Costs & Expenses: Cost of sales 454,371 330,650 851,670 587,487 Selling, general and administrative 356,103 444,460 723,549 829,315 Research and development 404,111 534,037 762,587 938,949 ............................................................ Total Costs & Expenses 1,214,585 1,309,147 2,337,806 2,355,751 ------------------------------------------------------------ Income (loss) from operations 682,717 155,339 879,996 (360,388) Other income (expense) Investment & other income 41,475 115,462 71,504 278,723 Interest expense (1,322) (4,960) (3,286) (7,941) ............................................................ Total other income - net 40,153 110,502 68,218 270,782 ------------------------------------------------------------ Income (loss) before provision for income taxes 722,870 265,841 948,214 (89,606) Provision for income taxes (272,560) (117,050) (356,210) (25,950) ............................................................ Income (loss) before minority interest 450,310 148,791 592,004 (115,556) Less: minority interest in net income (loss) of subsidiaries 15,000 4,950 19,125 (2,020) ............................................................ Net income (loss) $435,310 $143,841 $572,879 ($113,536) ============================================================ Net income (loss) per common share $0.09 $0.03 $0.12 ($0.02) ============================================================ Weighted average number of shares used in computing net income (loss) per share: 4,925,543 4,966,039 4,921,558 4,918,692 ============================================================ See accompanying notes to consolidated financial statements
4 BioSpecifics Technologies Corp. and Subsidiaries Consolidated Statements of Cash Flows
(unaudited) Six months ended July 31, CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 -------------------------------------- Net income (loss) $572,879 ($113,536) Adjustments to reconcile net income (loss) to cash provided by/(used by) operating activities: Depreciation 100,257 98,001 (Gain) loss on marketable securities - net 53,230 (116,973) Minority interest in income (loss) of subsidiaries 19,125 (2,020) Issuance of stock options 0 20,000 Changes in operating assets & liabilities: Decrease (increase) in accounts receivable (25,731) 733,822 Proceeds from sales of marketable securities 749,421 772,501 Purchases of marketable securities (294,825) (361,219) Increase in inventory (83,453) (86,356) Increase in prepaid and other current assets (35,121) (117,787) (Increase) decrease in other assets 42,532 (191,362) Decrease in accounts payable & accruals (455,565) (199,832) Increase in deferred revenues 0 60,000 (Decrease) increase in income taxes payable 138,210 (93,847) ...................................... Net cash provided by operating activities 780,959 401,392 -------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for plant, property and equipment (25,231) (40,521) ...................................... Net cash used in investing activities (25,231) (40,521) -------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes with related parties 470 0 ...................................... Net cash provided by financing activities 470 0 -------------------------------------- INCREASE IN CASH AND CASH EQUIVALENTS 756,198 360,871 CASH AND EQUIVALENTS: Beginning of Period 2,288,316 1,438,368 ...................................... End of Period $3,044,514 $1,799,239 ====================================== SUPPLEMENTAL DISCLOSURE Cash paid during period for interest $1,964 $7,946 ====================================== Cash paid during period for income taxes $248,000 $194,000 ====================================== See accompanying notes to consolidated financial statements
5 BIOSPECIFICS TECHNOLOGIES CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS JULY 31, 1996 (UNAUDITED) 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION - BioSpecifics Technologies Corp. (the Company) serves as a holding company for Advance Biofactures Corporation (ABC-New York), Advance Biofactures of Curacao, N.V. and subsidiaries (ABC-Curacao), and Biospecifics Pharma GmbH (Bio Pharma), Germany, which was established in November 1995. The Company, through its subsidiaries, engages in the business of producing and licensing for sale by others a U.S. Food and Drug Administration ("FDA") approved enzyme product named Collagenase ABC, and researching, developing and clinically testing additional products derived therefrom for potential use as pharmaceuticals. The Company currently derives substantially all of its revenues through a license agreement with a major US pharmaceutical company, Knoll Pharmaceutical Company ("KPC"). Since February 1, 1995, sales of collagenase have been principally to KPC, which markets it as an ointment in the United States under its trademarked name "Collagenase Santyl(R)". The license agreement with KPC expires in 2003. In the event that KPC were to cancel the license agreement for cause, which the Company believes is unlikely, the financial condition of the Company would be materially adversely impacted unless the Company were to find another licensee in the United States. The Company has undertaken efforts to secure licensees outside the United States. The Company has licensing agreements with foreign companies to market collagenase, either as a topical product or an injectable, when permitted by local governmental authorities. The Company sells Collagenase ABC to pharmaceutical companies in Latin America and India, in relatively small amounts. 6 2. INTERIM FINANCIAL STATEMENTS - In the opinion of management, the accompanying consolidated financial statements of the Company reflect all adjustments necessary to present fairly, in all material respects, the Company's balance sheet as of July 31, 1996, the results of operations for the three and six months ended July 31, 1996 and 1995, and cash flows for the six months ended July 31, 1996 and 1995. The results of operations for interim periods are not necessarily indicative of the results to be expected for an entire fiscal year, and the results for the current interim period are not necessarily indicative of results to be expected in other interim periods. These interim financial statements should be read in conjunction with the Company's Form 10-KSB for the fiscal year ended January 31, 1996. 3. EARNINGS (LOSS) PER SHARE - Earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. The dilutive effect of outstanding stock options and warrants was included in the calculation for the three and six months ended July 31, 1996. Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Options and warrants are not included in any period when the effect would be anti-dilutive. 4. ACCOUNTING FOR STOCK BASED COMPENSATION - In October 1995, The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123 establishes financial accounting and reporting standards for stock-based employee compensation plans. SFAS 123 also applies to transactions in which an entity issues its equity instruments to acquire goods or services from non employees. SFAS 123 encourages, but does not require, a fair value based method of accounting for employee stock options or similar equity instruments. Entities electing not to adopt a fair value method must make pro-forma disclosures of net income and earnings per share as if a fair value based method had been applied. SFAS 123 requires a fair value method for stock options or similar equity instruments issued to non employees. SFAS 123 is effective for fiscal year 1997. The Company does not expect that it will adopt a fair value based method and therefore does not expect the adoption of SFAS 123 to have material impact on its financial position or results of operations. 7 Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 - -------------------------------------------------------------------------------- The Company cautions readers that important factors may affect the Company's actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company. Such factors include, but are not limited to, changing market conditions, the impact of competitive products and pricing, the timely development, approval by the FDA and foreign health authorities, and market acceptance, of the Company's products in development, the Company's dependence on KPC, and other risks detailed herein and in other filings the Company makes with the Securities and Exchange Commission. The Company incorporates by reference the Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in its Form 10-KSB for the fiscal year ended January 31, 1996. Three months ended July 31, 1996 and 1995 ----------------------------------------- NET SALES - Net sales for the three months ended July 31, 1996 and 1995 were $1,150,458 and $999,310 respectively, representing a $151,148 or 15% increase. The increase was primarily due to higher sales to the Company's customer in Latin America. ROYALTIES - Royalties for the three months ended July 31, 1996 and 1995 were $726,844 and $465,176 respectively, representing a $261,668 or 56% increase from higher sales of Collagenase Santyl(R) in the United States, as reported to the Company by KPC. LICENSE FEES - The Company earned a license fee during the quarter ended July 31, 1996 due to a product distribution agreement with a German pharmaceutical company. There were no license fees earned in the quarter ended July 31, 1995 period. COST OF SALES - Cost of sales for the three months ended July 31, 1996 and 1995 were $454,371 and $330,650 respectively, representing an increase of $123,721 or 37%, due to higher net sales. Cost of sales in the 1995 period were reduced by the waiver of an FDA fee which had been previously accrued. 8 SELLING, GENERAL AND ADMINISTRATIVE - Selling, general and administrative ("SG&A") expenses for the three months ended July 31, 1996 and 1995 were $356,103 and $444,460 respectively, representing an $88,357 or 20% decrease. The decrease was due to lower professional fees incurred in the more recent quarter, the effect of which was partially offset by SG&A expenses of the Company's subsidiary Bio Pharma, which did not exist during the second quarter of 1995. RESEARCH AND DEVELOPMENT - Research and development ("R&D") expenses for the three months ended July 31, 1996 and 1995 were $404,111 and $534,037 respectively, representing a decrease of $129,926 or 24%. The decrease was due to completion of most R&D activities in Europe for Collagenase ABC and Nucleolysin(R). Most R&D expense in the more recent period were incurred in the United States, for clinical trials of injectable collagenase for Peyronie's disease, keloids, and Dupuytren's contracture, and for pre-clinical research of other uses of collagenase. OTHER INCOME - NET - Other income - net for the three months ended July 31, 1996 and 1995 was $40,153 and $110,502 respectively. The decrease of $70,349 was due primarily to realized gains on sales of trading securities and reduction in the unrealized holding losses of trading securities in the 1995 period. PROVISION FOR INCOME TAXES - The provision for income taxes for the three months ended July 31, 1996 and 1995 was $272,560 and $117,050 respectively, an increase of $155,510. The increase was due to higher profitability of the Company's United States subsidiary, primarily as a result of higher royalty revenues. The principal reason for the difference between the United States Federal statutory tax rate of 34% and the Company's effective tax rate is the additional provision required for state income taxes where the Company's US subsidiary is domiciled, and the non-deductibility of losses incurred by foreign subsidiaries when calculating US taxes. Six months ended July 31, 1996 and 1995 --------------------------------------- NET SALES - Net sales for the six months ended July 31, 1996 and 1995 were $2,000,661 and $1,150,135 respectively, representing an $850,525 or 74% increase. The increase in net sales is primarily due to significantly higher sales to KPC in the first three months of the July 31, 1996 fiscal period versus 1995. Also, the Company's Latin America and India customers purchased more collagenase in the 1996 period. 9 ROYALTIES - Royalties for the six months ended July 31, 1996 and 1995 were $1,197,141 and $845,228 respectively, representing a $351,913 or 42% increase, from higher sales of Collagenase Santyl(R) in the United States, as reported to the Company by KPC. LICENSE FEES - The Company earned a license fee during the six months ended July 31, 1996 due to a product distribution agreement with a German pharmaceutical company. There were no license fees earned in the six months ended July 31, 1995. COST OF SALES - Cost of sales for the six months ended July 31, 1996 and 1995 were $851,670 and $587,487 respectively, representing an increase of $264,183 or 45% due to higher net sales as described above. SELLING, GENERAL AND ADMINISTRATIVE - SG&A expenses for the six months ended July 31, 1996 and 1995 were $723,549 and $829,315 respectively, representing a $105,766 or 13% decrease. The decrease is due to lower professional fees incurred in the more recent six months, the effect of which was partially offset by the SG&A expenses of the Company's subsidiary Bio Pharma, which did not exist during the first six months of 1995. RESEARCH AND DEVELOPMENT - Research and development expenses for the six months ended July 31, 1996 and 1995 were $762,587 and $938,949 respectively, representing a decrease of $176,362 or 19%. The decrease was due to completion of most R&D activities in Europe for Collagenase ABC and Nucleolysin(R). Most R&D expense in the more recent period was incurred in the United States, for clinical trials of injectable collagenase for Peyronie's disease, keloids, and Dupuytren's contracture, and for pre-clinical research of other uses of collagenase. PROVISION FOR INCOME TAXES - The provision for income taxes for the six months ended July 31, 1996 and 1995 was $356,210 and $25,950 respectively, an increase of $330,260. The increase was due to profitability of the Company's United States and Curacao subsidiaries, due to higher sales and royalties. The principal reason for the difference between the United States Federal statutory tax rate of 34% and the Company's effective tax rate is the additional provision required for state income taxes where the Company's US subsidiary is domiciled, and the non-deductibility of losses incurred by foreign subsidiaries when calculating US taxes. 10 OTHER INCOME - NET - Other income - net for the six months ended July 31, 1996 and 1995 was $68,218 and $270,782 respectively. The decrease of $202,546 was due primarily to realized gains on sales of trading securities and reduction in the unrealized holding losses of trading securities in the 1995 period. Gains were not as extensive in the more current six months, nor are they expected to be in the future. LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION - --------------------------------------------------------------- The Company's primary source of working capital is from operating activities, including sales, royalties, and new license fees. As of July 31, 1996, the Company had working capital of approximately $7,082,000 which includes cash and cash equivalents and marketable securities of approximately $4,932,000. The principal source of cash during the six months ended July 31, 1996 was approximately $780,000 from operating activities, which includes proceeds from sales of investments, net of purchases, of $454,000. At July 31, 1996 the Company had no material commitments for capital expenditures. Although there can be no assurance, management believes that in view of the Company's working capital position and anticipated positive cash flow from operating activities, the Company has sufficient liquidity and capital resources to meet its immediate operating needs. The Company believes that cash on hand and cash from operations will be sufficient to meet the Company's cash needs on an ongoing basis. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ (a.) The annual meeting of stockholders was held July 11, 1996. The purpose of the meeting was to elect three directors of the Company. (b.) The directors elected at the stockholders' meeting were Edwin H. Wegman, Harold Stern and Rainer Friedel, whose terms expire in 1999. The other directors whose terms of office as director continued after the meeting are Henry Morgan and Sherman Vogel, whose terms expire in 1998, and Paul A. Gitman, MD and Thomas L. Wegman, whose terms of office expire in 1997. 11 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BioSpecifics Technologies Corp. (Registrant) Date: September 11, 1996 ------------------ By:/s/Edwin H. Wegman ------------------ Edwin H. Wegman Chairman and President Date: September 11, 1996 ------------------ By:/s/Albert Horcher ----------------- Albert Horcher Controller, Principal Financial and Chief Accounting Officer 12 EX-27 2 EXHIBIT 27.1 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF BIOSPECIFICS TECHNOLOGIES CORP. FOR THE SIX MONTHS ENDED JULY 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 6-MOS JAN-31-1997 FEB-01-1996 JUL-31-1996 3,044,514 1,887,708 1,212,257 0 1,519,220 8,039,436 2,865,280 1,959,224 9,542,006 957,353 0 0 0 4,883 8,412,187 9,542,006 3,197,802 3,217,802 836,670 836,670 762,587 0 3,286 948,214 356,210 572,879 0 0 0 572,879 .12 .12
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