-----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, V5p3oiSbn8lhaNhMUg08ILHM+5kynDT6pMHsT5nIzbrvGO1mACEqL6ANuLNUjGHQ QJMZ311TZoKaKUBnNYQ19A== 0001042910-98-000563.txt : 19980616 0001042910-98-000563.hdr.sgml : 19980616 ACCESSION NUMBER: 0001042910-98-000563 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980615 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 SEC ACT: SEC FILE NUMBER: 000-19879 FILM NUMBER: 98648450 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 1 U.S. Securities and Exchange Commission Washington D.C. 20549 FORM 10-QSB (Mark One) [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: April 30, 1998 [ ] 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: 4,891,146 shares of Common Stock, $0.001 par value as of June 1, 1998 Transitional Small Business Disclosure Format (check one): Yes:___ No x Page 1 of 9 INDEX ----- Page ---- PART I - FINANCIAL INFORMATION 3 Item 1. Financial Statements 3 Consolidated Financial Statements: Balance Sheets as of April 30, 1998 (unaudited) and January 31, 3 1998 Statements of Income for the Three Months Ended April 30, 1998 and 1997 (unaudited) 4 Statements of Cash Flows for the Three Months Ended April 30, 1998 and 1997 (unaudited) 5 Notes to Consolidated Interim Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 SIGNATURES 9 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements
BioSpecifics Technologies Corp. and Subsidiaries Consolidated Balance Sheets (Unaudited) April 30, January 31, 1998 1998 ---------- ------------ ASSETS Cash and cash equivalents $4,667,626 $4,431,055 Marketable securities 2,011,788 2,343,801 Accounts receivable 1,250,424 1,312,997 Inventory 1,405,891 1,482,720 Deferred tax assets - net 179,000 179,000 Prepaid expenses & other current assets 442,249 269,016 ------------ ------------ Total current assets 9,956,978 10,018,589 Property, plant, and equipment - net 844,592 873,600 Other assets 288,119 306,451 ------------ ------------ TOTAL ASSETS $11,089,689 $11,198,640 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $961,562 $1,309,972 Notes payable to related parties 12,135 12,010 Income taxes payable 93,569 61,840 Deferred revenue 175,000 175,000 ------------ ------------ Total current liabilities 1,242,266 1,558,822 Minority interest in subsidiaries 224,248 220,349 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; 4,891,146 and 4,886,096 shares issued and out- standing at April 30, 1998 and January 31, 1998, respectively 4,891 4,886 Additional paid-in capital 3,652,175 3,617,005 Retained earnings 6,656,055 6,427,433 Cumulative translation adjustment (3,284) (3,354) ------------ ------------ 10,309,837 10,045,970 Less: Treasury stock - 107,900 and 96,800 shares, at cost (686,662) (626,501) ------------ ------------ Stockholders' equity - net 9,623,175 9,419,469 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,089,689 $11,198,640 ============ ============
See accompanying notes to consolidated financial statements. 3 Biospecifics Technologies Corp. and Subsidiaries Consolidated Statements of Income
Unaudited Three Months Ended April 30, 1998 1997 ---------- ---------- Revenues: Net sales $1,223,543 $858,810 Royalties 484,115 594,344 ---------- ----------- 1,707,658 1,453,154 ---------- ----------- Costs and Expenses: Cost of sales 546,757 400,425 Selling, general and administrative 429,835 384,802 Research and development 421,818 423,957 ---------- ----------- 1,398,410 1,209,184 ---------- ----------- Income from operations 309,248 243,970 Other income (expense): Investment and other income 61,018 62,599 Interest expense (1,643) (599) ---------- ----------- 59,375 62,000 ---------- ----------- Income before taxes and minority interest 368,623 305,970 Provision for income taxes (136,100) (114,260) ---------- ----------- Income before minority interest 232,523 191,710 Minority interest in net income of subsidiaries 3,900 6,700 ---------- ----------- Net income $228,623 $185,010 ========== =========== Basic net income per common share $0.05 $0.04 ========== =========== Weighted-average common shares outstanding 4,785,263 4,873,396 ========== =========== Diluted net income per common share $0.05 $0.04 ========== =========== Weighted-average common and dilutive potential common shares outstanding 4,921,768 4,892,247 ========== ===========
See accompanying notes to consolidated financial statements 4 BioSpecifics Technologies Corp. and Subsidiaries Consolidated Statements of Cash Flows
(unaudited) Three months ended April 30, 1998 1997 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $228,623 $185,010 Adjustments to reconcile net income to cash provided by/(used by) operating activities: Depreciation 47,075 46,674 Loss on marketable securities - net 21,523 8,502 Minority interest in income of subsidiaries 3,900 6,700 Costs associated with issuance of common stock grants 15,000 - Changes in operating assets and liabilities: Accounts receivable 62,573 (520,430) Marketable securities, net 310,490 (139,735) Inventory 76,829 37,279 Prepaid and other current assets (173,233) 102,481 Other assets 18,332 25,395 Accounts payable & accruals (348,410) (61,569) Due to related parties 125 125 Income taxes payable 31,729 (620) Cumulative translation adjustment 68 (3,271) ---------- ---------- Net cash (used) provided by operating activities 294,624 (313,459) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for plant, property and equipment (18,067) (31,854) ---------- ---------- Net cash used in investing activities (18,067) (31,854) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Treasury stock purchases (60,161) - Proceeds from stock option exercises 20,175 - ---------- ---------- Net cash used in financing activities (39,986) - ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 236,571 (345,313) CASH AND CASH EQUIVALENTS: Beginning of Period 4,431,055 3,793,582 ---------- ---------- End of Period $4,667,626 $3,448,269 ========== ========== Supplemental disclosure of cash flow information: Cash paid during period for interest $1,743 $559 ========== ========== Cash paid during period for income taxes $104,371 $62,820 ========== ==========
See accompanying note to consolidated financial statements 5 BIOSPECIFICS TECHNOLOGIES CORP. NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS APRIL 30, 1998 (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. 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 named Collagenase ABC, which is used principally as a topical debridement treatment for dermal ulcers; and researching, developing and clinically testing additional products derived from Collagenase ABC for potential use as pharmaceuticals. The Company currently derives substantially all of its revenues through a license agreement with a major U.S. pharmaceutical company, Knoll Pharmaceutical Company ("KPC"). Sales of Collagenase ABC 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 ABC, either as a topical product or an injectable, when permitted by local governmental authorities. The Company sells relatively small amounts of Collagenase ABC to pharmaceutical companies in Latin America and India. 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 April 30, 1998, the statements of income for the three months ended April 30, 1998 and 1997, and statements of cash flows for the three months ended April 30, 1998 and 1997. 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, 1998. 3. Basic and Diluted Income per Share - Basic earnings per share ("EPS") excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding during the periods of presentation. Diluted EPS reflects the dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. 6 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 - -------------------------------------------------------------------------------- Information provided by the Company or statements contained in this report or made by its employees, if not historical, is forward-looking information which involves uncertainties and risk. 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 product 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. Further, any forward-looking statement or statements speak only as of the date on which such statements were made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement or statements were made. 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, 1998. Three months ended April 30, 1998 and 1997 - ------------------------------------------ Net Sales - Net sales of Collagenase ABC for the three months ended April 30, 1998 and 1997 were $1,223,543 and $858,810, respectively, an increase of $364,733 or 42%. Sales of Collagenase ABC to KPC and foreign licensees were higher during the 1998 first fiscal quarter versus the 1997 first fiscal quarter. Royalties - Royalties for the three months ended April 30, 1998 and 1997 were $484,115 and $594,344, respectively, a decrease of $110,229 or 19%. The decrease was due to a decline in after-market sales of Collagenase ointment (Collagenase Santyl ) in the United States by KPC during the 1998 first fiscal quarter, as reported to the Company by KPC. The Company believes the decline to be temporary, the result of unusually high sales of Collagenase Santyl by KPC in the month of January 1998, which had a negative impact on sales of Collagenase Santyl in the month of February 1998. As reported to the Company by KPC, sales of Collagenase Santyl have resumed a more favorable pace. Cost of Sales - Cost of sales for the three months ended April 30, 1998 and 1997 were $546,757 and $400,425, respectively, an increase of $146,332 or 37% due to the higher level of sales in the first quarter of 1998. 7 Selling, general and administrative - Selling, general and administrative ("SG&A") expenses for the three months ended April 30, 1998 and 1997 were $429,835 and $384,802, respectively, an increase of $45,033 or 12% due to higher rental costs and professional fees. Research and development - Research and development ("R&D") expense for the three months ended April 30, 1998 and 1997 were $421,818 and $423,957 respectively, representing a slight decrease of $2,139 or 1%. The Company is sponsoring U.S. clinical trials of its injectable collagenase for three disease conditions. The Company is focusing its R&D on developing injectable collagenase for certain disease conditions by sponsoring clinical trials in the United States. The Company expects its current year (fiscal 1999) R&D expense to exceed that of last year. Other income, net - Other income, net for the three months ended April 30, 1998 and 1997 was $59,375 and $62,000 respectively. The decrease of $2,625 or 4% was primarily attributable to fluctuations in interest rates which affect the fair value of the Company's trading securities. Provision for income taxes - The provision for income taxes for the three months ended April 30, 1998 and 1997 was $136,100 and $114,260, respectively, an increase of $21,840 or 19%. The higher provision in the current period was due to more profitable operations. LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION The Company's primary source of working capital is from operations, which includes sales of product, royalties, and new license fees. At April 30, 1998, the Company had working capital of approximately $8.7 million which includes cash and cash equivalents, and marketable securities of approximately $6.6 million. Net cash provided by operating activities during the quarter ended April 30, 1998 was approximately $295,000. At April 30, 1998, the Company had commitments for capital expenditures of approximately $150,000. In view of the Company's working capital position and anticipated future profitable operations, although there can be no assurance, management believes that the Company has sufficient liquidity and capital resources to meet its immediate operating needs. The Company believes that cash on hand and cash provided by operations will be sufficient to meet its cash needs on an ongoing basis. 8 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BioSpecifics Technologies Corp. (Registrant) Date: June 15, 1998 ------------- By:/s/ Edwin H. Wegman ------------------- Edwin H. Wegman Chairman, President, and Chief Executive Officer Date: June 15, 1998 ------------- By: /s/ Albert Horcher ------------------ Albert Horcher Secretary, Treasurer and Principal Financial and Chief Accounting Officer 9 EX-27 2 FDS --
5 1 3-MOS Jan-31-1999 Feb-01-1998 Apr-30-1998 4,667,626 2,011,788 1,250,424 0 1,405,891 442,249 3,062,465 2,217,873 11,089,689 1,242,266 0 0 0 4,891 10,308,230 9,623,175 1,707,658 1,707,658 546,757 546,757 421,818 0 1,643 368,623 136,100 228,623 0 0 0 228,623 0.05 0.05
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