Delaware
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11-3054851
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer o
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Accelerated filer x
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company o
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Class of Stock
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Outstanding November 4, 2011
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Common Stock ($.001 par value)
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6,361,110
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Page | ||
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PART I – FINANCIAL INFORMATION
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ITEM 1.
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4
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4
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5
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6
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7
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ITEM 2.
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15
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ITEM 3.
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23
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ITEM 4.
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24
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PART II – OTHER INFORMATION
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ITEM 1.
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24
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ITEM 1A.
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25
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ITEM 2.
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26
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ITEM 3.
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26
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ITEM 4.
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27
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ITEM 5.
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27
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ITEM 6.
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27
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September 30,
2011 |
December 31,
2010 |
|||||||
(unaudited)
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(audited)
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|||||||
Assets
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 3,795,763 | $ | 2,470,852 | ||||
Short-term investments
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5,000,000 | 5,360,970 | ||||||
Accounts receivable, net
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1,699,889 | 1,986,125 | ||||||
Income tax receivable
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379,036 | 185,386 | ||||||
Deferred tax assets
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1,289,065 | - | ||||||
Prepaid expenses and other current assets
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122,082 | 91,925 | ||||||
Total current assets
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12,285,835 | 10,095,258 | ||||||
Deferred royalty buy-down
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1,250,000 | 1,250,000 | ||||||
Deferred tax assets –long term
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1,762,132 | - | ||||||
Patent costs, net
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164,027 | 173,443 | ||||||
Total assets
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15,461,994 | 11,518,701 | ||||||
Liabilities and Stockholders' Equity
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||||||||
Current liabilities:
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||||||||
Accounts payable and accrued expenses
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732,930 | 893,083 | ||||||
Accrued third-party development expenses
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- | 2,649,369 | ||||||
Deferred revenue
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437,100 | 483,769 | ||||||
Accrued liabilities of discontinued operations
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78,138 | 78,138 | ||||||
Total current liabilities
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1,248,168 | 4,104,359 | ||||||
Long-term deferred revenue
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385,795 | 713,619 | ||||||
Stockholders' equity:
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||||||||
Series A Preferred stock, $.50 par value, 700,000 shares authorized; none outstanding
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- | - | ||||||
Common stock, $.001 par value; 10,000,000 shares authorized;6,530,743 and 6,445,743 shares issued at September 30, 2011 and December 31, 2010, respectively
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6,531 | 6,446 | ||||||
Additional paid-in capital
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18,697,136 | 17,739,765 | ||||||
Accumulated deficit
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(3,363,231 | ) | (9,893,530 | ) | ||||
Treasury stock, 169,633 and 151,875 shares at cost at September 30, 2011 and December 31, 2010, respectively
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(1,512,405 | ) | (1,151,958 | ) | ||||
Total stockholders' equity
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13,828,031 | 6,700,723 | ||||||
Total liabilities and stockholders’ equity
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$ | 15,461,994 | $ | 11,518,701 |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Revenues: | ||||||||||||||||
Net sales
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$ | 1,683 | $ | 5,183 | $ | 13,457 | $ | 32,328 | ||||||||
Royalties
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1,810,436 | 819,639 | 4,461,683 | 1,358,773 | ||||||||||||
Licensing revenues
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109,276 | 109,275 | 4,265,327 | 2,916,835 | ||||||||||||
Consulting fees
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- | 70,000 | 46,667 | 210,000 | ||||||||||||
Total Revenues
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1,921,395 | 1,004,097 | 8,787,134 | 4,517,936 | ||||||||||||
Costs and expenses:
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||||||||||||||||
Research and development
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224,150 | 216,571 | 707,015 | 1,258,187 | ||||||||||||
General and administrative
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1,245,145 | 1,289,310 | 4,172,687 | 4,969,653 | ||||||||||||
Total Cost and Expenses
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1,469,295 | 1,505,881 | 4,879,702 | 6,227,840 | ||||||||||||
Operating income (loss)
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452,100 | (501,784 | ) | 3,907,432 | (1,709,904 | ) | ||||||||||
Other income (expense):
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||||||||||||||||
Interest income
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7,813 | 17,487 | 41,061 | 69,262 | ||||||||||||
Other income (expense)
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- | - | 14,479 | - | ||||||||||||
7,813 | 17,487 | 55,540 | 69,262 | |||||||||||||
Income (loss) before expense for income tax
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459,913 | (484,297 | ) | 3,962,972 | (1,640,642 | ) | ||||||||||
Income tax benefit (expense)
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(190,077 | ) | - | 2,567,328 | (8,067 | ) | ||||||||||
Net income (loss)
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$ | 269,836 | $ | (484,297 | ) | $ | 6,530,300 | $ | (1,648,709 | ) | ||||||
Basic net income (loss) per share
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$ | 0.04 | $ | (0.08 | ) | $ | 1.03 | $ | (0.26 | ) | ||||||
Diluted net income (loss) per share
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$ | 0.04 | $ | (0.08 | ) | $ | 0.92 | $ | (0.26 | ) | ||||||
Shares used in computation of basic net income (loss) per share
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6,362,951 | 6,275,758 | 6,337,237 | 6,254,792 | ||||||||||||
Shares used in computation of diluted net income (loss) per share
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7,085,945 | 6,275,758 | 7,133,341 | 6,254,792 |
Nine Months Ended
September 30,
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Cash flows from operating activities:
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2011
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2010
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Net income (loss)
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$ | 6,530,300 | $ | (1,648,709 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
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Depreciation and amortization
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32,349 | 9,770 | ||||||
Stock-based compensation expense
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391,138 | 1,710,992 | ||||||
Changes in operating assets and liabilities:
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||||||||
Accounts receivable
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286,236 | 116,965 | ||||||
Deferred tax assets
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(3,051,197 | ) | - | |||||
Prepaid expenses and other current assets
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(223,807 | ) | (67,679 | ) | ||||
Accounts payable and accrued expenses
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(2,832,456 | ) | 457,547 | |||||
Deferred revenue
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(374,494 | ) | (651,836 | ) | ||||
Net cash provided by (used in) operating activities
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758,069 | (72,950 | ) | |||||
Cash flows from investing activities:
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||||||||
Maturity of marketable investments
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5,360,970 | 4,548,541 | ||||||
Purchases of marketable investments
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(5,000,000 | ) | (5,360,970 | ) | ||||
Net cash provided by (used in) investing activities
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360,970 | (812,429 | ) | |||||
Cash flows from financing activities:
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||||||||
Proceeds from stock option exercises
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82,450 | 653,375 | ||||||
Payments for repurchase of common stock
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(360,447 | ) | (418,757 | ) | ||||
Excess tax benefits from share-based payment arrangements
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483,869 | - | ||||||
Net cash provided by (used in) financing activities
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205,872 | 234,618 | ||||||
Increase (decrease) in cash and cash equivalents
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1,324,911 | (650,761 | ) | |||||
Cash and cash equivalents at beginning of year
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2,470,852 | 3,950,389 | ||||||
Cash and cash equivalents at end of period
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$ | 3,795,763 | $ | 3,299,628 | ||||
Supplemental disclosures of cash flow information:
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Cash paid during the year for:
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Interest
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- | - | ||||||
Taxes
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$ | 190,000 | $ | 9,851 |
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●
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Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets
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●
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Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs
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●
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Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the assets or liabilities
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Level 1
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Level 2
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Level 3
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Cash and cash equivalents
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$ | 3,795,763 | - | - | ||||||||
Certificates of Deposit
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5,000,000 | - | - |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2011
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2010
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2011
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2010
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Research and development
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$ | 22,138 | $ | 27,116 | $ | 74,711 | $ | 82,269 | ||||||||
General and administrative
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104,093 | 362,104 | 316,427 | 1,628,723 | ||||||||||||
Total stock-based compensation expense
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$ | 126,231 | $ | 389,220 | $ | 391,138 | $ | 1,710,992 |
Options
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Total Number
of Shares |
Weighted-Average
Exercise Price |
||||||
Outstanding as of December 31, 2010
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1,346,425 | $ | 7.81 | |||||
Granted
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- | - | ||||||
Forfeited
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- | - | ||||||
Exercised
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85,000 | 0.97 | ||||||
Expired
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- | $ | - | |||||
Outstanding as of September 30, 2011
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1,261,425 | $ | 8.27 | |||||
Exercisable as of September 30, 2011
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1,163,925 | $ | 7.16 |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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Stock options
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722,994 | 902,134 | 796,104 | 936,615 |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2011
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2010
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2011
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2010
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Net income (loss)
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$ | 269,836 | $ | (484,297 | ) | $ | 6,530,300 | $ | (1,648,709 | ) | ||||||
Other comprehensive loss:
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||||||||||||||||
Change in unrealized losses on marketable securities
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- | - | - | - | ||||||||||||
Total Comprehensive Income (Loss)
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$ | 269,836 | $ | (484,297 | ) | $ | 6,530,300 | $ | (1,648,709 | ) |
September 30,
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December 31,
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2011
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2010
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Trade accounts payable and accrued expenses
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$ | 473,162 | $ | 674,917 | ||||
Accrued legal and other professional fees
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116,292 | 77,442 | ||||||
Accrued payroll and related costs
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143,476 | 140,725 | ||||||
Total
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$ | 732,930 | $ | 893,084 |
September 30,
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December 31,
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2011
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2010
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Patents
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$ | 273,554 | $ | 250,621 | ||||
Accumulated Amortization
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(109,527 | ) | (77,178 | ) | ||||
$ | 164,027 | $ | 173,443 |
2012
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$ | 39,000 | ||
2013
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36,000 | |||
2014
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29,000 | |||
2015
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11,000 | |||
2016 through 2020
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8,000 |
Three Months
Ended
September 30, 2011
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Nine Months
Ended
September 30, 2011
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January 1, 2010
to
September 30,2011
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||||||||||
Program
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Canine Lipoma
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$ | 70,563 | $ | 211,704 | $ | 409,734 | ||||||
Human Lipoma
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33,837 | 88,190 | 213,381 |
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·
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the nature, timing and estimated costs of the efforts necessary to complete the development of our drug candidate projects;
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·
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the anticipated completion dates for our drug candidate projects;
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·
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the scope, rate of progress and cost of our clinical trials that we are currently running or may commence in the future with respect to our drug candidate projects;
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·
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the scope, rate of progress of our preclinical studies and other research and development activities related to our drug candidate projects;
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clinical trial results for our drug candidate projects;
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·
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the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights relating to our drug candidate projects;
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·
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the terms and timing of any strategic alliance, licensing and other arrangements that we have or may establish in the future relating to our drug candidate projects;
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·
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the cost and timing of regulatory approvals with respect to our drug candidate projects; and
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·
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the cost of establishing clinical supplies for our drug candidate projects.
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1.
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the lawsuit filed against the Company on June 28, 2011 by Auxilium and Cobra (as defined below) in the Court of Common Pleas in Chester County, Pennsylvania, seeking declaratory judgment on all of the counts contained in the May 2, 2011 lawsuit filed by the Company against them in New York.
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2.
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the lawsuit filed by the Company on May 2, 2011 against Recipharm AB (“Recipharm”), Recipharmcobra Holdings Limited (“Recipharmcobra” and together with Recipharm, “Cobra”) and Auxilium in the Supreme Court of the State of New York in Nassau County, New York alleging that Auxilium, despite full knowledge of the terms of a Material Transfer Agreement ("MTA") between us and Cobra, wrongfully caused Cobra to instruct its employees to assign to Auxilium alone, instead of to us, the rights to inventions that belong to us under the MTA, which such rights were used by Auxilium to apply for and to obtain a manufacturing patent that did not name us as a co-owner or co-inventor.
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3.
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the lawsuit filed against the Company on February 15, 2011 by Auxilium in the Court of Common Pleas in Chester County, Pennsylvania concerning our right to conduct clinical trials without the prior approval of the companies’ Joint Development Committee.
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·
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the nature, timing and estimated costs of the efforts necessary to complete the development of our drug candidate projects;
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·
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the anticipated completion dates for our drug candidate projects;
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·
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the scope, rate of progress and cost of our clinical trials that we are currently running or may commence in the future with respect to our drug candidate projects;
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·
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the scope, rate of progress of our preclinical studies and other research and development activities related to our drug candidate projects;
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·
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clinical trial results for our drug candidate projects;
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·
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the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights relating to our drug candidate projects;
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·
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the terms and timing of any strategic alliance, licensing and other arrangements that we have or may establish in the future relating to our drug candidate projects;
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·
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the cost and timing of regulatory approvals with respect to our drug candidate projects; and
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·
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the cost of establishing clinical supplies for our drug candidate projects.
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Period
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Total Number of
Shares
Purchased
During Period (2)
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Average
Price Paid
Per Share (3)
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Total Number of
Shares
Purchased as
Part of Publicly
Announced Plan
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Maximum Dollar
Value of Shares
that may yet be
Purchased
under the Plan (4)
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||||||||||||
April 1, 2010 – June 30, 2010
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18,718 | $ | 22.37 | 18,718 | $ | 1,581,242 | ||||||||||
July 1, 2010 – September 30, 2010
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- | - | 18,718 | $ | 1,581,242 | |||||||||||
October 1, 2010 – December 31, 2010
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1,890 | $ | 20.76 | 20,608 | $ | 1,541,999 | ||||||||||
January 1, 2011 – March 31, 2011
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- | - | 20,608 | $ | 1,541,999 | |||||||||||
April 1, 2011 – June 30, 2011
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8,777 | $ | 23.51 | 29,385 | $ | 1,335,651 | ||||||||||
$ | 2,000,000 | (5) | ||||||||||||||
July 1, 2011 – September 30, 2011
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8,981 | $ | 17.18 | 38,366 | $ | 1,845,900 | ||||||||||
Total
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38,366 |
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(1)
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On June 4, 2010, we announced that our board of directors authorized a stock repurchase program under Rule 10b-18 of the Exchange Act of up to $2.0 million of our outstanding common stock over a period of 12 months. On June 20, 2011, we announced that our Board of Directors had reauthorized this stock repurchase program.
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(2)
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The purchases were made in open-market transactions.
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(3)
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Includes commissions paid, if any, related to the stock repurchase transactions.
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(4)
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Represents the difference between the original $2.0 million of stock repurchases authorized by our board of directors on June 4, 2010 less the value of the stock repurchased for the indicated period.
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(5)
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On June 20, 2011, our board of directors reauthorized the repurchase of up to $2.0 million of our common stock under the stock repurchase program.
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3.1
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Registrant’s Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Registrant's Form 10-KSB filed with the SEC on March 2, 2007).
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3.2
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Registrant’s Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Registrant’s Form 10-KSB filed with the SEC on March 2, 2007).
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10.1
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Second Amended and Restated Development and License Agreement, dated as of August 31, 2011, by and between BioSpecifics Technologies Corp. and Auxilium Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed with the SEC on September 1, 2011).
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10.2
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Settlement Agreement, dated as of August 31, 2011, by and between BioSpecifics Technologies Corp. and Auxilium Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed with the SEC on September 1, 2011).
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule13a-14(a)/15d-14(a).
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
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101.INS | Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
BIOSPECIFICS TECHNOLOGIES CORP. | |
(Registrant) | |
Date: November 8, 2011
|
/s/Thomas L. Wegman |
Thomas L. Wegman | |
President, Principal Executive Officer and Principal Financial Officer |
1.
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I have reviewed this report on Form 10-Q for the quarterly period ended September 30, 2011 of BioSpecifics Technologies Corp.;
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2.
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Based on my knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
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The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date: November 8, 2011
|
/s/ Thomas L. Wegman |
Thomas L. Wegman |
President, Principal Executive Officer and Principal Financial Officer |
1.
|
The Company’s report on Form 10-Q for the quarterly period ended September 30, 2011 (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
/s/ Thomas L. Wegman |
Thomas L. Wegman |
President, Principal Executive Officer and Principal Financial Officer |
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Stockholders' equity: | ||
Series A Preferred stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Series A Preferred stock, shares authorized (in shares) | 700,000 | 700,000 |
Series A Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares issued (in shares) | 6,530,743 | 6,445,743 |
Treasury stock (in shares) | 169,633 | 151,875 |
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Revenues: | ||||
Net sales | $ 1,683 | $ 5,183 | $ 13,457 | $ 32,328 |
Royalties | 1,810,436 | 819,639 | 4,461,683 | 1,358,773 |
Licensing revenues | 109,276 | 109,275 | 4,265,327 | 2,916,835 |
Consulting fees | 0 | 70,000 | 46,667 | 210,000 |
Total Revenues | 1,921,395 | 1,004,097 | 8,787,134 | 4,517,936 |
Costs and expenses: | ||||
Research and development | 224,150 | 216,571 | 707,015 | 1,258,187 |
General and administrative | 1,245,145 | 1,289,310 | 4,172,687 | 4,969,653 |
Total Cost and Expenses | 1,469,295 | 1,505,881 | 4,879,702 | 6,227,840 |
Operating income (loss) | 452,100 | (501,784) | 3,907,432 | (1,709,904) |
Other income (expense): | ||||
Interest income | 7,813 | 17,487 | 41,061 | 69,262 |
Other income (expense) | 0 | 0 | 14,479 | 0 |
Total Other income (expense) | 7,813 | 17,487 | 55,540 | 69,262 |
Income (loss) before expense for income tax | 459,913 | (484,297) | 3,962,972 | (1,640,642) |
Income tax benefit (expense) | (190,077) | 0 | 2,567,328 | (8,067) |
Net income (loss) | $ 269,836 | $ (484,297) | $ 6,530,300 | $ (1,648,709) |
Basic net income (loss) per share (in dollars per share) | $ 0.04 | $ (0.08) | $ 1.03 | $ (0.26) |
Diluted net income (loss) per share (in dollars per share) | $ 0.04 | $ (0.08) | $ 0.92 | $ (0.26) |
Shares used in computation of basic net income (loss) per share (in shares) | 6,362,951 | 6,275,758 | 6,337,237 | 6,254,792 |
Shares used in computation of diluted net income (loss) per share (in shares) | 7,085,945 | 6,275,758 | 7,133,341 | 6,254,792 |
Document And Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Aug. 04, 2011 | Jun. 30, 2010 | |
Entity Registrant Name | BIOSPECIFICS TECHNOLOGIES CORP | ||
Entity Central Index Key | 0000875622 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 95,300,000 | ||
Entity Common Stock, Shares Outstanding | 6,368,868 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2011 |
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INCOME TAXES UPDATE | 9 Months Ended |
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Sep. 30, 2011 | |
INCOME TAXES - UPDATE [Abstract] | |
INCOME TAXES - UPDATE | 7. INCOME TAXES - UPDATE The significant components of the Company's deferred tax assets, pursuant to Accounting Standards Codification 740-10-50 consist of net operating losses, orphan tax credits, stock-based compensation and deferred revenues. For the nine month period ended September 30, 2011 net income tax benefit was $2.6 million, primarily a non-cash credit. In the 2011 period, we reduced our tax assets valuation allowance and recorded net deferred tax assets of $4.2 million that we believe will more likely than not be realized as we expect to achieve sustained profitability on an on-going annual basis. In making such determination, we considered all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Included in the valuation adjustment is an increase in the net operating loss carry-forward of approximately $1.0 million which was applied to the current period's federal and state income taxes, $1.1 million orphan tax credit, $1.6 million stock based deferred tax asset and $0.4 million tax asset from deferred revenues. We had $2.2 million NOL carryforwards from windfall tax benefits from stock compensation awards and used $0.4 million to reduce taxes payable for the nine month period of 2011. |
NET INCOME (LOSS) PER SHARE | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE | 3. NET INCOME (LOSS) PER SHARE In accordance with Accounting Standards Codification 260, Earnings Per Share, basic net income (loss) per share amount is computed using the weighted-average number of shares of common stock outstanding during the periods presented, while diluted net income (loss) per share is computed using the sum of the weighted-average number of common and common equivalent shares outstanding. Common equivalent shares used in the computation of diluted earnings per share result from the assumed exercise of stock options using the converted method. The following table summarizes the number of common equivalent shares that may be included for the calculation of diluted net income purposes from continuing operations reported in the consolidated statement of operations. For the three and nine months ended September 30, 2010, we incurred a net loss from continuing operations and, as such, we did not include the effect of outstanding stock options in the diluted net loss per share calculations for those periods, as their effect would have been anti-dilutive.
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RELATED PARTY TRANSACTIONS | 9 Months Ended |
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Sep. 30, 2011 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS Our subsidiary, ABC-NY (together with the Company, the “Tenant”) and Wilbur St. Corp. (the “Landlord”) were parties to a lease agreement initially dated as of January 30, 1998 and modified as of June 24, 2009 (the “Lease Agreement”), pursuant to which the Landlord leased to the Tenant the premises located at 35 Wilbur Street, Lynbrook, NY 11563 (the “Premises”) until June 30, 2010 and for a monthly rental price of $11,250 (exclusive of real estate taxes) plus utilities. Following the expiration of the Lease Agreement, the Tenant has continued to lease the Premises from the Landlord on a month-to-month basis. We have notified the Landlord of our termination of the Lease Agreement effective March 31, 2011, but continue to hold over. |
SUBSEQUENT EVENTS | 9 Months Ended |
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Sep. 30, 2011 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS |
QUALIFYING THERAPEUTIC DISCOVERY PROJECT PROGRAM | 9 Months Ended |
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Sep. 30, 2011 | |
QUALIFYING THERAPEUTIC DISCOVERY PROJECT PROGRAM [Abstract] | |
QUALIFYING THERAPEUTIC DISCOVERY PROJECT PROGRAM | 8. QUALIFYING THERAPEUTIC DISCOVERY PROJECT PROGRAM In November 2010, we were notified that we had been awarded a total cash grant of approximately $426,000 under the Qualifying Therapeutic Discovery Project program administered under section 48D of the Internal Revenue Code, of which approximately $102,000 relates to qualifying expenses we had previously incurred during the 2009 fiscal year which was received during the fourth quarter of fiscal 2010. The remainder of the grant of approximately $324,000 was received in February 2011 based on qualifying expenses that we incurred during the 2010 fiscal year. We recognized the full $426,000 of the grant as of the date of notification since we had already incurred all of the qualifying expenses. Since this program is non-recurring, we elected to classify this payment as other income in the Consolidated Statement of Operations for the year ended December 31, 2010. |
ORGANIZATION AND DESCRIPTION OF BUSINESS | 9 Months Ended |
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Sep. 30, 2011 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | 1. ORGANIZATION AND DESCRIPTION OF BUSINESS We are a biopharmaceutical Company involved in the development of an injectable collagenase for multiple indications. We have a development and license agreement (the “Auxilium Agreement”) with Auxilium Pharmaceuticals, Inc. (“Auxilium”) for injectable collagenase (which Auxilium has named XIAFLEX (collagenase clostridium histolyticum)) for clinical indications in Dupuytren's contracture, Peyronie's disease and frozen shoulder (adhesive capsulitis), and Auxilium has an option to acquire additional indications that we may pursue, including human and canine lipoma and cellulite. Auxilium has an agreement with Pfizer, Inc. (“Pfizer”), pursuant to which Pfizer has the right to market XIAFLEX for Dupuytren's contracture and Peyronie's disease in 27 member countries of the European Union and 19 other European and Eurasian countries, and will do so under the registered trademark XIAPEX (collagenase clostridium histolyticum). In addition, Auxilium has an agreement with Asahi Kasei Pharma Corporation (“Asahi”) pursuant to which Asahi has the right to commercialize XIAFLEX for the treatment of Dupuytren's contracture and Peyronie's disease in Japan. Until March 2011, we received, pursuant to a March 2006 agreement (the “DFB Agreement”) between the Company and DFB Biotech, Inc. (“DFB”), payments for certain technical assistance and certain transition services that we provided to DFB. Under the DFB Agreement, we continue to receive earn out payments based on the sales of certain products. Our right to receive earn out payments with respect to the marketed topical product sold to DFB expires in June 2013, but earn out payments for second generation collagenase products, if any, continue indefinitely. Operational Highlights On October 3, 2011 Auxilium Pharmaceuticals, Inc announced that the first patients had been dosed in the Company's phase IIIb trial of XIAFLEX® for the treatment of adult Dupuytren's contracture patients with multiple palpable cords. The study is expected to enroll approximately 60 patients at eight sites throughout the U.S. and Australia and patients will be monitored for 60 days following their last injection. It is estimated by SDI Health, LLC that up to 40% of annual Dupuytren's surgeries are performed to treat two or more cords concurrently. The phase IIIb study is an open-label study that is designed to assess the safety and efficacy of concurrent administration of two injections of XIAFLEX into the same hand of subjects with at least two Dupuytren's contractures caused by palpable cords. Safety assessments, including immunogenicity testing, will be made during all study visits. Efficacy assessments will include measuring finger goniometry and range of motion of the treated joints on days 1, 8, 30, and 60, following the first cycle of two injections. Upon completion of the day 60 follow-up visit following the first treatment cycle, subjects who require additional treatment in the treated hand may receive XIAFLEX in other individual cords, up to a total of five total injections. On August 31, 2011, we and Auxilium announced that we have dismissed all pending litigation between the Companies and announced plans to move XIAFLEX forward in the clinic for cellulite and human and canine lipoma as well as to collaborate on the initiation of further studies for XIAFLEX for additional indications. Through an amendment and restatement of the Companies' 2008 development and license agreement, the Companies have clarified the rights and responsibilities of the Joint Development Committee. Auxilium has been granted the right to initiate studies for the treatment of edematous fibrosclerotic panniculopathy, more commonly known as cellulite, and expects to begin phase Ib clinical studies in early 2012. We will initiate studies for the treatment of human and canine lipomas and plan to initiate clinical studies for both human and canine lipomas shortly. Auxilium will continue to have the option to exclusively license these indications upon completion of our development work. Auxilium and us also plan to collaborate on identifying further indications for treatment with XIAFLEX. Based on the terms of the amended agreement, Auxilium will pay us an opt-in fee at the time of completion by Auxilium of Stage I development of cellulite and will be responsible for all development costs associated with cellulite. Auxilium's opt-in rights remain unchanged with respect to the two lipoma indications. In addition to the opt-in fees, we will continue to be entitled to regulatory milestones, low double digit royalties and a markup of cost of goods on all indications. |
TOTAL COMPREHENSIVE INCOME (LOSS) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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TOTAL COMPREHENSIVE INCOME (LOSS) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TOTAL COMPREHENSIVE INCOME (LOSS) | 4. TOTAL COMPREHENSIVE INCOME (LOSS) Comprehensive loss is comprised of net income (loss) and other comprehensive income. Specifically, we include in other comprehensive income the changes in unrealized gains and losses on our holdings of available-for-sale securities, which are excluded from our net income (loss). The following table presents the calculation of our comprehensive income (loss):
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ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following:
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PATENT COSTS | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PATENT COSTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PATENT COSTS | 6. PATENT COSTS We amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives, ranging from 3 to 10 years, and review for impairment on a quarterly basis and when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. As of September 30, 2011, the Company capitalized certain patent costs, paid by Auxilium on behalf of the Company. These costs are reimbursable to Auxilium under the Auxilium Agreement and are creditable against future royalty revenues. Our net patent costs consisted of:
The amortization expense for patents was $32,349 for the nine months ended September 30, 2011. In the comparable period of 2010, the amortization expense for patents was $9,160 for the nine months September 30, 2010. The estimated aggregate amortization expense for each of the next five years is approximately as follows:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements are unaudited, but include all adjustments (consisting only of normal, recurring adjustments) which we consider necessary for a fair presentation of our financial position at such dates and the operating results and cash flows for those periods. Although we believe that the disclosures in our financial statements are adequate to make the information presented not misleading, certain information normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reporting. The information included in this Report should be read in conjunction with our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2011 and June 30, 2011 filed with the SEC on May 10, 2011 and August 9, 2011, respectively, and our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC on March 14, 2011. Principles of Consolidation The audited consolidated financial statements include the accounts of the Company and its subsidiary, ABC-NY. Critical Accounting Policies, Estimates and Assumptions The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from those estimates. While our significant accounting policies are described in more detail in the notes to our consolidated financial statements, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements. Cash, Cash Equivalents and Short-term Investments Cash, cash equivalents and short-term investments are stated at market value. Cash equivalents include only securities having a maturity of three months or less at the time of purchase. The Company limits its credit risk associated with cash, cash equivalents and short-term investments by placing its investments with banks it believes are highly creditworthy and with highly rated money market funds, United States government securities, or certificates of deposit. Fair Value Measurements Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC 820”), requires expanded disclosures about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires us to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:
The following table sets forth the fair value of our financial assets that were measured on a recurring basis as of September 30, 2011:
Revenue Recognition We currently recognize revenues resulting from product sales, the licensing and sublicensing of the use of our technology and from services we sometimes perform in connection with the licensed technology under the guidance of Accounting Standards Codification 605, Revenue Recognition (“ASC 605”). If we determine that separate elements exist in a revenue arrangement under ASC 605, we recognize revenue for delivered elements only when the fair values of undelivered elements are known, when the associated earnings process is complete, when payment is reasonably assured and, to the extent the milestone amount relates to our performance obligation, when our customer confirms that we have met the requirements under the terms of the agreement. Revenues, and their respective treatment for financial reporting purposes, are as follows: Product Sales We recognize revenue from product sales when there is persuasive evidence that an arrangement exists, title passes, the price is fixed or determinable and collectability is reasonably assured. No right of return exists for our products except in the case of damaged goods. To date, we have not experienced any significant returns of our products. Net sales include the sales of the collagenase for laboratory use that are recognized at the time the product is shipped to customers for laboratory use. Royalty / Mark-up on Cost of Goods Sold / Earn-Out Revenue For those arrangements for which royalty, mark-up on cost of goods sold or earn-out payment information becomes available and collectability is reasonably assured, we recognize revenue during the applicable period earned. For interim quarterly reporting purposes, when collectability is reasonably assured but a reasonable estimate of royalty, mark-up on cost of goods sold or earn-out payment revenues cannot be made, the royalty, mark-up on cost of goods sold and earn-out payment revenues are generally recognized in the quarter that the applicable licensee provides the written report and sufficient related information to us. Under the Auxilium Agreement, we do not participate in the selling, marketing or manufacturing of products for which we receive royalties and a mark-up of the cost of goods sold revenues. The royalty and mark-up on cost of goods sold revenues will generally be recognized in the quarter that Auxilium provides the written reports and related information to us, that is, royalty and mark up on cost of goods sold revenues are generally recognized one quarter following the quarter in which sales by Auxilium occurred. The royalties payable by Auxilium to us are subject to set-off for certain third party development and patent costs. Under the DFB Agreement, pursuant to which we sold our topical collagenase business to DFB, we have the right to receive earn-out payments in the future based on sales of certain products. Generally, under the DFB Agreement we would receive payments and a report within ninety (90) days from the end of each calendar year after DFB has sold the royalty-bearing product. Currently, DFB is providing us earn-out reports on a quarterly basis. License Revenue We include revenue recognized from upfront licensing and sublicensing fees and milestone payments in “License Revenues” in our consolidated statements of operations in this Report. Upfront License and Sublicensing Fees We generally recognize revenue from upfront licensing and sublicensing fees when the agreement is signed, we have completed the earnings process and we have no ongoing performance obligation with respect to the arrangement. Nonrefundable upfront licenses and sublicenses for product candidates for which we are providing continuing services related to product development are deferred and recognized as revenue over the development period. Milestones Milestones, in the form of additional license fees, typically represent nonrefundable payments to be received in conjunction with the achievement of a specific event identified in the contract, such as completion of specified development activities and/or regulatory submissions and/or approvals. We believe that a milestone represents the culmination of a distinct earnings process when it is not associated with ongoing research, development or other performance on our part. We recognize such milestones as revenue when they become due and collection is reasonably assured. When a milestone does not represent the culmination of a distinct earnings process, we recognize revenue in a manner similar to that of an upfront license fee. The timing and amount of revenue that we recognize from licenses of technology, either from upfront fees, sublicenses or milestones where we are providing continuing services related to product development, is primarily dependent upon our estimates of the development period. We define the development period as the point from which research activities commence up to regulatory approval of either our, or our partners' submission assuming no further research is necessary. As product candidates move through the development process, it is necessary to revise these estimates to consider changes to the product development cycle, such as changes in the clinical development plan, regulatory requirements, or various other factors, many of which may be outside of our control. Should the FDA or other regulatory agencies require additional data or information, we would adjust our development period estimates accordingly. The impact on revenue of changes in our estimates and the timing thereof is recognized prospectively over the remaining estimated product development period. Consulting and Technical Assistance Services We recognize revenues from consulting and technical assistance contracts primarily as a result of the DFB Agreement. Consulting revenues are recognized ratably over the term of the contract. The consulting and technical assistance obligations to DFB expired in March 2011. Accounts Receivable and Allowance for Doubtful Accounts The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses which when realized have been within the range of management's expectations. Our policy is to write off bad debts as uncollectible when it is determined that they cannot be collected. As of September 30, 2011, accounts receivables included approximately $1.7 million mainly due under our agreement with DFB. Reimbursable Third Party Development Costs We accrued expenses for research and development and capitalize certain patent costs related to estimated third party development costs that are reimbursable under the Auxilium Agreement. In August 2011, through an amendment and restatement of our 2008 development and license agreement with Auxilium, we have clarified the rights and responsibilities of the joint development of XIAFLEX. We resolved an on-going dispute with Auxilium concerning the appropriate amount of creditable third party development expenses related to the lyophilization of the injection formulation and certain patent expenses for research and development cost that are reimbursable under the Auxilium Agreement. We agreed to reimburse Auxilium for the amount invoiced us for third party development costs related to the development of the lyophilization of the injection formulation. In the third quarter of 2011, we recognized approximately $1.0 million related to royalty revenue from the sale of XIAFLEX. Based upon the royalty revenue reported to us, we reduced our reimbursable third party development and certain patent costs accrual to zero. Research and Development Expenses Our research and development (“R&D”) costs are expensed as incurred. R&D includes, but is not limited to, internal costs, such as salaries and benefits, costs of materials, lab expense, facility costs and overhead. R&D also consists of third party costs, such as medical professional fees, product materials used in clinical trials, consulting fees and costs associated with clinical study R&D arrangements. We fund R&D at medical research institutions under agreements that are generally cancelable. All of these costs are charged to R&D as incurred, which may be measured by percentage of completion, contract milestones, patient enrollment, or the passage of time. Clinical Trial Expenses Our cost accruals for clinical trials are based on estimates of the services received and efforts expended pursuant to contracts with various clinical trial centers and clinical research organizations. In the normal course of business we contract with third parties to perform various clinical trial activities in the ongoing development of potential drugs. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Payments under the contracts depend on factors such as the achievement of certain events, the successful enrollment of patients, the completion of portions of the clinical trial, or similar conditions. The objective of our accrual policy is to match the recording of expenses in our financial statements to the actual cost of services received and efforts expended. As such, expenses related to each patient enrolled in a clinical trial are recognized ratably beginning upon entry into the trial and over the course of the patient's continued participation in the trial. In the event of early termination of a clinical trial, we accrue an amount based on our estimate of the remaining non-cancelable obligations associated with the winding down of the clinical trial. Our estimates and assumptions could differ significantly from the amounts that may actually be incurred. Stock-Based Compensation The Company has two stock-based compensation plans in effect. Accounting Standards Codification 718, Compensation - Stock Compensation (“ASC 718”) requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based awards including stock options and common stock issued to our employees and directors under our stock plans. It requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service periods in our Consolidated Statements of Operations. Under the ASC 718, we estimate the fair value of our employee stock awards at the date of grant using the Black-Scholes option-pricing model, which requires the use of certain subjective assumptions. The most significant of these assumptions are our estimates of the expected volatility of the market price of our stock and the expected term of an award. When establishing an estimate of the expected term of an award, we consider the vesting period for the award, our recent historical experience of employee stock option exercises (including forfeitures) and the expected volatility. When there is uncertainty in the factors used to determine the expected term of an award, we use the simplified method. As required under the accounting rules, we review our valuation assumptions at each grant date and, as a result, our valuation assumptions used to value employee stock-based awards granted in future periods may change. The Company did not grant stock options during the nine month period ended September 30, 2011. Further, ASC 718 requires that employee stock-based compensation costs to be recognized over the requisite service period, or the vesting period, in a manner similar to all other forms of compensation paid to employees. The allocation of employee stock-based compensation costs to each operating expense line are estimated based on specific employee headcount information at each grant date and estimated stock option forfeiture rates and revised, if necessary, in future periods if actual employee headcount information or forfeitures differ materially from those estimates. As a result, the amount of employee stock-based compensation costs we recognize in each operating expense category in future periods may differ significantly from what we have recorded in the current period. Stock-based compensation expense recognized under ASC 718 was as follows:
Stock Option Activity A summary of our stock option activity during the nine months ended September 30, 2011 is presented below:
During the nine months ended September 30, 2011 and 2010, $82,450 and $653,375, respectively, were received from stock options exercised by option holders. The aggregate intrinsic value of options outstanding and exercisable as of September 30, 2011 was approximately $10.5 million. Aggregate intrinsic value represents the total pre-tax intrinsic value, based on the closing price of our common stock of $16.14 on September 30, 2011, which would have been received by the option holders had all option holders exercised their options as of that date. Total unrecognized compensation cost related to non-vested stock options outstanding as of September 30, 2011 was approximately $0.3 million which we expect to recognize over a weighted-average period of 1.2 years. Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation. Machinery and equipment, furniture and fixtures, and autos are depreciated on the straight-line basis over their estimated useful lives of 5 to 10 years. Leasehold improvements are amortized over the lesser of their estimated useful lives or the remaining life of the lease. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the appropriate period. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Future Impact of Recently Issued Accounting Standards In May 2011, the Financial Accounting Standards Board ("FASB") issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standard ("IFRS"), to converge fair value measurement and disclosure guidance in U.S. GAAP with the guidance in the International Accounting Standards Board's ("IASB") concurrently issued IFRS 13, Fair Value Measurement. The amendments in ASU 2011-04 do not modify the requirements for when fair value measurements apply; rather, they generally represent clarifications on how to measure and disclose fair value under ASC 820, Fair Value Measurement. The amendments in the ASU 2011-04 are effective prospectively for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted for public entities. The Company is currently assessing the impact of ASU 2011-04 on its financial statements. Adoption of this standard is not expected to have a material impact on the financial statements. In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”) Under ASU 2011-05, an entity will have the option to present comprehensive income on the income statement or as a separate financial statement. ASU 2011-05 is effective January 1, 2012 and requires retrospective adoption. ASU 2011-05 affects financial statement presentation only and has no effect on results of operations or financial position. There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the on our consolidated financial statements. |
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