-----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, R+pUl/qwl3ZBc+twUDjO+mPIgGwBE2eP9hW4PZJRr6x4UwEkSRF+G194KBxC4J7W KJqUjdJqg4picwmpPVvBLw== 0000927016-97-000438.txt : 19970222 0000927016-97-000438.hdr.sgml : 19970222 ACCESSION NUMBER: 0000927016-97-000438 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 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: 97534415 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 FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) Quarterly report under Section 13 or 15 (d) of the - -------- Securities Exchange Act Of 1934 For quarterly period ended __________________________________ X Transition report under Section 13 or 15 (d) of the - -------- Exchange Act of 1934 For the transition period from September 1, 1996 to December 31, 1996 ----------------- ----------------- 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) Anika Research, Inc., Fiscal year ended August 31 - ------------------------------------------------------------------------------- (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 February 12, 1997, 4,993,539 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 RESEARCH, INC. Balance Sheets as of, December 31, 1996 August 31, 1996 - -------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $2,704,665 $3,651,023 Accounts receivable 539,004 631,916 Inventories 2,481,646 2,514,280 Prepaid expenses 375,302 502,207 - -------------------------------------------------------------------------------- Total current assets 6,100,617 7,299,426 - -------------------------------------------------------------------------------- Property and equipment 3,865,330 4,745,923 Less accumulated depreciation 3,046,286 3,465,175 - -------------------------------------------------------------------------------- Net property and equipment 819,044 1,280,748 - -------------------------------------------------------------------------------- Total Assets $6,919,661 $8,580,174 ================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $550,314 $645,484 Accrued expenses 1,055,234 595,832 Deferred revenue 200,000 200,000 - -------------------------------------------------------------------------------- Total current liabilities 1,805,548 1,441,316 - -------------------------------------------------------------------------------- Other long-term liabilities 142,775 200,000 Redeemable convertible preferred stock; $.01 par value: authorized 750,000 shares; issued and outstanding 126,259 shares, respectively; liquidation and redemption value of $20.00 per share plus accrued dividends 2,602,527 2,523,483 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 4,930,719 shares and 4,840,726 shares, respectively 49,307 48,407 Additional paid-in capital 11,693,070 11,551,685 Unearned stock option compensation - (468,750) Accumulated deficit (9,373,566) (6,715,967) - -------------------------------------------------------------------------------- Total stockholders' equity 2,368,811 4,415,375 - -------------------------------------------------------------------------------- Total Liabilities and Stockholders $6,919,661 $8,580,174 ================================================================================
See accompanying notes to financial statements. ANIKA RESEARCH INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Four months ended December 31, 1996 1995 - ------------------------------------------------------------------------------- Net sales $1,212,041 $1,191,215 Cost of sales 1,308,625 1,263,249 - ------------------------------------------------------------------------------- Gross loss (96,584) (72,034) Operating expenses: Research and development 1,310,330 456,315 Selling, general and administrative 1,308,583 384,215 Interest income (57,898) (5,303) - ------------------------------------------------------------------------------- Total operating expenses 2,561,015 835,227 - ------------------------------------------------------------------------------- Loss before income taxes (2,657,599) (907,261) Income taxes - - - ------------------------------------------------------------------------------- Net loss ($2,657,599) ($907,261) =============================================================================== Loss per share ($0.54) ($0.28) Primary and fully diluted shares outstanding 4,905,382 3,294,312 - -------------------------------------------------------------------------------
See accompanying notes to financial statements. ANIKA RESEACH, INC. Statements of Cash Flows (Unaudited)
Four months ended, Dec. 31, 1996 Dec. 31, 1995 - --------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net loss ($2,657,599) ($907,261) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization 129,827 112,178 Writeoff of leaseholds at New Boston St. 375,925 - Amortization of unearned stock compensa 468,750 - Common stock issued to 401(k) plan 27,444 26,817 Changes in operating assets and liabilities: Accounts receivable 92,912 (318,752) Inventories 32,634 59,870 Prepaid expenses 126,907 87,768 Accounts payable and accrued expe 364,230 118,454 Other long-term liabilities (57,225) - - --------------------------------------------------------------------------------------------------- Net cash used for operating activities (1,096,195) (820,926) - --------------------------------------------------------------------------------------------------- Cash flows used for investing activities: Additions to property and equipment (44,048) (256,391) - --------------------------------------------------------------------------------------------------- Net cash used for investing activities (44,048) (256,391) - --------------------------------------------------------------------------------------------------- Cash flows provided by financing activities: Expenses from issuance of preferred stock - (4,710) Proceeds from exercise of stock options 193,885 - - --------------------------------------------------------------------------------------------------- Net cash provided by (used for) financing activities 193,885 (4,710) - --------------------------------------------------------------------------------------------------- Decrease in cash and cash equivalents (946,358) (1,082,027) Cash and cash equivalents at beginning of period 3,651,023 2,824,663 - --------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $2,704,665 $1,742,636 ===================================================================================================
See accompanying notes to financial statements. PART I: FINANCIAL INFORMATION Item 1: Financial Statements (Continued) Anika Research, 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 Research, 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, for Biomeks in Turkey. (2) Basis of Presentation --------------------- The accompanying financial statements for the four month transition period ended December 31, 1996 and the comparable period for 1995 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 December 31, 1996 and the results of operations and the cash flows for the four month transition period ended December 31, 1996 and 1995. 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 four months ended December 31, 1996 comprise the four month ("transition period") resulting from a recent change in the Company's year end from August 31 to December 31. On January 1, 1997 the Company 1) AMVISC is a registered trademark of Chiron Vision began reporting on a calendar quarter and calendar year basis. Certain reclassifications were made to the 1995 period financial statements to conform to the transition period 1996 presentation. (3) Earnings Per Share ------------------ Earnings per share 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. (4) Other Long-Term Liabilities --------------------------- Other long-term liabilities consist of the following: Dec 31, 1996 Aug 31, 1996 ------------ ------------ Advance rent payment $142,775 $200,000 ======== ======== (5) Common Stock ------------ 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 $3,968,700 and net proceeds to the Company after fees and expenses were $3,541,585. In addition, the Company granted certain registration rights and filed a registration statement with the Securities and Exchange Commission that was declared effective by the Securities and Exchange Commission on May 23, 1996. The proceeds from the private placement were used to repay a $1,000,000 debt obligation and for general working capital purposes. In connection with the private placement of newly issued Common Stock in March, 1996, the Company issued warrants to the placement agent for 146,664 shares of Common Stock exercisable at $4.00 per share and warrants for 57,036 shares of Common Stock exercisable at $3.00 per share. (6) Subsequent Event ---------------- On January 8, 1997, the Company's shareholders approved a change in the name of the Company from Anika Research, Inc. to Anika Therapeutics, Inc. PART I: FINANCIAL INFORMATION Item 2: Management's Discussion and Analysis or Plan of Operations Results of Operations --------------------- Net sales of hyaluronic acid products for the four month transition period ended December 31, 1996 totalled $1,212,000, an increase of $21,000 over the $1,191,000 recorded in net sales for the comparable four month period of the prior year. Anika's gross loss as a percentage of net sales was 7.9% for the four months ended December 31, 1996, a decrease of 1.9% from the 6.0% recorded over the same period in 1995. The decrease for the transition period is primarily attributable to an unfavorable mix of HA products. Research and development expenses for the four month transition period ended December 31, 1996 increased by $854,000 to $1,310,000 from $456,000 for the same period last year. The increase in spending for the four month transition period ended December 31, 1996 is primarily attributable to $600,000 in expenses from the clinical trial for the ORTHOVISC product and the amortization of $375,000 of unearned stock option compensation. Selling, general and administrative expenses for the four month transition period ended December 31, 1996 increased by $925,000 to $1,309,000 from $384,000 for the same period last year. The increase for the four months ended December 31, 1996 is primarily attributable to additional marketing and administrative staff, a $544,000 write-off of leasehold improvements and lease expenses resulting from closing one of the Company's facilities, and $200,000 in severance costs associated with the departure of the Company's former president. 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 $3.00 per share and 146,664 warrants to purchase Common Stock exercisable at $4.00 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 the $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 believes that its cash on hand of $2,705,000 at December 31, 1996 will fund calendar 1997 operating expenses including the cost of the ORTHOVISC clinical trial. However, there can be no assurance that the cash on hand will be sufficient for this period of time if actual costs and expenses are higher than anticipated. On January 1, 1997, the Company commenced supplying AMVISC to Chiron Vision under a new five year supply contract that has selling prices that are substantially higher than the prior contract. Revenues from the AMVISC supply contract will provide the Company with improved gross margins. 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 currently expects that its cash on hand will fund calendar 1997 operating expenses including the cost of the ORTHOVISC clinical trial. However, higher than anticipated costs and expenses may result in insufficient cash on hand which could create a need for additional financing. 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 and has accumulated net losses of $9,474,000 as of December 31, 1996. 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 has incurred substantial and increasing operating losses through December 31, 1996. 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 successfully 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 loss per share. 27.1 Financial Data Schedule. (b) The Company filed a report on Form 8-K on December 13, 1996 notifying the SEC of the appointment of Edward Ross, Jr. to the previously vacant position of vice president of sales and marketing. 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: February 13, 1997 BY: /s/ J. Melville Engle ------------------------- J. Melville Engle Chief Executive Officer DATE: February 13, 1997 BY: /s/ Sean F. Moran ------------------------- Sean F. Moran Chief Financial Officer EX-11 2 COMPUTATION OF .... EARNINGS PER SHARE EXHIBIT 11 Anika Research, Inc. Computation of Primary and Fully Diluted Earnings per Share
For the four months ended December 31, 1996 1995 ----------------------------- PRIMARY AND FULLY DILUTED: Net loss: ($2,657,599) ($907,261) Weighted average number of common shares outstanding 4,905,382 3,294,312 Dilutive effect of outstanding stock options, warrants and redeemable convertible preferred stock - - ----------------------------- Weighted average number of common shares as adjusted 4,905,382 3,294,312 ----------------------------- Primary and fully diluted loss per share ($0.54) ($0.28) =============================
EX-27 3 FINANCIAL DATA SCHEDULE
5 4-MOS DEC-31-1996 SEP-01-1996 DEC-31-1996 2,704,665 0 539,004 0 2,481,646 6,100,617 3,865,330 3,046,286 6,919,661 1,805,548 0 2,602,527 0 49,307 2,319,504 6,919,661 1,212,041 1,212,041 1,308,625 1,308,625 0 0 0 (2,715,497) 0 (2,715,497) 0 0 0 (2,657,599) (0.54) (0.54)
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