BIOSPECIFICS
TECHNOLOGIES CORP.
|
Delaware
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0-19879
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11-3054851
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(State
or other jurisdiction
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(Commission
file number)
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(I.R.S.
Employer
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of
incorporation or organization)
|
|
Identification
No.)
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Page
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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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13
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18
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18
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19
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19
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19
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19
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19
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BIOSPECIFICS
TECHNOLOGIES CORP. AND SUBSIDIARIES
|
|||||||
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
|
(unaudited)
|
(audited)
|
|
||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash and cash equivalents
|
$
|
7,271,762
|
$
|
539,380
|
|||
Accounts receivable, net
|
459,631
|
20,257
|
|||||
Current assets discontinued operations
|
885,791
|
3,067,614
|
|||||
Prepaid expenses and other current assets
|
90,647
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103,220
|
|||||
Total
current assets
|
8,707,831
|
3,730,471
|
|||||
Property, plant and equipment, net
|
370,679
|
408,783
|
|||||
Other assets of discontinued operations
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-
|
2,445,678
|
|||||
Receivable due from long term contract
|
600,000
|
-
|
|||||
Total
assets
|
9,678,510
|
6,584,932
|
|||||
Liabilities
and Stockholders' Equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts payable and accrued expenses
|
2,441,958
|
1,874,809
|
|||||
Deferred revenue
|
1,937,117
|
2,092,517
|
|||||
Current liabilities discontinued operations
|
830,341
|
809,023
|
|||||
Deferred employee stock bonus plan
|
-
|
168,900
|
|||||
Notes payable to related parties
|
69,894
|
69,894
|
|||||
Total
current liabilities
|
5,279,310
|
5,015,143
|
|||||
Long-term deferred revenue
|
5,996,585
|
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;
5,362,716 shares issued and
outstanding at March 31, 2006 and December 31, 2005
|
5,363
|
5,363
|
|||||
Additional paid-in capital
|
3,588,464
|
4,224,964
|
|||||
Retained earnings
|
(3,773,228
|
)
|
(4,877,590
|
)
|
|||
Treasury stock, 131,267 and 346,561 shares at cost at March 31,
2006
and December 31, 2005,
respectively
|
(693,957
|
)
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(1,832,864
|
)
|
|||
Notes receivable from former CEO and Chairman and other related
party
|
(724,027
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)
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(724,027
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)
|
|||
Total
stockholders' equity
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(1,597,385
|
)
|
(3,204,154
|
)
|
|||
Total
liabilities and stockholders’ equity
|
$
|
9,678,510
|
$
|
6.584,932
|
|||
See
accompanying notes to consolidated financial
statements
|
BIOSPECIFICS
TECHNOLOGIES CORP. AND SUBSIDIARIES
|
|||||||
(unaudited)
|
|||||||
Three
Months Ended March 31,
|
|||||||
2006
|
2005
|
||||||
Revenues:
|
|||||||
Net
sales
|
$
|
6,793
|
$
|
9,268
|
|||
Licensing
fees
|
289,279
|
235,189
|
|||||
Consulting
fees
|
23,333
|
-
|
|||||
319,405
|
244,457
|
||||||
Costs
and expenses:
|
|||||||
General
and administrative
|
972,395
|
494,300
|
|||||
Research
and development
|
745,365
|
150,751
|
|||||
1,717,760
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645,051
|
||||||
Operating
loss from continuing operations
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(1,398,355
|
)
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(400,594
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)
|
|||
Other
income (expense):
|
|||||||
Investment
income
|
17,825
|
1,711
|
|||||
Interest
expense
|
(505
|
)
|
(77,195
|
)
|
|||
17,320
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(75,484
|
)
|
|||||
Loss
from continuing operations before benefit (expense) for income
tax
|
(1,381,035
|
)
|
(476,078
|
)
|
|||
Income
tax benefit (expense)
|
-
|
-
|
|||||
(1,381,035
|
)
|
(476,078
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)
|
||||
Loss
before minority interest
|
(1,381,035
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)
|
(476,078
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)
|
|||
Minority
interest in loss of consolidated subsidiaries
|
-
|
4,704
|
|||||
Net
income (loss) from continuing operations
|
(1,381,035
|
)
|
(471,374
|
)
|
|||
Discontinued
operations:
|
|||||||
Loss
from discontinued operations
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(1,115,704
|
)
|
(1,380
|
)
|
|||
Gain
on the sale of assets
|
3,601,102
|
-
|
|||||
Net
income (loss)
|
$
|
1,104,363
|
$
|
(472,754
|
)
|
||
Basic
net income (loss) per share:
|
|||||||
From
continuing operations
|
$
|
(0.27
|
)
|
$
|
(0.09
|
)
|
|
From
discontinued operations
|
$
|
0.48
|
$
|
-
|
|||
Basic
net income (loss) per share
|
$
|
0.21
|
$
|
(0.09
|
)
|
||
Diluted
net income (loss) per share:
|
|||||||
From
continuing operations
|
$
|
(0.27
|
)
|
$
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(0.09
|
)
|
|
From
discontinued operations
|
$
|
0.48
|
$
|
-
|
|||
Diluted
net income (loss) per share
|
$
|
0.21
|
$
|
(0.09
|
)
|
||
Shares
used in computation of basic net income (loss) per
share
|
5,178,374
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4,972,461
|
|||||
Shares
used in computation of diluted net income (loss) per
share
|
5,178,454
|
4,972,461
|
|||||
See
accompanying notes to consolidated financial
statements
|
BIOSPECIFICS
TECHNOLOGIES CORP. AND SUBSIDIARIES
|
|||||||
(unaudited)
|
|||||||
Three
Months Ended March 31,
|
|||||||
Cash
flows from operating activities:
|
2006
|
2005
|
|||||
Net
loss
|
$
|
(1,381,035
|
)
|
$
|
(471,374
|
)
|
|
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
26,171
|
31,574
|
|||||
Amortization
of loan discount
|
-
|
35,068
|
|||||
Minority
interest in loss of subsidiaries
|
2,064
|
4,704
|
|||||
Stock-based
compensation expense
|
418,975
|
-
|
|||||
Issuance
of treasury stock as employee bonus
|
168,900
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
Receivable
|
(1,039,373
|
)
|
(166
|
)
|
|||
Prepaid
expenses and other current assets
|
12,573
|
(18,713
|
)
|
||||
Accounts
payable and accrued expenses
|
567,613
|
(271,366
|
)
|
||||
Deferred
Revenue
|
1,087,388
|
(235,189
|
)
|
||||
Deferred
employee stock bonus plan
|
(168,900
|
)
|
-
|
||||
Net
cash used in operating activities from continuing
operations
|
(305,624
|
)
|
(925,462
|
)
|
|||
Net
cash provided by discontinued operations
|
1,064,763
|
371,474
|
|||||
Cash
flows from investing activities:
|
|||||||
Expenditures
for property, plant and equipment
|
-
|
(4,450
|
)
|
||||
Net
cash provided by (used in) investing activities from continuing
operations
|
-
|
(4,450
|
)
|
||||
Net
cash provided by investing activities from discontinued
operations
|
6,058,713
|
115,724
|
|||||
Cash
flows from financing activities:
|
|||||||
Decrease
in short-term debt
|
-
|
(100,000
|
)
|
||||
Issuance
of treasury stock to minority shareholders of subsidiaries
|
(85,470
|
)
|
-
|
||||
Deferred
loan costs, net
|
-
|
22,533
|
|||||
Net
cash used in financing activities from continuing
operations
|
(85,470
|
)
|
(77,467
|
)
|
|||
Increase
(decrease) in cash and cash equivalents
|
6,732,382
|
(520,181
|
)
|
||||
Cash
and cash equivalents at beginning of year
|
539,380
|
1,345,800
|
|||||
Cash
and cash equivalents at end of period
|
$
|
7,271,762
|
$
|
825,619
|
|||
Supplemental
disclosures of cash flow information:
|
|||||||
Cash
paid during the periods for:
|
|||||||
Interest
|
$
|
505
|
$
|
62,086
|
|||
See
accompanying notes to consolidated financial statements
|
Reported
net loss from continuing operations
|
$
|
471,374
|
||
Deduct:
Stock-based compensation expense determined under the fair value
based
method for all awards, net of taxes
|
3,571
|
|||
Pro
forma net loss
|
$
|
474,945
|
||
Basic
and diluted net loss per share
|
||||
As
reported
|
$
|
(0.09
|
)
|
|
Pro
forma
|
$
|
(0.10
|
)
|
Three months ended
March
31, 2006
|
||||
Research
and development
|
$
|
60,605
|
||
General
and administrative
|
358,370
|
|||
Total
employee stock-based compensation expense
|
418,975
|
|||
Tax
benefit related to employee stock-based compensation
expense
|
—
|
|||
Net
effect on net loss
|
$
|
418,975
|
||
Effect
on basic and diluted net loss per share
|
$
|
(0.08
|
)
|
|
|
Employee Stock Option Plans
|
||||||
|
March 31,
|
||||||
|
2006
|
2005
|
|||||
Expected
term (in years)
|
5.0
|
5.0
|
|||||
Volatility
|
128
|
%
|
87
|
%
|
|||
Risk-free
interest rate
|
5.0
|
%
|
6.0
|
%
|
|||
Dividend
yield
|
0
|
%
|
0
|
%
|
Option
|
Total Number
of
Shares
|
Weighted-Average
Exercise
Price
|
|||||
Outstanding
as of December 31, 2005
|
973,887
|
$
|
1.36
|
||||
Granted(1)
|
510,910
|
$
|
1.02
|
||||
Forfeited(2)
|
--
|
--
|
|||||
Exercised
|
--
|
--
|
|||||
Expired(3)
|
--
|
--
|
|||||
Outstanding
as of March 31, 2006
|
1,484,798
|
$
|
1.24
|
||||
Exercisable
as of March 31, 2006
|
1,484,798
|
$
|
1.24
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Income
(loss) from discontinued operations
|
(1,115,704
|
)
|
(1,380
|
)
|
|||
Pre-tax
gain on disposal of discontinued operations (1)
|
3,601,102
|
--
|
|||||
|
|||||||
|
|||||||
Income
(loss) from discontinued operations
|
$
|
2,485,398
|
$
|
(1,380
|
)
|
|
As
of March 31,
|
||||||
|
|
|
2006
|
|
|
2005
|
|
Stock
options
|
1,348,363
|
1,058,620
|
|||||
Warrants
|
10,000
|
10,000
|
|||||
Total
|
1,358,363
|
1,068,620
|
|
March 31,
2006
|
December 31,
2005
|
|||||
Trade
accounts payable and accrued expenses
|
$
|
2,173,697
|
$
|
1,382,824
|
|||
Accrued
legal and other professional fees
|
59,994
|
124,984
|
|||||
Accrued
payroll and related costs
|
208,267
|
366,537
|
|||||
Total
|
$
|
2,441,958
|
$
|
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). |
32.1
|
Date:
May 25, 2007
|
/s/
Thomas L. Wegman
|
Thomas
L. Wegman
President
(Principal
Executive Officer and Principal Financial Officer)
|