Nevada
|
|
88-0425691
|
(State
or other jurisdiction of incorporation)
|
|
(IRS
Employer Identification
Number)
|
|
|
Page
|
|
|
|
Part I.
FINANCIAL INFORMATION:
|
||
|
Item
1. Financial Statements:
|
|
|
Condensed
Consolidated Balance Sheets as of September 30, 2007 (unaudited)
and
December 31, 2006.
|
F-2
|
|
|
|
|
Condensed
Consolidated Statements of Operations (unaudited) for the Three
and Nine
Months ended September 30, 2007 and 2006.
|
F-3
|
|
Condensed
Consolidated Statements of Cash Flows (unaudited) for the Nine
Months
ended September 30, 2007 and 2006.
|
F-4
to F-5
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
(unaudited)
|
F-6
to F-14
|
|
|
|
|
Item
2. Management's Discussion and Analysis and Plan of
Operation
|
1
|
|
|
|
|
Item
3. Controls and Procedures
|
12
|
|
|
|
Part
II. OTHER INFORMATION:
|
||
|
Item
6. Exhibits
|
13
|
|
|
|
SIGNATURES
|
|
14
|
|
|
|
EXHIBITS
|
|
CHEMBIO
DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
|
||||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
-
ASSETS -
|
||||||||
September
30, 2007
|
December
31, 2006
|
|||||||
(Unaudited)
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
|
$ |
2,255,307
|
$ |
4,290,386
|
||||
Accounts
receivable, net of allowance for doubtful accounts of $10,045 and
$42,967
for 2007 and 2006, respectively
|
1,436,487
|
1,350,240
|
||||||
Inventories
|
1,169,736
|
1,108,950
|
||||||
Prepaid
expenses and other current assets
|
270,185
|
204,092
|
||||||
TOTAL
CURRENT ASSETS
|
5,131,715
|
6,953,668
|
||||||
FIXED
ASSETS, net of accumulated depreciation
|
652,658
|
603,603
|
||||||
OTHER
ASSETS:
|
||||||||
Deposits
and other assets
|
357,362
|
349,306
|
||||||
$ |
6,141,735
|
$ |
7,906,577
|
|||||
-
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)-
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable and accrued liabilities
|
$ |
1,662,317
|
$ |
1,709,939
|
||||
Accrued
interest payable
|
3,159
|
93,160
|
||||||
Current
portion of obligations under capital leases
|
28,940
|
37,336
|
||||||
TOTAL
CURRENT LIABILITIES
|
1,694,416
|
1,840,435
|
||||||
OTHER
LIABILITIES:
|
||||||||
Obligations
under capital leases - net of current portion
|
83,894
|
7,081
|
||||||
Series
C preferred stock redemption put
|
161,390
|
449,677
|
||||||
TOTAL
LIABILITIES
|
1,939,700
|
2,297,193
|
||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
PREFERRED
STOCK - Series C 7% Redeemable Convertible - $.01 par value: 165
shares issued and outstanding as of 2007 and 2006. Liquidation
preference
of $8,397,583
|
6,837,479
|
6,549,191
|
||||||
STOCKHOLDERS’
EQUITY (DEFICIENCY):
|
||||||||
Preferred
Stock – 10,000,000 shares authorized:
|
||||||||
Series
A 8% Convertible - $.01 par value: 141.59027 and 149.92119 shares
issued
and outstanding as of 2007 and 2006, respectively. Liquidation
preference of $4,387,605
|
2,468,286
|
2,504,313
|
||||||
Series
B 9% Convertible - $.01 par value: 111.68591 and 113.93591 shares
issued
and outstanding as of 2007 and 2006, respectively. Liquidation
preference of $5,712,830
|
3,354,760
|
3,555,786
|
||||||
Common
stock - $.01 par value; 100,000,000 shares authorized 14,080,155
and
11,296,961 shares issued and outstanding as of 2007 and 2006,
respectively
|
140,802
|
112,970
|
||||||
Additional
paid-in capital
|
21,551,216
|
19,960,618
|
||||||
Accumulated
deficit
|
(30,150,508 | ) | (27,073,494 | ) | ||||
TOTAL
STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
(2,635,444 | ) | (939,807 | ) | ||||
$ |
6,141,735
|
$ |
7,906,577
|
|||||
See
notes accompanying the condensed consolidated financial
statements.
|
CHEMBIO
DIAGNOSTICS, INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(UNAUDITED)
|
||||||||||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
30, 2007
|
|
September
30, 2006
|
September
30, 2007
|
September
30, 2006
|
||||||||||||
REVENUES:
|
||||||||||||||||
Net
sales
|
$ |
2,158,438
|
$ |
942,088
|
$ |
6,603,976
|
$ |
3,683,599
|
||||||||
Research
grant income
|
155,099
|
76,102
|
250,655
|
209,494
|
||||||||||||
TOTAL
REVENUES
|
2,313,537
|
1,018,190
|
6,854,631
|
3,893,093
|
||||||||||||
Cost
of sales
|
1,328,528
|
830,819
|
4,217,903
|
2,705,749
|
||||||||||||
GROSS
PROFIT
|
985,009
|
187,371
|
2,636,728
|
1,187,344
|
||||||||||||
OVERHEAD
COSTS:
|
||||||||||||||||
Research
and development expenses
|
483,188
|
318,048
|
1,385,073
|
1,062,319
|
||||||||||||
Selling,
general and administrative expenses
|
1,174,530
|
1,109,797
|
3,490,099
|
3,740,765
|
||||||||||||
1,657,718
|
1,427,845
|
4,875,172
|
4,803,084
|
|||||||||||||
LOSS
FROM OPERATIONS
|
(672,709 | ) | (1,240,474 | ) | (2,238,444 | ) | (3,615,740 | ) | ||||||||
OTHER
INCOME (EXPENSES):
|
||||||||||||||||
Other
income (expense)
|
-
|
25,000
|
120,862
|
30,000
|
||||||||||||
Interest
income
|
30,603
|
2,094
|
125,513
|
2,980
|
||||||||||||
Interest
expense
|
(6,408 | ) | (360,606 | ) | (11,107 | ) | (382,316 | ) | ||||||||
24,195
|
(333,512 | ) |
235,268
|
(349,336 | ) | |||||||||||
LOSS
BEFORE INCOME TAXES
|
(648,514 | ) | (1,573,986 | ) | (2,003,176 | ) | (3,965,076 | ) | ||||||||
Income
taxes
|
-
|
-
|
-
|
-
|
||||||||||||
NET
LOSS
|
(648,514 | ) | (1,573,986 | ) | (2,003,176 | ) | (3,965,076 | ) | ||||||||
Dividends
payable in stock to preferred stockholders
|
362,959
|
220,909
|
1,073,837
|
641,769
|
||||||||||||
Dividend
accreted to preferred stock for associated costs and a beneficial
conversion feature
|
-
|
538,560
|
-
|
1,001,994
|
||||||||||||
NET
LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS
|
$ | (1,011,473 | ) | $ | (2,333,455 | ) | $ | (3,077,013 | ) | $ | (5,608,839 | ) | ||||
Basic
and diluted loss per share
|
$ | (0.07 | ) | $ | (0.21 | ) | $ | (0.24 | ) | $ | (0.56 | ) | ||||
Weighted
average number of shares outstanding, basic and
diluted
|
14,043,208
|
10,961,662
|
12,701,494
|
10,014,207
|
||||||||||||
See
notes accompanying the condensed consolidated financial
statements.
|
CHEMBIO
DIAGNOSTICS, INC. AND SUBSIDIARIES
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(UNAUDITED)
|
||||||||
Nine
months ended
|
||||||||
September
30, 2007
|
September
30, 2006
|
|||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS:
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Cash
received from customers
|
$ |
6,935,884
|
$ |
4,277,732
|
||||
Cash
paid to suppliers and employees
|
(8,760,425 | ) | (6,263,092 | ) | ||||
Interest
received
|
125,513
|
2,980
|
||||||
Interest
paid
|
(11,107 | ) | (22,302 | ) | ||||
Net
cash used in operating activities
|
(1,710,135 | ) | (2,004,682 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisition
of fixed assets
|
(171,501 | ) | (320,750 | ) | ||||
Net
cash used in investing activities
|
(171,501 | ) | (320,750 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Sale
of Series C Preferred Stock and associated warrants, net of cash
cost of
financing of $50,000
|
-
|
3,950,000
|
||||||
Sale
of Series B Preferred Stock and associated warrants, net of cash
cost of
financing of $2,750
|
-
|
997,250
|
||||||
Proceeds
from bridge loan
|
-
|
1,300,000
|
||||||
Payment
on bridge loan
|
-
|
(500,000 | ) | |||||
Payment
of accrued interest
|
(90,000 | ) | (97,652 | ) | ||||
Proceeds
from exercise of options
|
31,000
|
86,321
|
||||||
Payment
of capital lease obligation
|
(34,443 | ) | (28,379 | ) | ||||
Payment
of dividends
|
(60,000 | ) | (140,226 | ) | ||||
Net
cash (used in) provided by financing activities
|
(153,443 | ) |
5,567,314
|
|||||
NET
(DECREASE) INCREASE IN CASH
|
(2,035,079 | ) |
3,241,882
|
|||||
Cash
- beginning of the period
|
4,290,386
|
232,148
|
||||||
Cash
- end of the period
|
$ |
2,255,307
|
$ |
3,474,030
|
||||
Continues
on next page
|
||||||||
See
notes accompanying the condensed consolidated financial
statements.
|
CHEMBIO
DIAGNOSTICS, INC. AND SUBSIDIARIES
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(CONTINUED)
|
||||||||
(UNAUDITED)
|
||||||||
Nine
months ended
|
||||||||
September
30, 2007
|
September
30, 2006
|
|||||||
RECONCILIATION
OF NET LOSS TO NET CASH FROM OPERATING
ACTIVITIES:
|
||||||||
Net
Loss
|
$ | (2,003,176 | ) | $ | (3,965,076 | ) | ||
Adjustments:
|
||||||||
Depreciation
and amortization
|
213,158
|
146,346
|
||||||
Non-cash
interest expense
|
-
|
331,114
|
||||||
Loss
on retirement of fixed assests
|
12,146
|
-
|
||||||
Provision
for doubtful accounts
|
(11,210 | ) |
7,945
|
|||||
Common
stock, options and warrants issued as compensation
|
275,360
|
458,412
|
||||||
Changes
in current assets and liabilities:
|
||||||||
Accounts
receivable
|
(75,037 | ) |
376,693
|
|||||
Inventories
|
(60,786 | ) | (403,041 | ) | ||||
Prepaid
expenses and other current assets
|
(24,912 | ) |
115,538
|
|||||
Other
assets and deposits
|
(8,056 | ) | (251,544 | ) | ||||
Accounts
payable and accrued expenses
|
(27,622 | ) |
1,178,931
|
|||||
Net
cash used in operating activities
|
$ | (1,710,135 | ) | $ | (2,004,682 | ) | ||
Supplemental
disclosures for non-cash investing and financing
activities:
|
||||||||
Preferred
B issued as payment for financing fees
|
$ |
-
|
$ |
100,000
|
||||
Warrants
issued with bridge loan
|
-
|
-
|
||||||
Value
of warrants issued allocated to additional paid-in capital
|
20,000
|
1,120,030
|
||||||
Value of common stock and stock options issued | 41,181 | - | ||||||
Cost
of royalty rate reduction in other assets
|
-
|
200,000
|
||||||
Accreted
beneficial conversion to preferred stock
|
-
|
1,001,994
|
||||||
Accreted
dividend to preferred stock
|
1,073,837
|
641,769
|
||||||
Value
of Common stock issued as payment of dividend
|
1,072,157
|
522,794
|
||||||
Value
of Preferred B issued as payment of dividend
|
-
|
89,899
|
||||||
Value
of Preferred A converted to common stock
|
115,957
|
122,006
|
||||||
Value
of Preferred B converted to common stock
|
62,776
|
360,651
|
||||||
Assets
acquired under capital leases
|
102,860
|
-
|
||||||
See
notes accompanying the condensed consolidated financial
statements.
|
(a)
|
Basis
of
Presentation:
|
(b)
|
Inventories:
|
September
30, 2007
|
December
31, 2006
|
|||||||
Raw
Materials
|
$ |
696,086
|
$ |
629,967
|
||||
Work
in Process
|
215,565
|
257,208
|
||||||
Finished
Goods
|
258,085
|
221,775
|
||||||
$ |
1,169,736
|
$ |
1,108,950
|
(c)
|
Earnings
Per Share
|
For
the three months ended
|
For
the nine months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
September
30, 2007
|
September
30, 2006
|
|||||||||||||
Basic
|
14,043,208
|
10,961,662
|
12,701,494
|
10,014,207
|
||||||||||||
Diluted
|
14,043,208
|
10,961,662
|
12,701,494
|
10,014,207
|
For
the three months ended
|
For
the nine months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
September
30, 2007
|
September
30, 2006
|
|||||||||||||
1999
Plan Stock Options
|
2,396,136
|
1,629,750
|
1,929,471
|
1,629,750
|
||||||||||||
Other
Stock Options
|
124,625
|
144,625
|
124,625
|
144,625
|
||||||||||||
Warrants
|
26,196,085
|
24,713,994
|
26,191,683
|
24,713,994
|
||||||||||||
Convertible
Preferred Stock
|
26,553,340
|
16,835,036
|
26,811,978
|
16,835,036
|
(d)
|
Employee
Stock Option Plan:
|
For
the three months ended
|
For
the nine months ended
|
||||
September
30, 2007
|
September
30, 2006
|
September
30, 2007
|
September
30, 2006
|
||
Expected
term (in years)
|
5
|
n/a
|
5
|
4
to 5
|
|
Expected
volatility
|
106.31%
|
n/a
|
102.84%
- 106.31%
|
116.20%
- 118.03%
|
|
Expected
dividend yield
|
0%
|
n/a
|
0%
|
0%
|
|
Risk-free
interest rate
|
4.60%
|
n/a
|
4.50%
- 5.06%
|
4.66%
- 4.92%
|
Stock
Options
|
Number
of
Shares
|
Weighted
Average Exercise Price per
Share
|
Weighted
Average Remaining
Contractual
Term
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding
at January 1, 2007
|
1,529,750
|
$ |
0.70
|
|||||||||||
Granted
|
960,000
|
$ |
0.57
|
|||||||||||
Exercised
|
(50,000 | ) | $ |
0.62
|
||||||||||
Forfeited/expired
|
(128,250 | ) | $ |
0.65
|
||||||||||
Outstanding
at September 30, 2007
|
2,311,500
|
$ |
0.65
|
3.85
years
|
$ |
7,200
|
||||||||
Exercisable
at September 30, 2007
|
1,450,500
|
$ |
0.51
|
3.23
years
|
$ |
7,200
|
||||||||
(e)
|
Geographic
Information:
|
For
the three months ended
|
For
the nine months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
September
30, 2007
|
September
30, 2006
|
|||||||||||||
Africa
|
$ |
1,308,180
|
$ |
493,922
|
$ |
2,722,434
|
$ |
1,229,083
|
||||||||
Asia
|
15,850
|
55,125
|
115,544
|
206,414
|
||||||||||||
Europe
|
45,834
|
16,313
|
90,239
|
62,642
|
||||||||||||
Middle
East
|
-
|
5,505
|
174,218
|
13,245
|
||||||||||||
North
America
|
750,333
|
130,349
|
3,313,415
|
279,620
|
||||||||||||
South
America
|
38,241
|
240,874
|
188,126
|
1,892,595
|
||||||||||||
$ |
2,158,438
|
$ |
942,088
|
$ |
6,603,976
|
$ |
3,683,599
|
(f)
|
Accounts
payable and accrued
liabilities
|
September
30, 2007
|
December
31, 2006
|
|||||||
Accounts
payable – suppliers
|
$ |
479,272
|
$ |
679,990
|
||||
Accrued
commissions
|
12,745
|
91,920
|
||||||
Accrued
royalties / licenses
|
417,843
|
461,048
|
||||||
Accrued
payroll
|
128,536
|
87,637
|
||||||
Accrued
vacation
|
154,588
|
214,858
|
||||||
Deferred
R&D revenue
|
167,500
|
-
|
||||||
Accrued
legal and accounting
|
105,000
|
7,000
|
||||||
Accrued
expenses – other
|
196,833
|
167,486
|
||||||
TOTAL
|
$ |
1,662,317
|
$ |
1,709,939
|
(g)
|
Recent
Accounting Pronouncements affecting the
Company
|
(a)
|
Common
Stock
|
(b)
|
Warrants
|
(c)
|
Series
A 8% Convertible Preferred
Stock:
|
(d)
|
Series
B 9% Convertible Preferred
Stock:
|
(e)
|
Series
C 7% Convertible Preferred
Stock:
|
(a)
|
Economic
Dependency:
|
(b)
|
Governmental
Regulation:
|
(c)
|
Equipment
Purchase Commitment:
|
Selected
Product Categories:
|
For
the three months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
HIV
|
$ |
1,975,120
|
$ |
547,398
|
$ |
1,427,722
|
260.82 | % | ||||||||
Chagas
|
31,060
|
259,146
|
(228,086 | ) | -88.01 | % | ||||||||||
Other
|
152,258
|
135,544
|
16,714
|
12.33 | % | |||||||||||
Net
Sales
|
2,158,438
|
942,088
|
1,216,350
|
129.11 | % | |||||||||||
Research
grant income
|
155,099
|
76,102
|
78,997
|
103.80 | % | |||||||||||
Total
Revenues
|
$ |
2,313,537
|
$ |
1,018,190
|
$ |
1,295,347
|
127.22 | % |
Gross
Margin related to
|
For
the three months ended
|
|||||||||||||||
Net
Product Sales:
|
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
||||||||||||
Gross
Margin per Statement of Operations
|
$ |
985,009
|
$ |
187,371
|
$ |
797,638
|
425.70 | % | ||||||||
Less:
Research grant income
|
155,099
|
76,102
|
78,997
|
103.80 | % | |||||||||||
Gross
Margin from Net Product Sales
|
$ |
829,910
|
$ |
111,269
|
$ |
718,641
|
645.86 | % | ||||||||
Gross
Margin %
|
38.45 | % | 11.81 | % | 26.64 | % |
Selected
expense lines:
|
For
the three months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Clinical
& Regulatory Affairs:
|
||||||||||||||||
Wages
and related costs
|
$ |
44,472
|
$ |
43,598
|
$ |
874
|
2.00 | % | ||||||||
Consulting
|
22,000
|
12,505
|
9,495
|
75.93 | % | |||||||||||
Clinical
Trials
|
21,415
|
14,110
|
7,305
|
51.77 | % | |||||||||||
Other
|
3,026
|
676
|
2,350
|
347.63 | % | |||||||||||
Total
Regulatory
|
$ |
90,913
|
$ |
70,889
|
$ |
20,024
|
28.25 | % | ||||||||
R&D
Other than Regulatory:
|
||||||||||||||||
Wages
and related costs
|
$ |
243,418
|
$ |
201,189
|
42,229
|
20.99 | % | |||||||||
Consulting
|
15,000
|
5,000
|
10,000
|
200.00 | % | |||||||||||
Share-based
compensation
|
28,669
|
6,286
|
22,383
|
356.08 | % | |||||||||||
Materials
and supplies
|
81,909
|
6,546
|
75,363
|
1151.28 | % | |||||||||||
Other
|
23,279
|
28,138
|
(4,859 | ) | -17.27 | % | ||||||||||
Total
other than Regulatory
|
$ |
392,275
|
$ |
247,159
|
$ |
145,116
|
58.71 | % | ||||||||
Total
Research and Development
|
$ |
483,188
|
$ |
318,048
|
$ |
165,140
|
51.92 | % |
Externally
Funded DPP™ R&D Projects
|
||
Project
|
Short
Description of the status of the R&D
project
|
|
DPP™
Multiplex
Antigen
Detection Product
|
In
August 2007 Chembio received $150,000 in funding for the purpose
of
Chembio conducting a two phase, six month feasibility study to
establish
improved performance capabilities of DPP™ based upon agreed upon protocols
to ascertain detection limits with respect to antigen detection
in certain
types of samples prior to development of a new multiplex point
of care
product. We are very satisfied with the progress to date and we
also believe that progress thus far has been satisfactory to our
partner
Pall Corporation. If feasibility is established to the
satisfaction of the funding partner then it is anticipated that
a long
term development, limited exclusive license to DPP™ for this field of
application, and manufacturing contract would be negotiated between
the
parties. There can be no assurance that these activities will
result in successful commercial products.
|
|
DPP™
Multiplex
Antigen
Detection POCT-
Women’s
Health
|
In
September 2007 Chembio received $100,000 in funding for the purpose
of
Chembio conducting a three month feasibility study to establish
performance capabilities including detection limits of DPP™ antigen
detection in connection with a new point of care product in the
women’s
health field. We are very satisfied with the progress to
date and we also believe that progress thus far has been satisfactory
to
our funding partner. If feasibility is established then it is anticipated
that a long term development, limited exclusive license to DPP™ for this
field of use, and manufacturing contract would be negotiated between
the
parties. There can be no assurance that these activities will result
in
successful commercial products.
|
|
Public
Health/Donor Funded
DPP™
Antibody Detection Tests
for
Neglected Diseases
(Leptospira Leishmaniasis,
Leprosy)
|
We
have completed prototypes of the Leishmania and Leprosy antibody
detection
tests on our DPP™ technology platform and we and our partner that funded
some of this prototype development work, Infectious Disease Research
Institute (IDRI), are pursuing procurement opportunities with public
health entities and donor foundations for the acquisition of these
products. Our collaborators on Leptospira include the National
Institutes of Health, Infectious Disease Research Institute, Weill
Medical
College of Cornell University and Oswaldo Cruz Foundation in
Brazil. The Leishmania product is nearest completion and the
likeliest of these products to have significant revenue opportunities
in
2008. There can be no assurance that these activities will result
in any
successful commercial products.
|
|
DPP™
Companion Animal
Screening
Test
|
In
late September 2007, Chembio received $20,000 for a one month;
feasibility
study to establish if Chembio can developing a screening test that
would
be marketed to veterinary practices for companion animals. If
feasibility is established then it is anticipated that a long term
development, limited exclusive license to DPP™ for this field of use, and
manufacturing contract would be negotiated between the
parties. There can be no assurance that these activities will
result in successful commercial products.
|
|
DPP™
Auto-Immune Status
Multiplex
Test
|
In
late September 2007, Chembio received $15,000 for a one month feasibility
study to establish if Chembio can develop a multiplex screening
test for
autoimmune diseases. If feasibility is established then it is
anticipated that a long term development, limited exclusive license
to
DPP™ for this field of use, and manufacturing contract would be negotiated
between the parties. There can be no assurance that these activities
will
result in successful commercial
products.
|
Other
Research & Development Activities
|
||
DPP™
HIV 1/2
|
We
have completed a prototype of our DPP™ HIV 1/2 test for whole blood, serum
and plasma and are doing internal studies with various components
to
optimize the oral fluid feature pending commencement of pre-clinical
studies. We are considering the various options with respect to
bringing this product through regulatory approval and potential
marketing
and distribution strategies
|
|
Clearview®
HIV 1/2 STAT PAK® |
At
the request of Inverness, we are investigating the possibility
of adding
additional features to our HIV STAT PAK that we manufacture for
export and
that is marketed by Inverness Medical in the United
States.
|
|
DPP™
Syphilis
|
This
product development activity is pursuant to a Cooperative Research
and
Development Agreement (CRADA) that we entered into with the United
States
Centers for Disease Control in November, 2006. The goal of the
CRADA was
to develop a DPP™ multiplex test that could be used to both screen for
antibodies to Syphilis (known as treponomal) and confirm (known
as
non-treponomal) them. During the third quarter we completed
validation work for the treponomal screening test and submitted
several
thousand treponomal tests for use in a large overseas CDC study
for which
we are waiting for reported results
|
|
Reader
Technologies
|
We
have made significant progress in employing reflectance and fluorescence
reader devices that can measure, record and report results of DPP™ tests
with greater consistency than interpretation through visual
observation. This will be particularly important with the
development of multiplex tests on DPP™, which is a significant advantage
of DPP™ due to the independently controlled, direct, even and simultaneous
delivery of sample material to the test zone area that is unique
to DPP™.
We have found that the DPP™ technology results in much improved membrane
clearance as compared with conventional single path lateral flow
technologies and this substantially increases the utility and accuracy
of
readers, and we have made significant progress in adapting these
reading
instruments to DPP™ using both colored and fluorescent conjugate
labels
|
|
Fluorescence
Technology
|
We
have entered into a collaboration with a development stage company
that
has a patent-pending technology that could increase detection levels
using
a unique fluorescence labeling
methodology
|
Selected
expense lines:
|
For
the three months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Wages
and related costs
|
$ |
363,148
|
$ |
385,452
|
$ | (22,304 | ) | -5.79 | % | |||||||
Consulting
|
54,397
|
82,227
|
(27,830 | ) | -33.85 | % | ||||||||||
Commissons,
License and Royalties
|
249,152
|
92,410
|
156,742
|
169.62 | % | |||||||||||
Options
(per SFAS 123R)
|
41,705
|
23,694
|
18,011
|
76.02 | % | |||||||||||
Marketing
Materials
|
15,698
|
25,137
|
(9,439 | ) | -37.55 | % | ||||||||||
Investor
Relations
|
66,297
|
113,181
|
(46,884 | ) | -41.42 | % | ||||||||||
Legal,
Accounting and 404
|
237,907
|
115,796
|
122,111
|
105.45 | % | |||||||||||
Travel,
Entertainment and shows
|
55,332
|
91,560
|
(36,228 | ) | -39.57 | % | ||||||||||
Bad
Debt Allowance
|
-
|
7,945
|
(7,945 | ) | -100.00 | % | ||||||||||
Other
|
90,894
|
172,395
|
(81,501 | ) | -47.28 | % | ||||||||||
Total
S, G &A
|
$ |
1,174,530
|
$ |
1,109,797
|
$ |
64,733
|
5.83 | % |
Other
Income and Expense
|
For
the three months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Other
income (expense)
|
$ |
-
|
$ |
25,000
|
$ | (25,000 | ) | -100.00 | % | |||||||
Interest
income
|
30,603
|
2,094
|
28,509
|
1361.46 | % | |||||||||||
Interest
expense
|
(6,408 | ) | (360,606 | ) |
354,198
|
-98.22 | % | |||||||||
Total
Other Income and Expense
|
$ |
24,195
|
$ | (333,512 | ) | $ |
357,707
|
-107.25 | % |
Selected
Product Categories:
|
For
the nine months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
HIV
|
$ |
5,935,013
|
$ |
1,970,240
|
$ |
3,964,773
|
201.23 | % | ||||||||
Chagas
|
61,080
|
1,200,907
|
(1,139,827 | ) | -94.91 | % | ||||||||||
Other
|
607,883
|
512,452
|
95,431
|
18.62 | % | |||||||||||
Net
Sales
|
6,603,976
|
3,683,599
|
2,920,377
|
79.28 | % | |||||||||||
Research
grant income
|
250,655
|
209,494
|
41,161
|
19.65 | % | |||||||||||
Total
Revenues
|
$ |
6,854,631
|
$ |
3,893,093
|
$ |
2,961,538
|
76.07 | % |
Gross
Margin related to
|
For
the nine months ended
|
|||||||||||||||
Net
Product Sales:
|
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
||||||||||||
Gross
Margin per Statement of Operations
|
$ |
2,636,728
|
$ |
1,187,344
|
$ |
1,449,384
|
122.07%
|
|||||||||
Less:
Research grant income
|
250,655
|
209,494
|
41,161
|
19.65%
|
||||||||||||
Gross
Margin from Net Product Sales
|
$ |
2,386,073
|
$ |
977,850
|
$ |
1,408,223
|
144.01%
|
|||||||||
Gross
Margin %
|
36.13 | % | 26.55 | % | 9.58 | % |
Selected
expense lines:
|
For
the nine months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Clinical
& Regulatory Affairs:
|
||||||||||||||||
Wages
and related costs
|
$ |
134,731
|
$ |
130,230
|
$ |
4,501
|
3.46 | % | ||||||||
Consulting
|
79,732
|
59,160
|
20,572
|
34.77 | % | |||||||||||
Clinical
Trials
|
33,355
|
59,427
|
(26,072 | ) | -43.87 | % | ||||||||||
Other
|
7,725
|
689
|
7,036
|
1021.19 | % | |||||||||||
Total
Regulatory
|
$ |
255,543
|
$ |
249,506
|
$ |
6,037
|
2.42 | % | ||||||||
R&D
Other than Regulatory:
|
||||||||||||||||
Wages
and related costs
|
$ |
651,442
|
$ |
560,727
|
90,715
|
16.18 | % | |||||||||
Consulting
|
37,934
|
10,455
|
27,479
|
262.83 | % | |||||||||||
Share-based
compensation
|
161,174
|
54,261
|
106,913
|
197.03 | % | |||||||||||
Materials
and supplies
|
198,190
|
115,351
|
82,839
|
71.81 | % | |||||||||||
Other
|
80,790
|
72,019
|
8,771
|
12.18 | % | |||||||||||
Total
other than Regulatory
|
$ |
1,129,530
|
$ |
812,813
|
$ |
316,717
|
38.97 | % | ||||||||
Total
Research and Development
|
$ |
1,385,073
|
$ |
1,062,319
|
$ |
322,754
|
30.38 | % |
Selected
expense lines:
|
For
the nine months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Wages
and related costs
|
$ |
1,098,524
|
$ |
1,058,398
|
$ |
40,126
|
3.79 | % | ||||||||
Consulting
|
165,042
|
228,834
|
(63,792 | ) | -27.88 | % | ||||||||||
Commissons,
License and Royalties
|
622,425
|
601,940
|
20,485
|
3.40 | % | |||||||||||
Options
(per SFAS 123R)
|
115,134
|
159,587
|
(44,453 | ) | -27.86 | % | ||||||||||
Marketing
Materials
|
57,906
|
39,049
|
18,857
|
48.29 | % | |||||||||||
Investor
Relations
|
161,524
|
381,610
|
(220,086 | ) | -57.67 | % | ||||||||||
Legal,
Accounting and 404
|
630,416
|
626,776
|
3,640
|
0.58 | % | |||||||||||
Travel,
Entertainment and shows
|
132,645
|
220,963
|
(88,318 | ) | -39.97 | % | ||||||||||
Bad
Debt Allowance
|
(11,210 | ) |
14,824
|
(26,034 | ) | -175.62 | % | |||||||||
Other
|
517,693
|
408,784
|
108,909
|
26.64 | % | |||||||||||
Total
S, G &A
|
$ |
3,490,099
|
$ |
3,740,765
|
$ | (250,666 | ) | -6.70 | % |
Other
Income and Expense
|
For
the nine months ended
|
|||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Other
income
|
$ |
120,862
|
$ |
30,000
|
$ |
90,862
|
302.87%
|
|||||||||
Interest
income
|
125,513
|
2,980
|
122,533
|
4111.85%
|
||||||||||||
Interest
expense
|
(11,107 | ) | (382,316 | ) |
371,209
|
-97.09%
|
||||||||||
Total
Other Income and Expense
|
$ |
235,268
|
$ | (349,336 | ) | $ |
584,604
|
-167.35%
|
For
the nine months ended
|
||||||||||||||||
September
30, 2007
|
September
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Net
cash used in operating activities
|
$ | (1,710,135 | ) | $ | (2,004,682 | ) | $ |
294,547
|
-14.69 | % | ||||||
Net
cash used in investing activities
|
(171,501 | ) | (320,750 | ) |
149,249
|
-46.53 | % | |||||||||
Net
cash (used in) provided by financing activities
|
(153,443 | ) |
5,567,314
|
(5,720,757 | ) | -102.76 | % | |||||||||
NET
(DECREASE) INCREASE IN CASH
|
$ | (2,035,079 | ) | $ |
3,241,882
|
$ | (5,276,961 | ) | -162.77 | % |
OBLIGATIONS
|
Total
|
Less
than
|
1-3
Years
|
4-5
Years
|
Greater
than
|
|||||||||||||||
1
Year
|
5
Years
|
|||||||||||||||||||
Capital
Leases (1)
|
$ |
150,216
|
$ |
42,153
|
$ |
85,717
|
$ |
22,346
|
$ |
-
|
||||||||||
Operating
Leases
|
202,920
|
128,160
|
74,760
|
-
|
-
|
|||||||||||||||
Other
Long Term Obligations(2)
|
987,083
|
523,083
|
383,000
|