BIOSPECIFICS
TECHNOLOGIES CORP.
|
Delaware
|
0-19879
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11-3054851
|
(State
or other jurisdiction
|
(Commission
file number)
|
(I.R.S.
Employer
|
of
incorporation or organization)
|
|
Identification
No.)
|
Class
of Stock
|
Outstanding
May 01, 2007
|
|
Common
Stock ($.001 par value)
|
5,261,549
|
Page
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ITEM
1.
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2
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2
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3
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4
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5
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ITEM
2.
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13
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ITEM
3.
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20
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20
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ITEM
1.
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20
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ITEM
2.
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20
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ITEM
3.
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20
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ITEM
4.
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20
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ITEM
5.
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20
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ITEM
6.
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20
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BIOSPECIFICS
TECHNOLOGIES CORP. AND SUBSIDIARIES
|
|||||
Consolidated
Balance
Sheets
|
September
30,
|
December
31,
|
|||||||
2006
|
2005
|
|||||||
(unaudited)
|
(audited)
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
5,269,698
|
$ |
539,380
|
||||
Accounts
receivable, net
|
430,234
|
20,257
|
||||||
Accounts
receivable of discontinued operations
|
593,524
|
3,067,614
|
||||||
Prepaid
expenses and other current assets
|
92,161
|
103,220
|
||||||
Total
current assets
|
6,385,617
|
3,730,471
|
||||||
Property,
plant and equipment, net
|
320,771
|
408,783
|
||||||
Accrued
tax and other liabilities of discontinued operations
|
-
|
2,445,678
|
||||||
Receivable
due from long term contract
|
600,000
|
-
|
||||||
Total
assets
|
7,306,388
|
6,584,932
|
||||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
2,254,369
|
1,874,809
|
||||||
Deferred
revenue
|
1,937,117
|
2,092,517
|
||||||
Current
liabilities discontinued operations
|
425,239
|
809,023
|
||||||
Deferred
employee stock bonus plan
|
-
|
168,900
|
||||||
Notes
payable to related parties
|
69,894
|
69,894
|
||||||
Total
current liabilities
|
4,686,619
|
5,015,143
|
||||||
Long-term
deferred revenue
|
5,278,027
|
4,753,797
|
||||||
Minority
interest in subsidiaries
|
-
|
(2,064 | ) | |||||
Other
liabilities of discontinued operations
|
-
|
22,210
|
||||||
Stockholders'
equity:
|
||||||||
Series
A Preferred stock, $.50 par value, 700,000 shares authorized; none
outstanding
|
-
|
-
|
||||||
Common
stock, $.001 par value; 10,000,000 shares authorized; 5,365,816 and
5,362,716 shares
issued
and outstanding at
September 30, 2006 and December 31, 2005, respectively
|
5,366
|
5,363
|
||||||
Additional
paid-in capital
|
3,737,415
|
4,224,964
|
||||||
Retained
earnings
|
(4,983.055 | ) | (4,877,590 | ) | ||||
Treasury
stock, 131,267 and 346,561 shares at cost at September 30, 2006 and
December 31, 2005, respectively
|
(693,957 | ) | (1,832,864 | ) | ||||
Notes
receivable from former CEO and Chairman and other related
party
|
(724,027 | ) | (724,027 | ) | ||||
Total
stockholders' equity
|
(2,658,258 | ) | (3,204,154 | ) | ||||
Total
liabilities and stockholders’ equity
|
$ |
7,306,388
|
$ |
6.584,932
|
See
accompanying notes to consolidated financial
statements
|
BIOSPECIFICS
TECHNOLOGIES CORP. AND SUBSIDIARIES
|
|||||||
Consolidated
Statements
of
Operations
|
|||||||
(unaudited)
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||||||
Revenues:
|
||||||||||||||||
Net
sales
|
$ |
5,141
|
$ |
5,775
|
$ |
18,817
|
$ |
32,955
|
||||||||
Licensing
fees
|
289,279
|
343,818
|
867,837
|
922,824
|
||||||||||||
Consulting
fees
|
70,000
|
-
|
163,333
|
-
|
||||||||||||
364,420
|
349,593
|
1,049,987
|
955,779
|
|||||||||||||
Costs
and expenses:
|
||||||||||||||||
General
and administrative
|
769,449
|
548,667
|
2,668,315
|
1,575,469
|
||||||||||||
Research
and development
|
134,194
|
55,661
|
1,127,406
|
321,242
|
||||||||||||
903,644
|
604,328
|
3,795,721
|
1,896,711
|
|||||||||||||
Operating
loss from continuing operations
|
(539,223 | ) | (254,735 | ) | (2,826,934 | ) | (940,932 | ) | ||||||||
Other
income (expense):
|
||||||||||||||||
Investment
income
|
73,286
|
232
|
155,424
|
2,266
|
||||||||||||
Interest
expense
|
-
|
(13,029 | ) | (521 | ) | (174,339 | ) | |||||||||
73,286
|
(12,797 | ) |
154,903
|
(172,073 | ) | |||||||||||
Loss
from continuing operations before benefit (expense) for income
tax
|
(465,937 | ) | (267,532 | ) | (2,590,832 | ) | (1,113,005 | ) | ||||||||
Income
tax benefit (expense)
|
-
|
-
|
-
|
-
|
||||||||||||
(465,937 | ) | (267,532 | ) | (2,590,832 | ) | (1,113,005 | ) | |||||||||
Loss
before minority interest
|
(465,937 | ) | (267,532 | ) | (2,590,832 | ) | (1,113,005 | ) | ||||||||
Minority
interest in income of consolidated subsidiaries
|
-
|
3,014
|
-
|
861
|
||||||||||||
Net
income (loss) from continuing operations
|
(465,937 | ) | (264,518 | ) | (2,590,832 | ) | (1,112,144 | ) | ||||||||
Discontinued
operations:
|
||||||||||||||||
Gain
(loss) from discontinued operations
|
-
|
185,332
|
(1,115,704 | ) |
427,087
|
|||||||||||
Gain
on the sale of assets
|
-
|
-
|
3,601,071
|
-
|
||||||||||||
Net
loss
|
$ | (465,937 | ) | $ | (79,186 | ) | $ | (105,464 | ) | $ | (685,057 | ) | ||||
Basic
net income (loss) per share:
|
||||||||||||||||
From
continuing operations
|
$ | (0.09 | ) | $ | (0.05 | ) | $ | (0.50 | ) | $ | (0.22 | ) | ||||
From
discontinued operations
|
$ |
-
|
$ |
0.04
|
$ |
0.48
|
$ |
0.09
|
||||||||
Basic
net loss per share
|
$ | (0.09 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.13 | ) | ||||
Diluted
net income (loss) per share:
|
||||||||||||||||
From
continuing operations
|
$ | (0.09 | ) | $ | (0.05 | ) | $ | (0.50 | ) | $ | (0.22 | ) | ||||
From
discontinued operations
|
$ |
-
|
$ |
0.04
|
$ |
0.48
|
$ |
0.09
|
||||||||
Diluted
net loss per share
|
$ | (0.09 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.13 | ) | ||||
Shares
used in computation of basic net income (loss) per
share
|
5,234,429
|
4,996,380
|
5,215,015
|
4,981,983
|
||||||||||||
Shares
used in computation of diluted net income (loss) per
share
|
5,234,429
|
4,996,380
|
5,215,071
|
4,981,983
|
See
accompanying notes to consolidated financial
statements
|
BIOSPECIFICS
TECHNOLOGIES CORP. AND SUBSIDIARIES
|
||||
Consolidated
Statements
of Cash
Flows
|
||||
(unaudited)
|
Nine
Months Ended
September
30,
|
||||||||
Cash
flows from operating activities:
|
2006
|
2005
|
||||||
Net
loss
|
$ | (2,590,831 | ) | $ | (1,112,144 | ) | ||
Adjustments
to reconcile net loss to net cash provided
|
||||||||
by
operating activities:
|
||||||||
Depreciation
and amortization
|
76,079
|
94,722
|
||||||
Amortization
of loan discount
|
-
|
70,137
|
||||||
Issuance
of treasury stock as employee bonus
|
-
|
22,969
|
||||||
Issuance
of restricted stock for services
|
7,875
|
7,875
|
||||||
Minority
interest in loss of subsidiaries
|
-
|
(861 | ) | |||||
Stock-based
compensation expense
|
485,456
|
-
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(928,777 | ) | (7,791 | ) | ||||
Prepaid
expenses and other current assets
|
11,059
|
(37,075 | ) | |||||
Accounts
payable and accrued expenses
|
372,960
|
(455,213 | ) | |||||
Deferred
revenue
|
368,830
|
2,077,176
|
||||||
Net
cash provided by (used in) operating activities from continuing
operations
|
(2,197,349 | ) |
659,795
|
|||||
Net
cash provided by discontinued operations
|
952,360
|
423,118
|
||||||
Cash
flows from investing activities:
|
||||||||
Expenditures
for property, plant and equipment
|
-
|
(14,606 | ) | |||||
Net
cash used in investing activities from continuing
operations
|
-
|
(14,606 | ) | |||||
Net
cash provided by investing activities from discontinued
operations
|
6,058,713
|
378,234
|
||||||
Cash
flows from financing activities:
|
||||||||
Decrease
in senior secured convertible debt
|
-
|
(1,575,000 | ) | |||||
Decrease
in short-term debt
|
-
|
(100,000 | ) | |||||
Payment
to minority
shareholders
|
(83,406 | ) |
-
|
|||||
Proceeds
from stock option exercises
|
-
|
13,763
|
||||||
Deferred
loan costs, net
|
-
|
54,817
|
||||||
Net
cash used in financing activities from continuing
operations
|
(83,406 | ) | (1,606,420 | ) | ||||
Net
cash used in financing activities from discontinued
operations
|
-
|
(182,000 | ) | |||||
Increase
in cash and cash equivalents
|
4,730,318
|
(341,879 | ) | |||||
Cash
and cash equivalents at beginning of year
|
539,380
|
1,345,800
|
||||||
Cash
and cash equivalents at end of period
|
$ |
5,269,698
|
$ |
1,003,921
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid during the periods for:
|
||||||||
Interest
|
$ |
521
|
$ |
124,691
|
||||
Supplemental
disclosures of non-cash transactions:
For
the nine months ended September 30, 2006, the Company reduced its
liability under the to the employee stock bonus plan by issuing $162,300
of common stock. The remaining balance of $6,600 was
cancelled.
|
See
accompanying
notes to consolidated financial
statements
|
Three Months Ended
|
Nine Months Ended
|
|||||||
September
30, 2005
|
September
30, 2005
|
|||||||
Reported
net loss from continuing operations
|
$ |
264,518
|
$ |
1,112,144
|
||||
Deduct:
Stock-based compensation expense determined under the fair value
based
method for all awards, net of taxes
|
3,704
|
12,116
|
||||||
Pro
forma net loss
|
$ |
268,222
|
$ |
1,124,260
|
||||
Basic
and diluted net loss per share
|
||||||||
As
reported
|
$ | (0.05 | ) | $ | (0.22 | ) | ||
Pro
forma
|
$ | (0.05 | ) | $ | (0.23 | ) |
Three Months Ended
|
Nine Months Ended
|
|||||||
September
30, 2006
|
September
30, 2006
|
|||||||
Research
and development
|
$ |
12,576
|
$ |
73,183
|
||||
General
and administrative
|
49,118
|
412,273
|
||||||
Total
employee stock-based compensation expense
|
61,694
|
485,456
|
||||||
Tax
benefit related to employee stock-based compensation
expense
|
—
|
—
|
||||||
Net
effect on net loss
|
$ |
61,694
|
$ |
485,456
|
||||
Effect
on basic and diluted net loss per share
|
$ | (0.01 | ) | $ | (0.09 | ) |
Employee
Stock Option Plans
|
|||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||
2006
|
2005
|
2006
|
2005
|
||||
Expected
term (in years)
|
5.0
|
5.0
|
5.0
|
5.0
|
|||
Volatility
|
128%
|
87%
|
128%
|
87%
|
|||
Risk-free
interest rate
|
5.0%
|
6.0%
|
5.0%
|
6.0%
|
|||
Dividend
yield
|
0%
|
0%
|
0%
|
0%
|
Option
|
|
Total Number
of
Shares
|
|
|
Weighted-Average
Exercise
Price
|
Outstanding
as of December 31, 2005
|
|
973,887
|
$1.36
|
||
Granted
(1)
|
|
731,824
|
$0.96
|
||
Forfeited
(2)
|
|
(327,175)
|
$1.22
|
||
Exercised
|
|
--
|
--
|
||
Expired
(3)
|
|
(100,000)
|
$1.10
|
||
Outstanding
as of September 30, 2006
|
|
1,278,536
|
$1.19
|
||
|
|
|
|
||
Exercisable
as of September 30, 2006
|
|
1,178,536
|
$1.22
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||||||
Income
(loss) from discontinued operations
|
$ |
-
|
$ |
185,332
|
$ | (1,115,704 | ) | $ |
427,087
|
|||||||
Pre-tax
gain on disposal of discontinued operations (1)
|
-
|
-
|
$ |
3,601,071
|
-
|
|||||||||||
Income
(loss) from discontinued operations
|
$ |
-
|
$ |
185,332
|
$ |
2,485,367
|
$ |
427,087
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||||||
Stock
options
|
1,125,992
|
1,068,114
|
1,039,691
|
1,056,501
|
||||||||||||
Warrants
|
10,000
|
10,000
|
10,000
|
10,000
|
||||||||||||
Total
|
1,135,992
|
1,078,114
|
1,049,691
|
1,066,501
|
September
30,
2006
|
December 31,
2005
|
|||||||
Trade
accounts payable and accrued expenses
|
$ |
2,033,079
|
$ |
1,382,824
|
||||
Accrued
legal and other professional fees
|
47,985
|
124,984
|
||||||
Accrued
payroll and related costs
|
173,305
|
366,537
|
||||||
Total
|
$ |
2,254,369
|
$ |
1,874,345
|
|
·
|
Any
payment by the Company in excess of $10,000 other than payments for
previously approved reoccurring expenses requires the written approval
of
any member of the Audit Committee in addition to the signature of
our
President, Thomas L. Wegman; and
|
|
·
|
Any
payment by the Company for the business expenses of our President,
Thomas
L. Wegman requires the written approval of any member of the Audit
Committee.
|
|
3.1
|
Articles
of Incorporation of the Registrant (incorporated by reference to
Exhibit
3.1 to the Registrant's Annual Report on Form 10-KSB for the fiscal
years
ended December 31, 2005, 2004 and
2003).
|
|
3.2
|
Bylaws
of the Registrant (incorporated by reference to Exhibit 3.2 to the
Registrant’s Annual Report on Form 10-KSB for the fiscal years ended
December 31, 2005, 2004 and 2003).
|
BIOSPECIFICS
TECHNOLOGIES CORP.
|
|
(Registrant)
|
Date: June
25, 2007
|
/s/
Thomas L. Wegman
Thomas
L. Wegman
President
(Principal
Executive and Financial Officer)
|