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 June 30, 2007 (unaudited) and
December
31, 2006.
|
F-2
|
|
|
|
|
Condensed
Consolidated Statements of Operations (unaudited) for the Three
and Six
Months ended June 30, 2007 and 2006.
|
F-3
|
|
Condensed
Consolidated Statements of Cash Flows (unaudited) for the Six
Months ended
June 30, 2007 and 2006.
|
F-4
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
(unaudited)
|
F-5
to F-11
|
|
|
|
|
Item
2. Management's Discussion and Analysis and Plan of
Operation
|
1
|
|
|
|
|
Item
3. Controls and Procedures
|
10
|
|
|
|
Part
II. OTHER INFORMATION:
|
||
Item
4. Submission Of Matters To A Vote Of Security
Holders
|
10
|
|
|
Item
6. Exhibits
|
11
|
|
|
|
SIGNATURES
|
|
12
|
|
|
|
EXHIBITS
|
|
CHEMBIO
DIAGNOSTIC SYSTEMS, INC. AND SUBSIDIARIES
|
||||||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
||||||||
-
ASSETS -
|
||||||||
June
30, 2007
|
December
31, 2006
|
|||||||
(Unaudited)
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
|
$ |
2,963,774
|
$ |
4,290,386
|
||||
Accounts
receivable, net of allowance for doubtful accounts of $10,045
and $42,967
for 2007 and 2006, respectively
|
1,435,043
|
1,350,240
|
||||||
Inventories
|
1,128,266
|
1,108,950
|
||||||
Prepaid
expenses and other current assets
|
304,873
|
204,092
|
||||||
TOTAL
CURRENT ASSETS
|
5,831,956
|
6,953,668
|
||||||
FIXED
ASSETS, net of accumulated depreciation
|
711,697
|
603,603
|
||||||
OTHER
ASSETS:
|
||||||||
Deposits
and other assets
|
320,568
|
349,306
|
||||||
$ |
6,864,221
|
$ |
7,906,577
|
|||||
-
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)-
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable and accrued liabilities
|
$ |
1,752,162
|
$ |
1,709,939
|
||||
Accrued
interest payable
|
33,159
|
93,160
|
||||||
Current
portion of obligations under capital leases
|
37,357
|
37,336
|
||||||
TOTAL
CURRENT LIABILITIES
|
1,822,678
|
1,840,435
|
||||||
OTHER
LIABILITIES:
|
||||||||
Obligations
under capital leases - net of current portion
|
88,746
|
7,081
|
||||||
Series
C redemption put
|
228,644
|
449,677
|
||||||
TOTAL
LIABILITIES
|
2,140,068
|
2,297,193
|
||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
PREFERRED
STOCK - Series C 7% Convertible - $.01 par value: 165 shares
issued and outstanding as of 2007 and 2006. Liquidation preference
of
$8,684,583
|
7,057,225
|
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 $4,300,763
|
2,381,444
|
2,504,313
|
||||||
Series
B 9% Convertible - $.01 par value: 112.27091 and 113.93591 shares
issued
and outstanding as of 2007 and 2006, respectively. Liquidation
preference
of $5,869,360
|
3,498,362
|
3,555,786
|
||||||
Common
stock - $.01 par value; 100,000,000 shares authorized 12,644,310
and
11,296,961 shares issued and outstanding as of 2007 and 2006,
respectively
|
126,443
|
112,970
|
||||||
Additional
paid-in capital
|
20,799,713
|
19,960,618
|
||||||
Accumulated
deficit
|
(29,139,034 | ) | (27,073,494 | ) | ||||
TOTAL
STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
(2,333,072 | ) | (939,807 | ) | ||||
$ |
6,864,221
|
$ |
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
|
Six
months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
June
30, 2007
|
June
30, 2006
|
|||||||||||||
REVENUES:
|
||||||||||||||||
Net
sales
|
$ |
2,420,215
|
$ |
1,572,442
|
$ |
4,445,537
|
$ |
2,741,511
|
||||||||
Research
grant income
|
82,558
|
64,794
|
95,556
|
133,392
|
||||||||||||
TOTAL
REVENUES
|
2,502,773
|
1,637,236
|
4,541,093
|
2,874,903
|
||||||||||||
Cost
of sales
|
1,510,873
|
1,072,802
|
2,889,375
|
1,874,930
|
||||||||||||
GROSS
PROFIT
|
991,900
|
564,434
|
1,651,718
|
999,973
|
||||||||||||
OVERHEAD
COSTS:
|
||||||||||||||||
Research
and development expenses
|
583,154
|
351,465
|
901,884
|
744,271
|
||||||||||||
Selling,
general and administrative expenses
|
1,063,343
|
1,333,321
|
2,315,569
|
2,630,968
|
||||||||||||
1,646,497
|
1,684,786
|
3,217,453
|
3,375,239
|
|||||||||||||
LOSS
FROM OPERATIONS
|
(654,597 | ) | (1,120,352 | ) | (1,565,735 | ) | (2,375,266 | ) | ||||||||
OTHER
INCOME (EXPENSES):
|
||||||||||||||||
Other
income (expense)
|
(12,146 | ) |
5,000
|
120,862
|
5,000
|
|||||||||||
Interest
income
|
42,589
|
289
|
94,910
|
886
|
||||||||||||
Interest
expense
|
(1,702 | ) | (12,312 | ) | (4,699 | ) | (21,710 | ) | ||||||||
28,741
|
(7,023 | ) |
211,073
|
(15,824 | ) | |||||||||||
LOSS
BEFORE INCOME TAXES
|
(625,856 | ) | (1,127,375 | ) | (1,354,662 | ) | (2,391,090 | ) | ||||||||
Income
taxes
|
-
|
-
|
-
|
-
|
||||||||||||
NET
LOSS
|
(625,856 | ) | (1,127,375 | ) | (1,354,662 | ) | (2,391,090 | ) | ||||||||
Dividends
payable in stock to preferred stockholders
|
356,900
|
207,937
|
710,878
|
420,860
|
||||||||||||
Dividend
accreted to preferred stock for associated costs and a beneficial
conversion feature
|
-
|
-
|
-
|
463,434
|
||||||||||||
NET
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (982,756 | ) | $ | (1,335,312 | ) | $ | (2,065,540 | ) | $ | (3,275,384 | ) | ||||
Basic
and diluted loss per share
|
$ | (0.08 | ) | $ | (0.13 | ) | $ | (0.17 | ) | $ | (0.34 | ) | ||||
Weighted
average number of shares outstanding, basic and
diluted
|
12,019,518
|
10,054,987
|
12,318,633
|
9,532,628
|
||||||||||||
See
notes accompanying the condensed consolidated financial
statements.
|
CHEMBIO
DIAGNOSTICS, INC. AND SUBSIDIARIES
|
||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(UNAUDITED)
|
||||||||
Six
months ended
|
||||||||
June
30, 2007
|
June
30, 2006
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (1,354,662 | ) | $ | (2,391,090 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation
and amortization
|
134,194
|
84,790
|
||||||
Loss
on retirement of fixed assests
|
12,146
|
-
|
||||||
Provision
for doubtful accounts
|
(32,922 | ) |
6,878
|
|||||
Common
stock, options and warrants issued as compensation
|
257,398
|
281,470
|
||||||
Changes
in:
|
||||||||
Accounts
receivable
|
(51,881 | ) |
329,956
|
|||||
Inventories
|
(19,316 | ) | (230,674 | ) | ||||
Prepaid
expenses and other current assets
|
(100,781 | ) |
82,055
|
|||||
Other
assets and deposits
|
28,738
|
-
|
||||||
Accounts
payable and accrued expenses
|
62,223
|
1,004,284
|
||||||
Net
cash used in operating activities
|
(1,064,863 | ) | (832,331 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisition
of fixed assets
|
(151,574 | ) | (267,553 | ) | ||||
Net
cash used in investing activities
|
(151,574 | ) | (267,553 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
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
of accrued interest
|
(60,001 | ) | (67,652 | ) | ||||
Proceeds
from exercise of options
|
31,000
|
86,321
|
||||||
Payment
of capital lease obligation
|
(21,174 | ) | (18,659 | ) | ||||
Payment
of dividends
|
(60,000 | ) | (140,226 | ) | ||||
Net
cash (used in) provided by financing activities
|
(110,175 | ) |
2,157,034
|
|||||
NET
(DECREASE) INCREASE IN CASH
|
(1,326,612 | ) |
1,057,150
|
|||||
Cash
- beginning of the period
|
4,290,386
|
232,148
|
||||||
Cash
- end of the period
|
$ |
2,963,774
|
$ |
1,289,298
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid during the period for interest
|
$ |
64,700
|
$ |
12,312
|
||||
Supplemental
disclosures for non-cash investing and financing
activities:
|
||||||||
Preferred
B issued as payment for financing fees
|
$ |
-
|
$ |
100,000
|
||||
Warrants
issued with bridge loan
|
-
|
328,341
|
||||||
Value
of warrants issued allocated to additional paid in capital
|
20,000
|
481,470
|
||||||
Cost
of royalty rate reduction in other assets
|
-
|
200,000
|
||||||
Accreted
beneficial conversion to preferred stock
|
-
|
463,434
|
||||||
Accreted
dividend to preferred stock
|
710,878
|
420,860
|
||||||
Value
of Common stock issued as payment of dividend
|
381,759
|
189,218
|
||||||
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
|
46,454
|
360,651
|
||||||
Assets
acquired under capital leases
|
102,860
|
-
|
||||||
See
notes accompanying the condensed consolidated financial
statements.
|
(a)
|
Basis
of
Presentation:
|
(b)
|
Inventories:
|
June
30, 2007
|
December
31, 2006
|
||||||
Raw
Materials
|
$ |
586,468
|
$ |
629,967
|
|||
Work
in Process
|
222,886
|
257,208
|
|||||
Finished
Goods
|
318,912
|
221,775
|
|||||
$ |
1,128,266
|
$ |
1,108,950
|
(c)
|
Earnings
Per Share
|
For
the three months ended
|
For
the six months ended
|
|||||||
June
30, 2007
|
June
30, 2006
|
June
30, 2007
|
June
30, 2006
|
|||||
Basic
|
12,019,518
|
10,054,987
|
12,318,633
|
9,532,628
|
||||
Diluted
|
12,019,518
|
10,054,987
|
12,318,633
|
9,532,628
|
|
For
the three months ended
|
For
the six months ended
|
||||||
June
30, 2007
|
June
30, 2006
|
June
30, 2007
|
June
30, 2006
|
|||||
1999
Plan Stock Options
|
1,847,599
|
1,619,500
|
1,672,326
|
1,461,500
|
||||
Other
Stock Options
|
142,125
|
144,625
|
144,625
|
144,625
|
||||
Warrants
|
26,196,085
|
23,351,159
|
26,189,446
|
22,457,650
|
||||
Convertible
Preferred Stock
|
26,780,096
|
17,204,644
|
26,943,441
|
16,572,985
|
(d)
|
Employee
Stock Option Plan:
|
For
the three months ended
|
For
the six months ended
|
|||||||
June
30, 2007
|
June
30, 2006
|
June
30, 2007
|
June
30, 2006
|
|||||
Expected
term (in years)
|
5
|
4
to 5
|
5
|
4
to 5
|
||||
Expected
volatility
|
102.84%
|
116.20%
|
102.84%
- 104.80%
|
116.20%
- 118.03%
|
||||
Expected
dividend yield
|
0%
|
0%
|
0%
|
0%
|
||||
Risk-free
interest rate
|
4.55%
- 5.06%
|
4.66%
- 4.92%
|
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
|
940,000
|
$ |
0.57
|
|||||||||
Exercised
|
(50,000 | ) | $ |
0.62
|
||||||||
Forfeited/expired
|
(13,750 | ) | $ |
0.69
|
||||||||
Outstanding
at June 30, 2007
|
2,406,000
|
$ |
0.65
|
3.78
years
|
$ |
10,200
|
||||||
|
||||||||||||
Exercisable
at June 30, 2007
|
1,528,000
|
$ |
0.50
|
3.17
years
|
$ |
10,200
|
(e)
|
Geographic
Information:
|
For
the three months ended
|
For
the six months ended
|
||||||||||||||
June
30, 2007
|
June
30, 2006
|
June
30, 2007
|
June
30, 2006
|
||||||||||||
Africa
|
$ |
1,045,630
|
$ |
524,697
|
$ |
1,414,254
|
$ |
735,161
|
|||||||
Asia
|
58,481
|
108,478
|
99,694
|
151,289
|
|||||||||||
Europe
|
10,414
|
7,630
|
37,424
|
46,328
|
|||||||||||
Middle
East
|
62,240
|
7,065
|
181,199
|
7,740
|
|||||||||||
North
America
|
1,102,155
|
89,310
|
2,563,081
|
149,271
|
|||||||||||
South
America
|
141,295
|
835,262
|
149,885
|
1,651,722
|
|||||||||||
$ |
2,420,215
|
$ |
1,572,442
|
$ |
4,445,537
|
$ |
2,741,511
|
(f)
|
Accounts
payable and accrued
liabilities
|
June
30, 2007
|
December
31, 2006
|
||||||
Accounts
payable – suppliers
|
$ |
652,783
|
$ |
679,990
|
|||
Accrued
commissions
|
7,350
|
91,920
|
|||||
Accrued
royalties / licenses
|
418,290
|
461,048
|
|||||
Accrued
payroll
|
98,033
|
87,637
|
|||||
Accrued
vacation
|
189,061
|
214,858
|
|||||
Accrued
legal and accounting
|
61,315
|
7,000
|
|||||
Accrued
expenses – other
|
325,330
|
167,486
|
|||||
TOTAL
|
$ |
1,752,162
|
$ |
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:
|
Selected
Product Categories:
|
For
the three months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
HIV
|
$ |
2,148,528
|
$ |
885,158
|
$ |
1,263,370
|
142.73 | % | ||||||||
Chagas
|
25,450
|
458,188
|
(432,738 | ) | -94.45 | % | ||||||||||
Other
|
246,237
|
229,096
|
17,141
|
7.48 | % | |||||||||||
Net
Sales
|
2,420,215
|
1,572,442
|
847,773
|
53.91 | % | |||||||||||
Research
grant income
|
82,558
|
64,794
|
17,764
|
27.42 | % | |||||||||||
Total
Revenues
|
$ |
2,502,773
|
$ |
1,637,236
|
$ |
865,537
|
52.87 | % |
Gross
Margin related to Net
Product Sales:
|
For
the three months ended
|
|||||||||||||||
|
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
||||||||||||
Gross
Margin per Statement of Operations
|
$ |
991,900
|
$ |
564,434
|
$ |
427,466
|
75.73 | % | ||||||||
Less:
Research grant income
|
82,558
|
64,794
|
17,764
|
27.42 | % | |||||||||||
Gross
Margin from Net Product Sales
|
$ |
909,342
|
$ |
499,640
|
$ |
409,702
|
82.00 | % | ||||||||
Gross
Margin %
|
37.57 | % | 31.77 | % | 5.80 | % |
Selected
expense lines:
|
For
the three months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Clinical
& Regulatory Affairs:
|
||||||||||||||||
Wages
and related costs
|
$ |
43,337
|
$ |
41,202
|
$ |
2,135
|
5.18 | % | ||||||||
Consulting
|
46,458
|
36,155
|
10,303
|
28.50 | % | |||||||||||
Clinical
Trials
|
10,440
|
23,233
|
(12,793 | ) | -55.06 | % | ||||||||||
Other
|
3,303
|
12
|
3,291
|
27423.17 | % | |||||||||||
Total
Regulatory
|
$ |
103,538
|
$ |
100,602
|
$ |
2,936
|
2.92 | % | ||||||||
R&D
Other than Regulatory:
|
||||||||||||||||
Wages
and related costs
|
$ |
211,727
|
$ |
179,250
|
32,477
|
18.12 | % | |||||||||
Consulting
|
12,850
|
-
|
12,850
|
|||||||||||||
Stock
and Options (per SFAS 123R)
|
131,797
|
17,775
|
114,022
|
641.47 | % | |||||||||||
Materials
and supplies
|
92,517
|
36,588
|
55,929
|
152.86 | % | |||||||||||
Other
|
30,725
|
17,250
|
13,475
|
78.12 | % | |||||||||||
Total
other than Regulatory
|
$ |
479,616
|
$ |
250,863
|
$ |
228,753
|
91.19 | % | ||||||||
Total
Research and Development
|
$ |
583,154
|
$ |
351,465
|
$ |
231,689
|
65.92 | % |
Selected
expense lines:
|
For
the three months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Wages
and related costs
|
$ |
345,729
|
$ |
340,211
|
$ |
5,518
|
1.62 | % | ||||||||
Consulting
|
76,446
|
69,528
|
6,918
|
9.95 | % | |||||||||||
Commissons,
License and Royalties
|
166,262
|
262,602
|
(96,340 | ) | -36.69 | % | ||||||||||
Options
(per SFAS 123R)
|
57,729
|
59,609
|
(1,880 | ) | -3.15 | % | ||||||||||
Marketing
Materials
|
24,281
|
10,482
|
13,799
|
131.64 | % | |||||||||||
Investor
Relations
|
47,400
|
121,716
|
(74,316 | ) | -61.06 | % | ||||||||||
Legal,
Accounting and 404
|
144,369
|
235,239
|
(90,870 | ) | -38.63 | % | ||||||||||
Travel,
Entertainment and shows
|
26,413
|
79,673
|
(53,260 | ) | -66.85 | % | ||||||||||
Bad
Debt Allowance
|
(21,935 | ) |
7,226
|
(29,161 | ) | -403.56 | % | |||||||||
Other
|
196,649
|
147,035
|
49,614
|
33.74 | % | |||||||||||
Total
S, G &A
|
$ |
1,063,343
|
$ |
1,333,321
|
$ | (269,978 | ) | -20.25 | % |
Other
Income and Expense
|
For
the three months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Other
income (expense)
|
$ | (12,146 | ) | $ |
5,000
|
$ | (17,146 | ) | -342.92 | % | ||||||
Interest
income
|
42,589
|
289
|
42,300
|
14636.68 | % | |||||||||||
Interest
expense
|
(1,702 | ) | (12,312 | ) |
10,610
|
-86.18 | % | |||||||||
Total
Other Income and Expense
|
$ |
28,741
|
$ | (7,023 | ) | $ |
35,764
|
-509.24 | % |
Selected
Product Categories:
|
For
the six months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
HIV
|
$ |
3,959,893
|
$ |
1,422,842
|
$ |
2,537,051
|
178.31 | % | ||||||||
Chagas
|
30,020
|
941,761
|
(911,741 | ) | -96.81 | % | ||||||||||
Other
|
455,624
|
376,908
|
78,716
|
20.88 | % | |||||||||||
Net
Sales
|
4,445,537
|
2,741,511
|
1,704,026
|
62.16 | % | |||||||||||
Research
grant income
|
95,556
|
133,392
|
(37,836 | ) | -28.36 | % | ||||||||||
Total
Revenues
|
$ |
4,541,093
|
$ |
2,874,903
|
$ |
1,666,190
|
57.96 | % |
Gross
Margin related to Net
Product Sales:
|
For
the six months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Gross
Margin per Statement of Operations
|
$ |
1,651,718
|
$ |
999,973
|
$ |
651,745
|
65.18 | % | ||||||||
Less:
Research grant income
|
95,556
|
133,392
|
(37,836 | ) | -28.36 | % | ||||||||||
Gross
Margin from Net Product Sales
|
$ |
1,556,162
|
$ |
866,581
|
$ |
689,581
|
79.57 | % | ||||||||
Gross
Margin %
|
35.01 | % | 31.61 | % | 3.40 | % |
Selected
expense lines:
|
For
the six months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Clinical
& Regulatory Affairs:
|
||||||||||||||||
Wages
and related costs
|
$ |
90,259
|
$ |
78,878
|
$ |
11,381
|
14.43 | % | ||||||||
Consulting
|
57,732
|
46,655
|
11,077
|
23.74 | % | |||||||||||
Clinical
Trials
|
11,940
|
45,317
|
(33,377 | ) | -73.65 | % | ||||||||||
Other
|
4,698
|
7,766
|
(3,068 | ) | -39.51 | % | ||||||||||
Total
Regulatory
|
$ |
164,629
|
$ |
178,616
|
$ | (13,987 | ) | -7.83 | % | |||||||
R&D
Other than Regulatory:
|
||||||||||||||||
Wages
and related costs
|
$ |
406,045
|
$ |
359,538
|
46,507
|
12.94 | % | |||||||||
Consulting
|
22,934
|
-
|
22,934
|
|||||||||||||
Stock
and Options (per SFAS 123R)
|
132,505
|
47,975
|
84,530
|
176.20 | % | |||||||||||
Materials
and supplies
|
109,669
|
108,805
|
864
|
0.79 | % | |||||||||||
Other
|
66,102
|
49,337
|
16,765
|
33.98 | % | |||||||||||
Total
other than Regulatory
|
$ |
737,255
|
$ |
565,655
|
$ |
171,600
|
30.34 | % | ||||||||
Total
Research and Development
|
$ |
901,884
|
$ |
744,271
|
$ |
157,613
|
21.18 | % |
Selected
expense lines:
|
For
the six months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Wages
and related costs
|
$ |
722,112
|
$ |
667,007
|
$ |
55,105
|
8.26 | % | ||||||||
Consulting
|
110,645
|
146,606
|
(35,961 | ) | -24.53 | % | ||||||||||
Commissons,
License and Royalties
|
373,272
|
509,530
|
(136,258 | ) | -26.74 | % | ||||||||||
Options
(per SFAS 123R)
|
73,429
|
135,893
|
(62,464 | ) | -45.97 | % | ||||||||||
Marketing
Materials
|
41,790
|
13,912
|
27,878
|
200.39 | % | |||||||||||
Investor
Relations
|
95,227
|
268,429
|
(173,202 | ) | -64.52 | % | ||||||||||
Legal,
Accounting and 404
|
392,509
|
510,980
|
(118,471 | ) | -23.19 | % | ||||||||||
Travel,
Entertainment and shows
|
50,524
|
129,403
|
(78,879 | ) | -60.96 | % | ||||||||||
Bad
Debt Allowance
|
(11,210 | ) |
6,878
|
(18,088 | ) | -262.98 | % | |||||||||
Other
|
467,271
|
242,330
|
224,941
|
92.82 | % | |||||||||||
Total
S, G &A
|
$ |
2,315,569
|
$ |
2,630,968
|
$ | (315,399 | ) | -11.99 | % |
Other
Income and Expense
|
For
the six months ended
|
|||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Other
income
|
$ |
120,862
|
$ |
5,000
|
$ |
115,862
|
2317.24 | % | ||||||||
Interest
income
|
94,910
|
886
|
94,024
|
10612.19 | % | |||||||||||
Interest
expense
|
(4,699 | ) | (21,710 | ) |
17,011
|
-78.36 | % | |||||||||
Total
Other Income and Expense
|
$ |
211,073
|
$ | (15,824 | ) | $ |
226,897
|
-1433.88 | % |
For
the six months ended
|
||||||||||||||||
June
30, 2007
|
June
30, 2006
|
$
Change
|
%
Change
|
|||||||||||||
Net
cash used in operating activities
|
$ | (1,064,863 | ) | $ | (832,331 | ) | $ | (232,532 | ) | 27.94 | % | |||||
Net
cash used in investing activities
|
(151,574 | ) | (267,553 | ) |
115,979
|
-43.35 | % | |||||||||
Net
cash (used in) provided by financing activities
|
(110,175 | ) |
2,157,034
|
(2,267,209 | ) | -105.11 | % | |||||||||
NET
(DECREASE) INCREASE IN CASH
|
$ | (1,326,612 | ) | $ |
1,057,150
|
$ | (2,383,762 | ) | -225.49 | % |
OBLIGATIONS
|
Total
|
Less
than
|
1-3
Years
|
4-5
Years
|
Greater
than
|
||||||||||||||
1
Year
|
5
Years
|
||||||||||||||||||
Capital
Leases (1)
|
$ |
166,728
|
$ |
50,825
|
$ |
86,414
|
$ |
27,840
|
$ |
1,649
|
|||||||||
Operating
Leases
|
234,960
|
128,160
|
106,800
|
-
|
-
|
||||||||||||||
Other
Long Term Obligations(2)
|
1,093,333
|
516,833
|
495,500
|
27,000
|
54,000
|
||||||||||||||
Total
Obligations
|
$ |
1,495,021
|
$ |
695,818
|
$ |
688,714
|
$ |
54,840
|
$ |
55,649
|
|
(1)
|
This
represents capital leases used to purchase capital equipment. (Obligations
inclusive of interest).
|
|
(2)
|
This
represents contractual obligations for fixed cost licenses and
employment
contracts.
|
Proposal
#1:– Election of Directors
|
Alan
Carus
|
Kathy
Davis
|
Dr.
Gary Meller
|
Lawrence
A. Siebert
|
For
|
7,538,858
|
7,543,858
|
7,436,665
|
7,534,680
|
Withheld
|
327,792
|
322,792
|
429,985
|
331,970
|
Abstain/broker
non votes
|
3,977,365
|
3,977,365
|
3,977,365
|
3,977,365
|
Proposal
|
Ratifying
Lazar Levine & Felix LLP as the Company’s Independent Registered
Certified Accountants
|
Vote
to Adjourn Or Postpone the meeting
|
Vote
on Other Business
|
For
|
7,778,951
|
7,428,116
|
7,325,871
|
Withheld
|
40,022
|
171,687
|
337,320
|
Abstain/broker
non votes
|
4,025,042
|
4,244,212
|
4,180,824
|
3.1
|
Articles
of Incorporation, as amended. (3)
|
3.2
|
Bylaws.
(1)
|
3.3
|
Amendment
No. 1 to Bylaws dated May 3, 2004. (2)
|
4.1
|
Form
of Warrant, dated June 29, 2006, issued pursuant to Company’s sale of
Secured Debentures. (4)
|
4.2
|
Registration
Rights Agreement, dated June 29, 2006. (4)
|
4.3
|
Certificate
of Designation of Preferences, Rights and Limitations of Series
C 7%
Convertible Preferred Stock of the Registrant. (6)
|
4.4
|
Amended
and Restated Certificate of Designation of Preferences, Rights
and
Limitations of Series C 7% Convertible Preferred Stock of the
Registrant
(6)
|
4.5
|
Registration
Rights Agreement, dated as of September 29, 2006, by and among
the
Registrant and the Purchasers listed therein. (6)
|
4.6
|
Registration
Rights Agreement, dated as of October 5, 2007 by and among
the Registrant
and the Purchases listed therein. (6)
|
4.7
|
Form
of Common Stock Purchase Warrant issued pursuant to the Securities
Purchase Agreement dated September 29, 2006. (6)
|
10.1
|
Employment
Agreement dated June 15, 2006 with Lawrence A. Siebert.
(5)
|
10.2
|
Securities
Purchase Agreement, dated June 29, 2006, among the Company
and purchasers
of the Company’s Secured Debentures. (4)
|
10.3
|
Form
of Secured Debenture, dated June 29, 2006. (4)
|
10.4
|
Security
Agreement, dated June 29, 2006, among the Company, Chembio
Diagnostic
Systems, Inc., and purchasers of the Company’s Secured Debentures.
(4)
|
10.5
|
Subsidiary
Guarantee, dated June 29, 2006, made by Chembio Diagnostic
Systems, Inc.,
in favor of Purchasers of the Company’s Secured Debentures.
(4)
|
10.6
|
Securities
Purchase Agreement, dated as of September 29, 2006, by and
among the
Registrant and the Purchasers listed therein. (6)
|
10.7
|
Securities
Purchase Agreement, dated as of October 5, 2006, by and among
the
Registrant and the Purchases listed therein. (6)
|
10.8
|
Letter
of Amendment to Securities Purchase Agreements dated as of
October 5, 2006
by and among the Registrant and the Purchasers listed therein.
(6)
|
10.9
|
HIV
Barrel License, Marketing and Distribution Agreement, dated
as of
September 29, 2006, by and among the Registrant, Inverness
and StatSure.
(7)
|
10.10
|
HIV
Cassette License, Marketing and Distribution Agreement, dated
as of
September 29, 2006, between the Registrant and Inverness.
(7)
|
10.11
|
Non-Exclusive
License, Marketing and Distribution Agreement, dated as of
September 29,
2006, between the Registrant and Inverness. (7)
|
10.12
|
Joint
HIV Barrel Product Commercialization Agreement, dated as of
September 29,
2006, between the Registrant and StatSure. (7)
|
10.13
|
Settlement
Agreement, dated September 29, 2006, between the Registrant
and StatSure.
(7)
|
10.14
|
Employment
Agreement, dated April 23, 2007, with Javan Esfandiari
(8)
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant
to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of
2002
|
Date:
|
August
9, 2007
|
By:
/s/ Lawrence A. Siebert
|
|
|
Lawrence
A. Siebert
|
|
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
|
|
Date:
|
August
9, 2007
|
By:
/s / Richard J. Larkin
|
|
|
Richard
J. Larkin
|
|
|
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
|
1.
|
I
have reviewed this Form 10-QSB of Chembio Diagnostics,
Inc.
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
1.
|
I
have reviewed this Form 10-QSB of Chembio Diagnostics,
Inc.
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such
statements
were made, not misleading with respect to the period covered by
this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures
(as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant
and have:
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|