-----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, FtZSx7lUgBNgg/F5B758S9WmU06jNllVpTVa04wpqNkLXnJMTe2arG7atXXoOh0C WRsFXsamUp8XqnBhhUP9vA== 0000898437-97-000003.txt : 19970814 0000898437-97-000003.hdr.sgml : 19970814 ACCESSION NUMBER: 0000898437-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANIKA THERAPEUTICS INC CENTRAL INDEX KEY: 0000898437 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 043145961 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21326 FILM NUMBER: 97657777 BUSINESS ADDRESS: STREET 1: 236 WEST CUMMINGS PARK CITY: WOBURN STATE: MA ZIP: 01801 BUSINESS PHONE: 6179326616 MAIL ADDRESS: STREET 1: 236 WEST CUMMINGS PARK CITY: WOBURN STATE: MA ZIP: 01801 FORMER COMPANY: FORMER CONFORMED NAME: ANIKA RESEARCH INC DATE OF NAME CHANGE: 19930309 10QSB 1 QUARTERLY REPORT 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 quarterly period ended June 30, 1997 ---------------------------------------- Transition report under Section 13 or 15 (d) of the Exchange Act For the transition period from to ------------- ------------------ Commission file number 000-21326 -------------------------------------------- Anika Therapeutics, Inc. - ------------------------------------------------------------------ (Exact Name of Small Business Issuer as Specified in Its Charter) Massachusetts 04-3145961 - ------------------------------- -------------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 236 West Cummings Park, Woburn, Massachusetts 01801 - ------------------------------------------------------------------- (Address of Principal Executive Offices) (617) 932-6616 - ------------------------------------------------------------------- (Issuer's Telephone Number, Including area code) (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) Check whether the issuer: (1) filed all reports required to be filed by Section 13 and 15 (d) of the Exchange Act during the past 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 ----- ----- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: On August 11, 1997, 5,085,751 shares of common stock, par value $0.01 per share, were outstanding. Transitional Small Business Disclosure Format: Yes No X ----- ----- PART 1: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS ANIKA THERAPEUTICS, INC.
Balance Sheets (Unaudited) as of, June 30, 1997 December 31, 1996 - ----------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $2,945,852 $2,704,665 Accounts receivable 1,186,687 539,004 Inventories 2,407,225 2,481,646 Prepaid expenses 599,352 375,302 - ----------------------------------------------------------------------------- Total current assets 7,139,116 6,100,617 - ----------------------------------------------------------------------------- Property and equipment 3,881,740 3,865,330 Less accumulated depreciation 3,204,750 3,046,286 - ----------------------------------------------------------------------------- Net property and equipment 676,990 819,044 - ----------------------------------------------------------------------------- Loan receivable due from officer 75,000 - Total Assets $7,891,106 $6,919,661 ============================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $528,699 $550,314 Accrued expenses 976,878 1,055,234 Deferred revenue 300,000 200,000 - ----------------------------------------------------------------------------- Total current liabilities 1,805,577 1,805,548 - ----------------------------------------------------------------------------- Other long-term liabilities 123,887 142,775 Redeemable convertible preferred stock; $.01 par value: authorized 750,000 shares; issued and outstanding 130,211 shares and 126,259, respectively; liquidation and redemption value of $20.00 per share plus accrued dividends 2,723,865 2,602,527 Stockholders' equity: Undesignated preferred stock, $.01 par value: authorized 1,250,000 shares; no shares issued and outstanding - - Common stock, $.01 par value: authorized 15,000,000 shares; issued and outstanding 5,072,952 shares and 4,930,719 shares, respectively 50,730 49,307 Additional paid-in capital 12,007,200 11,693,070 Accumulated deficit (8,820,153) (9,373,566) Total stockholders' equity 3,237,777 2,368,811 - ---------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $7,891,106 $6,919,661 =============================================================================
See accompanying notes to financial statements. ANIKA THERAPEUTICS, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended Six months ended June 30, June 30, 1997 1996 1997 1996 - ----------------------------------------------------------------------------- Net sales $2,450,073 $1,501,627 $4,377,423 $2,538,424 Cost of sales 1,187,798 1,278,004 2,207,211 2,435,051 - ------------------------------------------------------------------------------------------ Gross profit 1,262,275 223,623 2,170,212 103,373 Operating expenses: Research and development 509,142 500,211 832,257 844,392 Selling, general and administrative 435,999 366,624 830,420 638,005 Interest income, net (29,418) (65,140) (59,802) (75,293) - ------------------------------------------------------------------------------------------ Total operating expenses 915,723 801,695 1,602,875 1,407,104 - ------------------------------------------------------------------------------------------ Income (loss) before income taxes 346,552 (578,072) 567,337 (1,303,731) Income taxes 9,508 13,924 - ------------------------------------------------------------------------------------------ Net income (loss) $337,044 ($578,072) $553,413 ($1,303,731) ========================================================================================== Primary earnings (loss) per share $0.05 ($0.12) $0.09 ($0.30) Primary shares outstanding 6,335,924 4,799,662 6,200,583 4,293,452 Fully diluted earnings (loss) per share $0.04 ($0.12) $0.07 ($0.30) Fully diluted shares outstanding 7,806,161 4,799,662 7,774,724 4,293,452
See accompanying notes to financial statements. ANIKA THERAPEUTICS, INC. Statements of Cash Flows (Unaudited)
Six months ended, June 30, 1997 1996 - ------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income (loss) $553,413 ($1,303,731) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 158,464 175,604 Amortization of unearned stock compensation 117,188 Common stock issued to 401(k) plan and Board of Directors 134,327 41,130 Changes in operating assets and liabilities: Accounts receivable (647,683) (16,178) Loan receivable due from officer (75,000) Inventories 74,421 121,502 Prepaid expenses (224,050) (191,985) Accounts payable and accrued expenses 30 1,099,482 Other long-term liabilities (18,888) (520,757) - ------------------------------------------------------------------------------------------- Net cash used for operating activities (44,966) (477,745) - ------------------------------------------------------------------------------------------- Cash flows used for investing activities: Additions to property and equipment (16,410) (88,659) - ------------------------------------------------------------------------------------------- Net cash used for investing activities (16,410) (88,659) - ------------------------------------------------------------------------------------------- Cash flows provided by financing activities: Payments on debt (800,000) Expenses from issuance of preferred stock (22,583) Proceeds from issuance of common stock 3,541,585 Proceeds from exercise of stock options 302,563 152,750 - ------------------------------------------------------------------------------------------- Net cash provided by financing activities 302,563 2,871,752 - ------------------------------------------------------------------------------------------- Increase in cash and cash equivalents 241,187 2,305,348 Cash and cash equivalents at beginning of period 2,704,665 1,742,637 - ------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $2,945,852 $4,047,985 ===========================================================================================
See accompanying notes to financial statements. PART I: FINANCIAL INFORMATION Item 1: Financial Statements (Continued) Anika Therapeutics, Inc. Notes to Financial Statements This Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference are discussed throughout this form 10-QSB and are discussed in the section entitled "Certain Factors Affecting Future Operating Results" of this Form 10-QSB. (1) Nature of Business ------------------ Anika Therapeutics, Inc. ("Anika" or the "Company") develops and manufactures hyaluronic acid ("HA") products for use in surgical and therapeutic medical applications. Hyaluronic acid is a naturally occurring biopolymer found in the body that coats, protects, and lubricates soft tissues. Anika currently manufactures AMVISC (1), an HA-based viscoelastic used in ophthalmic surgery for Chiron Vision, a subsidiary of Chiron Corporation. Anika also manufactures HYVISC , an HA-based product used to treat equine osteo- arthritis, for Boehringer Ingelheim Animal Health, Inc. in the United States and ORTHOVISC , an HA-based product for use in osteoarthritis and temporomandibular joint dysfunction. ORTHOVISC is sold in Canada, Holland and Turkey. (2) Basis of Presentation --------------------- The accompanying financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, these financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 1997, the results of operations for the three and six months ended June 30, 1997 and 1996 and the cash flows for six months ended June 30, 1997 and 1996. The accompanying financial statements and related notes should be read in conjunction with the Company's annual financial statements filed with the Annual Report on Form 10-KSB for the year ended August 31, 1996. The results of operations for the three and six months ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. 1) AMVISC is a registered trademark of Chiron Vision On January 1, 1997 the Company began reporting on a calendar quarter and calendar year basis. (3) Earnings Per Share ------------------ Earnings per share (E.P.S.) is computed based on the weighted average number of common shares outstanding, adjusted, when dilutive, for the number of shares issuable upon the conversion of Series A Redeemable Convertible Preferred Stock and the assumed exercise of stock options and warrants after the assumed repurchase of shares with the related proceeds. In February 1997, the Financial Accounting Standards Board (FASB)issued Statement of Financial Accounting Standards No. 128, Earnings per Share (Statement 128). Statement 128 will be required to be adopted by Anika for the year ended December 31, 1997. Statement 128 was issued to simplify the computation of E.P.S. and to make the U.S. standard compatible with the E.P.S. standards of other countries. It will replace the presentation of Primary E.P.S. with a presentation of Basic E.P.S. and replace Fully Diluted E.P.S. with Diluted E.P.S. It also requires dual presentation of Basic E.P.S. and Diluted E.P.S. on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the Basic E.P.S. computation to the numerator and denominator of the Diluted E.P.S. computation. Basic E.P.S., unlike Primary E.P.S., excludes all dilution while Diluted E.P.S., like Fully Diluted E.P.S., reflects the potential dilution that could 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 entity. If Statement 128 was adopted for the quarter ended June 30, 1997, primary earnings per share would have been $.07 per share for the three months ended June 30, 1997 and $.11 per share for the six months ended June 30, 1997 and there would have been no impact on fully diluted E.P.S. (4) Loan Receivable due from Officer -------------------------------- Loan receivable consists of a loan to an officer. The entire balance is due at the earlier of the end of five years or at the termination of employment. Interest accrues at an annual rate of 6% and is payable monthly over the term of the loan. (5) Redeemable Convertible Preferred Stock -------------------------------------- Each share of the Series A stock is entitled to receive an annual dividend on May 1 of each year, at a rate of $1.80 per share, payable in additional shares of Series A stock, with the number of dividend shares determined by the price of Anika's underlying common stock. The Company may elect to pay the dividend in cash if certain financial covenants are met. During each consecutive ninety day period in which the average quarterly price of Anika's common stock remains above $6.00 per share, no dividend will accrue. For the period May 1, 1996 to April 30, 1997, Anika issued 3,952 additional shares of Series A stock to the preferred shareholders as a dividend payment. The total recorded value of the dividend payment was $227,266. PART I: FINANCIAL INFORMATION Item 2: Management's Discussion and Analysis or Plan of Operations Results of Operations --------------------- Net sales for the second quarter ended June 30, 1997 totalled $2,450,000, an increase of $948,000 over the $1,502,000 in net sales for the second quarter of the prior year. For the six months ended June 30, 1997 net sales totalled $4,377,000, an increase of $1,839,000, or 72%, over the $2,538,000 recorded in net sales for the prior year. A majority of the increase in sales was primarily attributable to an increase in AMVISC unit selling prices to Chiron Vision. Anika's gross profit as a percentage of net sales was 51.5% for the second quarter of 1997, an increase from the 14.9% gross profit recorded for the same period last year. For the six months ended June 30, 1997, Anika's gross profit as a percentage of net sales was 49.6%, compared to a gross profit as a percentage of net sales of 4.1% recorded over the same period in 1996. The increase for the three and six months ended is primarily attributable to the new five-year supply contract with Chiron that became effective on January 1, 1997 which has higher unit selling prices than the prior agreement. Research and development expenses for the second quarter ended June 30, 1997 increased by $9,000 to $509,000 from $500,000 for the same period last year. For the six months ended June 30, 1997 research and development expenses decreased by $12,000 to $832,000 from $844,000 for the same period last year. Selling, general and administrative expenses for the second quarter ended June 30, 1997 increased by $69,000 to $436,000 from $367,000 for the same period last year. For the six months ended June 30, 1997, selling, general and administrative expenses increased by $192,000 to $830,000 from $638,000 for the same period last year. The increase for the three and six months ended June 30, 1997 is primarily attributable to additional marketing and administrative staff, and increased selling and marketing costs associated with the international commercialization of ORTHOVISC. Liquidity and Capital Resources ------------------------------- In March, 1996 the Company completed a financing involving the private placement of 1,455,000 shares of newly issued Common Stock to institutional and private accredited investors. Total gross proceeds were approximately $4 million and net proceeds to the Company after fees and expenses were approximately $3,542,000. In connection with the private placement, the Company issued to the placement agent 57,036 warrants to purchase Common Stock exercisable at $4.00 per share and 146,664 warrants to purchase Common Stock exercisable at $3.00 per share. In addition, the Company granted certain registration rights and filed a registration statement with the Securities and Exchange Commission registering the securities which was declared effective by the Securities and Exchange Commission in May 1996. The proceeds from the private placement were used to repay a $1,000,000 debt obligation and for general working capital purposes. On May 17, 1995, the Company raised through a private placement $2,235,642, net of offering costs, from the issuance of 120,970 shares of Series A Redeemable Convertible Preferred Stock ("Series A stock") at a selling price of $20.00 per share. Each share of the Series A stock is entitled to receive an annual dividend on May 1 of each year, at a rate of $1.80 per share, payable in additional shares of Series A stock, with the number of dividend shares determined by the price of Anika's underlying common stock. The Company may elect to pay the dividend in cash if certain financial covenants are met. During each consecutive ninety day period in which the average quarterly price of Anika's common stock remains above $6.00 per share, no dividend will accrue. Anika anticipates that its cash on hand of $2,946,000 at June 30, 1997 will fund operating expenses for the balance of 1997. Although Anika recorded a profit of $553,000 for the six months ended June 30, 1997, there is no assurance that profitability will continue for future quarters. In addition, Anika may require substantial additional funds if further clinical testing of ORTHOVISC is required and clinical studies for other products are initiated. The ability of Anika to obtain financing is dependent on the status of Anika's future business prospects as well as conditions prevailing in the relevant capital markets. No assurance can be given that any additional financing will be made available to Anika or will be available on acceptable terms should such a need arise. CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS This Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include, among other factors noted herein, the following: Need for Additional Funds; Liquidity. Anika anticipates that its cash on hand will fund operating expenses for the balance of 1997. However, Anika may require substantial additional funds if further clinical testing of ORTHOVISC is required and clinical studies for other products are initiated. The ability of Anika to obtain financing is dependent on the status of Anika's future business prospects as well as conditions prevailing in the relevant capital markets. No assurance can be given that any additional financing will be made available to Anika or will be available on acceptable terms should such a need arise. Competition. Anika competes with many companies, including large pharmaceutical companies, specialized medical products companies, academic institutions, governmental agencies and other research organizations which may be involved in research, development and commercialization of HA products. Successful commercialization of a particular HA product will depend in large part upon the ability of Anika to complete clinical studies and obtain FDA marketing and foreign regulatory approvals prior to its competitors. History of Losses; Uncertainty of Future Profitability. Anika has incurred operating losses since its inception in May 1993. Presently Anika has accumulated deficit of $8,820,000 as of June 30, 1997. The continued development of Anika's products will require the commitment of substantial resources to conduct research, preclinical and clinical development programs, and to establish sales and marketing capabilities. Anika incurred substantial and increasing operating losses through December 31, 1996 and although Anika has achieved profitability for the six months ending June 30, 1997, the time required by Anika to reach sustained profitability is highly uncertain, and Anika must among other things, successfully complete development of certain of its products, obtain regulatory approvals and establish sales and marketing capabilities for certain of its products. There can be no assurance that Anika will be able to achieve profitability on a sustained basis. Comprehensive Government Regulation; No Assurance of FDA Approval. Anika's research, development, manufacturing activities and the future marketing of products by Anika are subject to regulation for safety and efficacy by numerous governmental authorities in the United States and other countries. These regulations can be costly, regulatory approvals may take many years, and they can be subject to change and unanticipated delays. Anika cannot predict what impact, if any, such changes might have on its business. There can be no assurance that approvals of Anika's products, processes or facilities will be granted or that Anika will obtain the financing needed to develop certain products. Any failure to obtain, or delay in obtaining, such approvals could adversely affect the ability of Anika to market its products. In addition, requirements relating to the conduct of clinical trials, product licensing, pricing and reimbursement vary widely from country to country. Anika or the FDA may suspend clinical trials at any time upon a determination that the subjects or patients are being exposed to an unacceptable adverse health risk ascribable to Anika's products. If clinical studies are suspended, Anika may be unable to continue the development of the investigational products affected. Dependence on Patents and Proprietary Technology. Anika has a policy of seeking patent protection for patentable aspects of its proprietary technology. However, no assurance can be given that any application filings or issued patents will provide Anika with a competitive advantage or will not be successfully challenged by third parties. Other entities have filed patent applications for or have been issued patents concerning various aspects of HA-related products or processes. There can be no assurance that the products or processes developed by Anika will not infringe the patent rights of others in the future. Anika also relies upon trade secrets and proprietary know-how. However, there can be no assurance that confidentiality agreements, which Anika employees generally sign, will be effective in protecting trade secrets or that third parties will not independently develop substantially equivalent or better technology. Dependence Upon Marketing Partners. Anika does not plan to directly market and sell its products to customers. Therefore, Anika's success will be dependent upon the efforts of its marketing partners and the terms and conditions of Anika's relationships with such marketing partners. In addition, Anika will need to obtain the assistance of additional marketing partners for new products which are brought to market and existing products brought to new markets, and there can be no assurance that such additional partners will be available or that such partners will agree to market Anika's products on acceptable terms. Exposure to Product Liability Claims. The testing, marketing and sale of human health care products entail an inherent risk of allegations of product liability, and there can be no assurance that substantial product liability claims will not be asserted against Anika. Although Anika has not incurred any material product liability to date and coverage under its $1,000,000 insurance policy may be adequate to cover such claims should they arise, there can be no assurance that material claims will not arise in the future or that Anika's insurance will be adequate to cover all situations. Dependence upon Key Personnel. The future success of Anika is highly dependent on the members of its management and scientific staff, the loss of one or more of whom could have a material adverse effect on Anika. Anika faces significant competition for highly skilled scientific, management and marketing personnel from other companies, research and academic institutions, government entities and other organizations. There can be no assurance that Anika will be successful in hiring or retaining the personnel it requires and failure to do so could materially and adversely affect Anika's prospects. Part II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit No. Description 11 Computation of earnings per share. 27.1 Financial Data Schedule. (b) Reports on Form 8-K: None 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. ANIKA THERAPEUTICS, INC. DATE: August 13,1997 BY: /s/ J. Melville Engle -------------------------- J. Melville Engle Chief Executive Officer DATE: August 13, 1997 BY: /s/ Sean F. Moran ---------------------- Sean F. Moran Chief Financial Officer EX-11 2 [DESCRIPTION] COMPUTATION OF PRIMARY AND FULLY DILUTED EPS EXHIBIT 11 Anika Therapeutics, Inc. Computation of Primary and Fully Diluted Earnings per Share (Unaudited)
Three months ended Six months ended June 30, June 30, 1997 1996 1997 1996 ------------------------------------------------ PRIMARY : - --------- Net income (loss): $337,044 ($578,072) $553,413 ($1,303,731) Weighted average number of common shares outstanding 5,052,426 4,799,662 5,020,989 4,293,452 Dilutive effect of : Outstanding stock options 797,689 - 721,575 - Warrants for redeemable convertible preferred stock 396,941 - 379,038 - Warrants for common stock 88,868 - 78,981 - ----------------------------------------------- Weighted average number of common shares as adjusted 6,335,924 4,799,662 6,200,583 4,293,452 ----------------------------------------------- Primary earnings (loss) per share $0.05 ($0.12) $0.09 ($0.30) =============================================== FULLY DILUTED: - -------------- Net income (loss): $337,044 ($578,072) $553,413 ($1,303,731) Weighted average number of common shares outstanding 5,052,426 4,799,662 5,020,989 4,293,452 Dilutive effect of : Redeemable convertible preferred stock 1,266,542 - 1,266,542 - Outstanding stock options 946,905 - 946,905 - Warrants for redeemable convertible preferred stock 432,036 - 432,036 - Warrants for common stock 108,252 - 108,252 - ----------------------------------------------- Weighted average number of common shares as adjusted 7,806,161 4,799,662 7,774,724 4,293,452 ----------------------------------------------- Fully diluted earnings(loss) per share $0.04 ($0.12) $0.07 ($0.30) ===============================================
EX-27 3 FININCIAL DATA SCHEDULE
5 6-MOS DEC-31-1997 JUN-30-1997 2,945,852 0 1,186,687 0 2,407,225 7,139,116 3,881,740 3,204,750 7,891,106 1,805,577 0 2,723,865 0 50,730 3,187,047 7,891,106 4,377,423 4,377,423 2,207,211 2,207,211 0 0 0 567,337 13,924 553,413 0 0 0 553,413 .09 .07
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