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, 2008 (unaudited) and
December 31, 2007.
|
F-2
|
Condensed
Consolidated Statements of Operations (unaudited) for the Three and Nine
Months ended September 30, 2008 and 2007.
|
F-3
|
Condensed
Consolidated Statements of Cash Flows (unaudited) for the Nine Months
ended September 30, 2008 and 2007.
|
F-4
|
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
F-5
to F-12
|
Item
2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
|
1
|
Item
4T. Controls and Procedures
|
12
|
Part
II. OTHER INFORMATION:
|
|
Item
6. Exhibits
|
13
|
SIGNATURES
|
15
|
EXHIBITS
|
CHEMBIO DIAGNOSTICS,
INC. AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED
BALANCE SHEETS
|
||||||||
AS
OF
|
||||||||
|
||||||||
-
ASSETS -
|
September
30, 2008
|
December
31, 2007
|
||||||
(UNAUDITED)
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 999,429 | $ | 2,827,369 | ||||
Accounts
receivable, net of allowance for doubtful accounts of $10,301 and $10,045
for 2008 and 2007, respectively
|
2,021,169 | 946,340 | ||||||
Inventories
|
1,192,127 | 1,453,850 | ||||||
Prepaid
expenses and other current assets
|
256,000 | 243,748 | ||||||
TOTAL
CURRENT ASSETS
|
4,468,725 | 5,471,307 | ||||||
FIXED ASSETS, net of
accumulated depreciation
|
953,762 | 829,332 | ||||||
OTHER
ASSETS:
|
||||||||
License
agreements, net of current portion
|
1,035,366 | 255,948 | ||||||
Deposits
and other assets
|
27,820 | 28,410 | ||||||
$ | 6,485,673 | $ | 6,584,997 | |||||
-
LIABILITIES AND STOCKHOLDERS’ EQUITY -
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 2,319,117 | $ | 2,175,791 | ||||
Deferred
research and development revenue
|
100,000 | 43,334 | ||||||
Current
portion of license fee payable
|
375,000 | - | ||||||
Current
portion of obligations under capital leases
|
18,148 | 23,458 | ||||||
TOTAL
CURRENT LIABILITIES
|
2,812,265 | 2,242,583 | ||||||
OTHER
LIABILITIES:
|
||||||||
Obligations
under capital leases - net of current portion
|
65,747 | 79,588 | ||||||
License
fee payable - net of current portion
|
500,000 | - | ||||||
TOTAL
LIABILITIES
|
3,378,012 | 2,322,171 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS’
EQUITY:
|
||||||||
Common
stock - $.01 par value; 100,000,000 shares authorized 61,944,901 and
60,537,534 shares issued and outstanding as of 2008 and 2007,
respectively
|
619,449 | 605,375 | ||||||
Additional
paid-in capital
|
39,232,274 | 39,003,148 | ||||||
Accumulated
deficit
|
(36,744,062 | ) | (35,345,697 | ) | ||||
TOTAL
STOCKHOLDERS’ EQUITY
|
3,107,661 | 4,262,826 | ||||||
$ | 6,485,673 | $ | 6,584,997 | |||||
See
accompanying notes
|
CHEMBIO DIAGNOSTICS,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||
FOR THE THREE AND NINE
MONTHS ENDED
|
||||||||||||||||
(UNAUDITED)
|
||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
September
30, 2008
|
September
30, 2007
|
|||||||||||||
REVENUES:
|
||||||||||||||||
Net
sales
|
$ | 3,406,803 | $ | 2,158,438 | $ | 8,111,015 | $ | 6,603,976 | ||||||||
Research
grant income
|
109,361 | 155,099 | 487,661 | 250,655 | ||||||||||||
TOTAL
REVENUES
|
3,516,164 | 2,313,537 | 8,598,676 | 6,854,631 | ||||||||||||
Cost
of sales
|
1,859,554 | 1,328,528 | 4,583,335 | 4,217,903 | ||||||||||||
GROSS
PROFIT
|
1,656,610 | 985,009 | 4,015,341 | 2,636,728 | ||||||||||||
OPERATING
EXPENSES:
|
||||||||||||||||
Research
and development expenses
|
758,851 | 483,188 | 1,952,436 | 1,385,073 | ||||||||||||
Selling,
general and administrative expenses
|
1,133,288 | 1,174,530 | 3,475,262 | 3,490,099 | ||||||||||||
1,892,139 | 1,657,718 | 5,427,698 | 4,875,172 | |||||||||||||
LOSS
FROM OPERATIONS
|
(235,529 | ) | (672,709 | ) | (1,412,357 | ) | (2,238,444 | ) | ||||||||
OTHER
INCOME (EXPENSES):
|
||||||||||||||||
Other
income (expense)
|
- | - | - | 120,862 | ||||||||||||
Interest
income
|
3,587 | 30,603 | 29,958 | 125,513 | ||||||||||||
Interest
expense
|
(5,112 | ) | (6,408 | ) | (15,966 | ) | (11,107 | ) | ||||||||
(1,525 | ) | 24,195 | 13,992 | 235,268 | ||||||||||||
LOSS
BEFORE INCOME TAXES
|
(237,054 | ) | (648,514 | ) | (1,398,365 | ) | (2,003,176 | ) | ||||||||
Provision
for income taxes
|
- | - | - | - | ||||||||||||
NET
LOSS
|
(237,054 | ) | (648,514 | ) | (1,398,365 | ) | (2,003,176 | ) | ||||||||
Dividends
payable in stock to preferred stockholders
|
- | 362,959 | - | 1,073,837 | ||||||||||||
NET
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (237,054 | ) | $ | (1,011,473 | ) | $ | (1,398,365 | ) | $ | (3,077,013 | ) | ||||
Basic
and diluted loss per share
|
$ | (0.00 | ) | $ | (0.07 | ) | $ | (0.02 | ) | $ | (0.24 | ) | ||||
Weighted
average number of shares outstanding, basic and
diluted
|
61,944,901 | 14,043,208 | 61,036,181 | 12,701,494 | ||||||||||||
See
accompanying notes
|
CHEMBIO DIAGNOSTICS,
INC. AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
FOR THE NINE MONTHS
ENDED
|
||||||||
(UNAUDITED)
|
||||||||
September
30, 2008
|
September
30, 2007
|
|||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS:
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Cash
received from customers
|
$ | 7,523,847 | $ | 6,935,884 | ||||
Cash
paid to suppliers and employees
|
(8,982,976 | ) | (8,760,425 | ) | ||||
Interest
received
|
29,958 | 125,513 | ||||||
Interest
paid
|
(15,966 | ) | (11,107 | ) | ||||
Net
cash used in operating activities
|
(1,445,137 | ) | (1,710,135 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisition
of fixed assets
|
(363,652 | ) | (171,501 | ) | ||||
Net
cash used in investing activities
|
(363,652 | ) | (171,501 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from exercise of warrants
|
- | 31,000 | ||||||
Payment
of accrued interest
|
- | (90,000 | ) | |||||
Payment
of dividends
|
- | (60,000 | ) | |||||
Payment
of capital lease obligation
|
(19,151 | ) | (34,443 | ) | ||||
Net
cash used in financing activities
|
(19,151 | ) | (153,443 | ) | ||||
NET
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(1,827,940 | ) | (2,035,079 | ) | ||||
Cash
and cash equivalents - beginning of the period
|
2,827,369 | 4,290,386 | ||||||
Cash
and cash equivalents - end of the period
|
$ | 999,429 | $ | 2,255,307 | ||||
RECONCILIATION
OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
|
||||||||
Net
Loss
|
$ | (1,398,365 | ) | $ | (2,003,176 | ) | ||
Adjustments:
|
||||||||
Depreciation
and amortization
|
239,222 | 213,158 | ||||||
Loss
on retirement of fixed assets
|
- | 12,146 | ||||||
Provision
for doubtful accounts
|
256 | (11,210 | ) | |||||
Common
stock, options and warrants issued as compensation
|
268,159 | 275,360 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
(1,075,085 | ) | (75,037 | ) | ||||
Inventories
|
261,723 | (60,786 | ) | |||||
Prepaid
expenses and other assets
|
(816,039 | ) | (24,912 | ) | ||||
Other
assets and deposits
|
- | (8,056 | ) | |||||
Deferred
revenue
|
56,666 | - | ||||||
Accounts
payable and accrued expenses
|
143,326 | (27,622 | ) | |||||
Licenses
fee payable
|
875,000 | - | ||||||
Net
cash used in operating activities
|
$ | (1,445,137 | ) | $ | (1,710,135 | ) | ||
Supplemental
disclosures for non-cash investing and financing
activities:
|
||||||||
Value
of common stock issued upon cashless warrant exercise
|
$ | 14,074 | $ | - | ||||
Value
of warrants/options/stock issued allocated to additional paid-in
capital
|
- | 61,181 | ||||||
Accreted
dividend to preferred stock
|
- | 1,073,837 | ||||||
Value
of Common stock issued as payment of dividend
|
- | 1,072,157 | ||||||
Value
of Preferred stock converted to common stock
|
- | 178,733 | ||||||
Assets
acquired under capital leases
|
- | 102,860 | ||||||
See
accompanying notes
|
(a)
|
Basis
of Presentation:
|
(b)
|
Inventories:
|
September
30, 2008
|
December
31, 2007
|
|||||||
Raw
Materials
|
$ | 645,364 | $ | 705,873 | ||||
Work
in Process
|
415,586 | 234,077 | ||||||
Finished
Goods
|
131,177 | 513,900 | ||||||
$ | 1,192,127 | $ | 1,453,850 |
(c)
|
Earnings
Per Share
|
For the three months ended
|
For the nine months
ended
|
||||||||
September
30, 2008
|
|
September
30, 2007
|
|
September
30, 2008
|
|
September
30, 2007
|
|||
Basic
|
61,944,901
|
14,043,208
|
61,036,181
|
12,701,494
|
|||||
Diluted
|
61,944,901
|
14,043,208
|
61,036,181
|
12,701,494
|
For the three months ended
|
For the nine months
ended
|
||||||||
September
30, 2008
|
|
September
30, 2007
|
|
September
30, 2008
|
|
September
30, 2007
|
|||
1999
& 2008 Plan Stock Options
|
2,797,482
|
2,396,136
|
2,565,655
|
1,929,471
|
|||||
Other
Stock Options
|
124,625
|
124,625
|
124,625
|
124,625
|
|||||
Warrants
|
10,163,244
|
26,196,085
|
16,183,547
|
26,191,683
|
|||||
Convertible
Preferred Stock
|
-
|
26,553,340
|
-
|
26,811,978
|
(d)
|
Employee
Stock Option Plan:
|
For the three months ended
|
For the nine months
ended
|
|||||||
September
30, 2008
|
|
September
30, 2007
|
|
September
30, 2008
|
September
30, 2007
|
|||
Expected
term (in years)
|
n/a
|
5
|
1
to 4
|
5
|
||||
Expected
volatility
|
n/a
|
106.31%
|
109.33-112.33%
|
|
102.84-104.80%
|
|||
Expected
dividend yield
|
n/a
|
n/a
|
n/a
|
n/a
|
||||
Risk-free
interest rate
|
n/a
|
4.60%
|
1.91
to 2.98%
|
|
4.50-5.06%
|
Stock
Options
|
Number
of Shares
|
Weighted
Average Exercise Price per Share
|
Weighted
Average Remaining Contractual Term
|
Aggregate
Intrinsic Value
|
|||||||||
Outstanding
at December 31, 2007
|
2,201,500 | $ | 0.64 |
3.52
years
|
$ | - | |||||||
Impact of re-price
(for accounting purposes treated as a cancelation and
re-issue):
|
|||||||||||||
effect
as if cancelled
|
(1,846,500 | ) | $ | 0.64 | |||||||||
effect
as if re-issiued
|
1,846,500 | $ | 0.48 | ||||||||||
Granted
|
967,650 | $ | 0.18 | ||||||||||
Exercised
|
- | - | |||||||||||
Forfeited/expired
|
(450,500 | ) | $ | 0.58 | |||||||||
Outstanding
at September 30, 2008
|
2,718,650 | $ | 0.38 |
3.42
years
|
$ | 9,558 | |||||||
Exercisable
at September 30, 2008
|
2,150,650 | $ | 0.39 |
3.28
years
|
$ | 6,390 |
(e)
|
Geographic
Information:
|
For the three months ended
|
For the nine months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
September
30, 2008
|
September
30, 2007
|
|||||||||||||
Africa
|
$ | 1,397,297 | $ | 1,308,180 | $ | 3,698,178 | $ | 2,722,434 | ||||||||
Asia
|
80,300 | 15,850 | 211,040 | 115,544 | ||||||||||||
Europe
|
49,215 | 45,834 | 130,935 | 90,239 | ||||||||||||
Middle
East
|
122,190 | - | 277,340 | 174,218 | ||||||||||||
North
America
|
645,124 | 750,333 | 1,688,874 | 3,313,415 | ||||||||||||
South
America
|
1,112,677 | 38,241 | 2,104,648 | 188,126 | ||||||||||||
$ | 3,406,803 | $ | 2,158,438 | $ | 8,111,015 | $ | 6,603,976 |
(f)
|
Accounts
payable and accrued liabilities
|
September
30, 2008
|
December
31, 2007
|
|||||||
Accounts
payable – suppliers
|
$ | 689,384 | $ | 726,174 | ||||
Accrued
commissions
|
135,884 | 14,251 | ||||||
Accrued
royalties / licenses
|
1,104,618 | 852,119 | ||||||
Accrued
payroll
|
187,334 | 279,598 | ||||||
Accrued
vacation
|
134,957 | 155,480 | ||||||
Accrued
legal and accounting
|
25,000 | 10,000 | ||||||
Accrued
expenses – other
|
41,940 | 138,169 | ||||||
TOTAL
|
$ | 2,319,117 | $ | 2,175,791 |
(g)
|
Recent
Accounting Pronouncements affecting the
Company
|
(h)
|
License
Agreement
|
(i)
|
Deferred
Revenue
|
(a)
|
Economic
Dependency:
|
For
the three months ended
|
For
the nine months ended
|
Accounts
Receivable
|
||||||||
Sept.
30, 2008
|
Sept.
30, 2007
|
Sept.
30, 2008
|
Sept.
30, 2007
|
As
of
|
||||||
Sales
|
%
of Sales
|
Sales
|
%
of Sales
|
Sales
|
%
of Sales
|
Sales
|
%
of Sales
|
Sept.
30, 2008
|
Sept.
30, 2007
|
|
Customer
1
|
$1,077,000
|
32%
|
n/a
|
n/a
|
$2,060,000
|
25%
|
n/a
|
n/a
|
$ 865,000
|
n/a
|
Customer
2
|
$1,139,000
|
33%
|
$723,000
|
34%
|
$2,638,000
|
33%
|
$1,933,000
|
29%
|
$ 606,000
|
$ 411,000
|
Customer
3
|
$ 605,000
|
18%
|
$628,000
|
29%
|
$1,570,000
|
19%
|
$1,581,000
|
24%
|
$
59,000
|
$ 425,000
|
Customer
4
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
$1,398,000
|
21%
|
n/a
|
$ -
|
For
the three months ended
|
For
the nine months ended
|
Accounts
Payable
|
||||||||
Sept.
30, 2008
|
Sept.
30, 2007
|
Sept.
30, 2008
|
Sept.
30, 2007
|
As
of
|
||||||
Purchases
|
%
of Purc.
|
Purchases
|
%
of Purc.
|
Purchases
|
%
of Purc.
|
Purchases
|
%
of Purc.
|
Sept.
30, 2008
|
Sept.
30, 2007
|
|
Vendor
1
|
$ 149,000
|
20%
|
$143,000
|
27%
|
$ 367,000
|
18%
|
$ 251,000
|
14%
|
$ 49,000
|
$ 4,000
|
Vendor
2
|
$ 49,000
|
7%
|
$ 57,000
|
11%
|
$ 190,000
|
10%
|
$ 130,500
|
7%
|
$ 27,000
|
$ 18,000
|
(b)
|
Governmental
Regulation:
|
(c)
|
Nigeria:
|
(d)
|
Voluntary
Component Recall:
|
(e)
|
DPP®
Agreements:
|
a.
|
Brazil:
|
b.
|
Bio-Rad:
|
Selected
Product Categories:
|
For
the three months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
HIV
|
$ | 3,097,898 | $ | 1,975,120 | $ | 1,122,778 | 56.85 | % | ||||||||
TB
|
112,672 | 10,910 | 101,762 | 932.74 | % | |||||||||||
Other
|
196,233 | 172,408 | 23,825 | 13.82 | % | |||||||||||
Net
Product Sales
|
3,406,803 | 2,158,438 | 1,248,365 | 57.84 | % | |||||||||||
Research
grant income
|
109,361 | 155,099 | (45,738 | ) | -29.49 | % | ||||||||||
Total
Revenues
|
$ | 3,516,164 | $ | 2,313,537 | $ | 1,202,627 | 51.98 | % |
Gross
Margin related to
|
For
the three months ended
|
|||||||||||||||
Net
Product Sales:
|
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
||||||||||||
Gross
Margin per Statement of Operations
|
$ | 1,656,610 | $ | 985,009 | $ | 671,601 | 68.18 | % | ||||||||
Less:
Research grant income
|
109,361 | 155,099 | (45,738 | ) | -29.49 | % | ||||||||||
Gross
Margin from Net Product Sales
|
$ | 1,547,249 | $ | 829,910 | $ | 717,339 | 86.44 | % | ||||||||
Gross
Margin %
|
45.42 | % | 38.45 | % |
Selected
expense lines:
|
For
the three months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
Clinical &
Regulatory Affairs:
|
||||||||||||||||
Wages
and related costs
|
$ | 61,438 | $ | 45,713 | $ | 15,725 | 34.40 | % | ||||||||
Consulting
|
17,267 | 22,000 | (4,733 | ) | -21.51 | % | ||||||||||
Clinical
Trials
|
41,305 | 21,415 | 19,890 | 92.88 | % | |||||||||||
Other
|
8,532 | 1,785 | 6,747 | 377.98 | % | |||||||||||
Total
Regulatory
|
$ | 128,542 | $ | 90,913 | $ | 37,629 | 41.39 | % | ||||||||
R&D Other than
Regulatory:
|
||||||||||||||||
Wages
and related costs
|
$ | 411,958 | $ | 243,418 | 168,540 | 69.24 | % | |||||||||
Consulting
|
64,981 | 41,120 | 23,861 | 58.03 | % | |||||||||||
Share-based
compensation
|
9,738 | 28,669 | (18,931 | ) | -66.03 | % | ||||||||||
Materials
and supplies
|
74,232 | 54,466 | 19,766 | 36.29 | % | |||||||||||
Other
|
69,400 | 24,602 | 44,798 | 182.09 | % | |||||||||||
Total
other than Regulatory
|
$ | 630,309 | $ | 392,275 | $ | 238,034 | 60.68 | % | ||||||||
Total
Research and Development
|
$ | 758,851 | $ | 483,188 | $ | 275,663 | 57.05 | % |
Selected
expense lines:
|
For
the three months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
Wages
and related costs
|
$ | 319,499 | $ | 365,938 | $ | (46,439 | ) | -12.69 | % | |||||||
Consulting
|
44,973 | 54,397 | (9,424 | ) | -17.32 | % | ||||||||||
Commissons,
License and Royalties
|
438,630 | 249,152 | 189,478 | 76.05 | % | |||||||||||
Share-based
compensation
|
14,082 | 40,755 | (26,673 | ) | -65.45 | % | ||||||||||
Marketing
Materials
|
6,047 | 15,698 | (9,651 | ) | -61.48 | % | ||||||||||
Investor
Relations
|
42,046 | 66,297 | (24,251 | ) | -36.58 | % | ||||||||||
Legal,
Accounting and Sox 404 compliance
|
123,612 | 237,907 | (114,295 | ) | -48.04 | % | ||||||||||
Travel,
Entertainment and Trade Shows
|
29,628 | 50,547 | (20,919 | ) | -41.39 | % | ||||||||||
Other
|
114,771 | 93,839 | 20,932 | 22.31 | % | |||||||||||
Total
S, G &A
|
$ | 1,133,288 | $ | 1,174,530 | $ | (41,242 | ) | -3.51 | % |
Other
Income and Expense
|
For
the three months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
Interest
income
|
$ | 3,587 | $ | 30,603 | $ | (27,016 | ) | -88.28 | % | |||||||
Interest
expense
|
(5,112 | ) | (6,408 | ) | 1,296 | -20.22 | % | |||||||||
Total
Other Income and Expense
|
$ | (1,525 | ) | $ | 24,195 | $ | (25,720 | ) | -106.30 | % |
Selected
Product Categories:
|
For
the nine months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
HIV
|
$ | 7,228,915 | $ | 5,935,013 | $ | 1,293,902 | 21.80 | % | ||||||||
TB
|
254,604 | 94,053 | 160,551 | 170.70 | % | |||||||||||
Other
|
627,496 | 574,910 | 52,586 | 9.15 | % | |||||||||||
Net
Product Sales
|
8,111,015 | 6,603,976 | 1,507,039 | 22.82 | % | |||||||||||
Research
grant income
|
487,661 | 250,655 | 237,006 | 94.55 | % | |||||||||||
Total
Revenues
|
$ | 8,598,676 | $ | 6,854,631 | $ | 1,744,045 | 25.44 | % |
Gross
Margin related to
|
For the nine months ended
|
|||||||||||||||
Net
Product Sales:
|
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
||||||||||||
Gross
Margin per Statement of Operations
|
$ | 4,015,341 | $ | 2,636,728 | $ | 1,378,613 | 52.28 | % | ||||||||
Less:
Research grant income
|
487,661 | 250,655 | 237,006 | 94.55 | % | |||||||||||
Gross
Margin from Net Product Sales
|
$ | 3,527,680 | $ | 2,386,073 | $ | 1,141,607 | 47.84 | % | ||||||||
Gross
Margin %
|
43.49 | % | 36.13 | % |
Selected
expense lines:
|
For the nine months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
Clinical & Regulatory
Affairs:
|
||||||||||||||||
Wages
and related costs
|
$ | 194,897 | $ | 135,972 | $ | 58,925 | 43.34 | % | ||||||||
Consulting
|
24,683 | 79,732 | (55,049 | ) | -69.04 | % | ||||||||||
Clinical
Trials
|
138,792 | 33,355 | 105,437 | 316.11 | % | |||||||||||
Other
|
53,096 | 6,485 | 46,611 | 718.75 | % | |||||||||||
Total
Regulatory
|
$ | 411,468 | $ | 255,544 | $ | 155,924 | 61.02 | % | ||||||||
R&D Other than
Regulatory:
|
||||||||||||||||
Wages
and related costs
|
$ | 992,927 | $ | 652,993 | 339,934 | 52.06 | % | |||||||||
Consulting
|
104,981 | 69,142 | 35,839 | 51.83 | % | |||||||||||
Share-based
compensation
|
75,197 | 161,174 | (85,977 | ) | -53.34 | % | ||||||||||
Materials
and supplies
|
190,746 | 164,135 | 26,611 | 16.21 | % | |||||||||||
Other
|
177,117 | 82,085 | 95,032 | 115.77 | % | |||||||||||
Total
other than Regulatory
|
$ | 1,540,968 | $ | 1,129,529 | $ | 411,439 | 36.43 | % | ||||||||
Total
Research and Development
|
$ | 1,952,436 | $ | 1,385,073 | $ | 567,363 | 40.96 | % |
Selected
expense lines:
|
For the nine months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
Wages
and related costs
|
$ | 1,003,733 | $ | 1,148,426 | $ | (144,693 | ) | -12.60 | % | |||||||
Consulting
|
141,582 | 165,042 | (23,460 | ) | -14.21 | % | ||||||||||
Commissons,
License and Royalties
|
1,093,791 | 622,425 | 471,366 | 75.73 | % | |||||||||||
Share-based
compensation
|
173,825 | 114,184 | 59,641 | 52.23 | % | |||||||||||
Marketing
Materials
|
22,548 | 57,906 | (35,358 | ) | -61.06 | % | ||||||||||
Investor
Relations
|
111,747 | 161,524 | (49,777 | ) | -30.82 | % | ||||||||||
Legal,
Accounting and Sox 404 compliance
|
474,555 | 630,416 | (155,861 | ) | -24.72 | % | ||||||||||
Travel,
Entertainment and Trade Shows
|
71,847 | 120,838 | (48,991 | ) | -40.54 | % | ||||||||||
Bad
Debt Allowance
|
6,062 | (11,210 | ) | 17,272 | -154.08 | % | ||||||||||
Other
|
375,572 | 480,548 | (104,976 | ) | -21.85 | % | ||||||||||
Total
S, G &A
|
$ | 3,475,262 | $ | 3,490,099 | $ | (14,837 | ) | -0.43 | % |
Other
Income and Expense
|
For
the nine months ended
|
|||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
Other
income
|
$ | - | $ | 120,862 | $ | (120,862 | ) | -100.00 | % | |||||||
Interest
income
|
29,958 | 125,513 | (95,555 | ) | -76.13 | % | ||||||||||
Interest
expense
|
(15,966 | ) | (11,107 | ) | (4,859 | ) | 43.75 | % | ||||||||
Total
Other Income and Expense
|
$ | 13,992 | $ | 235,268 | $ | (221,276 | ) | -94.05 | % |
For
the nine months ended
|
||||||||||||||||
September
30, 2008
|
September
30, 2007
|
$
Change
|
%
Change
|
|||||||||||||
Net
cash used in operating activities
|
$ | (1,445,137 | ) | $ | (1,710,135 | ) | $ | 264,998 | -15.50 | % | ||||||
Net
cash used in investing activities
|
(363,652 | ) | (171,501 | ) | (192,151 | ) | 112.04 | % | ||||||||
Net
cash utilized by financing activities
|
(19,151 | ) | (153,443 | ) | 134,292 | -87.52 | % | |||||||||
NET
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
$ | (1,827,940 | ) | $ | (2,035,079 | ) | $ | 207,139 | -10.18 | % |
Number
|
Description
|
3.1
|
Articles
of Incorporation, as amended. (3)
|
3.2
|
Amended
and Restated Bylaws. (1)
|
4.1
|
Registration
Rights Agreement, dated as of May 5, 2004, by and among the Registrant and
the Purchasers listed therein. (2)
|
4.2
|
Lock-Up
Agreement, dated as of May 5, 2004, by and among the Registrant and the
shareholders of the Registrant listed therein. (2)
|
4.3
|
Amended
Form of Common Stock Warrant issued pursuant to the May 4, 2004 Stock and
Warrant Purchase Agreement. (11)
|
4.4
|
Form
of $0.90 Warrant issued to Mark L. Baum pursuant to the Consulting
Agreement dated as of May 5, 2004 between the Registrant and Mark L. Baum.
(2)
|
4.5
|
Form
of $0.60 Warrant issued to Mark L. Baum pursuant to the Consulting
Agreement dated as of May 5, 2004 between the Registrant and Mark L. Baum.
(2)
|
4.6
|
Form
of Common Stock Warrant issued pursuant to the January 26, 2005 Securities
Purchase Agreement. (9)
|
4.7
|
Amended
Form of Common Stock Warrant issued pursuant to the January 26, 2005
Securities Purchase Agreement. (11)
|
4.8
|
Registration
Rights Agreement, dated as of January 26, 2005, by and among the
Registrant and the purchasers listed therein. (9)
|
4.9
|
Form
of Warrant, dated June 29, 2006, issued pursuant to Company and purchasers
of the Company’s Secured Debentures. (4)
|
4.10
|
Registration
Rights Agreement, dated June 29, 2006. (4)
|
4.11
|
Registration
Rights Agreement, dated as of September 29, 2006, by and among the
Registrant and the Purchasers listed therein. (6)
|
4.12
|
Form
of Common Stock Warrant issued pursuant to the Securities Purchase
Agreements dated September 29, 2006 (6).
|
4.13
|
Amended
Form of Common Stock Warrant issued pursuant to the Securities Purchase
Agreements dated October 5, 2006. (11)
|
4.14
|
Amended
Form of Common Stock Warrant issued to Placement Agents pursuant to the
October 5, 2005 Securities Purchase Agreement. (11)
|
4.15
|
Form
of Employee Option Agreement. (11)
|
4.16
|
Amended
Form of Warrant used for Consultant Services, and in connection with the
Company’s 2004 merger. (11)
|
4.17
|
1999
Equity Incentive Plan (13)
|
4.18
|
2008
Stock Incentive Plan (14)
|
10.1
|
Employment
Agreement dated June 15, 2006 with Lawrence A. Siebert.
(5)
|
10.2
|
Employment
Agreement dated April 23, 2007 with Javan Esfandiari.
(12)
|
10.3
|
Series
A Convertible Preferred Stock and Warrant Purchase Agreement (the “Stock
and Warrant Purchase Agreement”), dated as of May 5, 2004, by and among
the Registrant and the purchasers listed therein. (2)
|
10.4
|
Securities
Purchase Agreement (the “Securities Purchase Agreement”), dated as of
January 26, 2005, by and among the Registrant and the purchasers listed
therein. (9)
|
10.5
|
Amendment
No. 1 to Securities Purchase Agreement, dated as of January 28, 2005 by
and among the Registrant and the purchasers listed therein.
(10)
|
10.6
|
Equity
Exchange Agreement, dated as of January 28, 2005, by and between the
Registrant and Kurzman Partners, LP. (10)
|
10.7
|
Security
Purchase Agreement, dated June 29, 2006, among the Company and purchasers
of the Company’s Secured Debentures. (4)
|
10.8
|
Form
of Secured Debenture, dated June 29, 2006. (4)
|
10.9
|
Security
Agreement, dated June 29, 2006, among the Company, Chembio Diagnostic
Systems, Inc., and purchasers of the Company’s Secured Debentures.
(4)
|
10.10
|
Subsidiary
Guarantee, dated June 29, 2006, made by Chembio Diagnostic Systems, Inc.,
in favor of Purchasers of the Company’s Secured Debentures.
(4)
|
10.11
|
Securities
Purchase Agreement (the “Securities Purchase Agreement”), dated as of
September 29, 2006, by and among the Registrant and the Purchasers listed
therein. (6)
|
10.12
|
Letter
of Amendment to Securities Purchase Agreements dated as of September 29,
2006 by and among the Registrant and the Purchasers listed therein.
(6)
|
10.13
|
HIV
Barrel License, Marketing and Distribution Agreement, dated as of
September 29, 2006, by and among the Registrant, Inverness and StatSure.
(6)
|
10.14
|
HIV
Cassette License, Marketing and Distribution Agreement, dated as of
September 29, 2006, between the Registrant and Inverness.
(6)
|
10.15
|
Non-Exclusive
License, Marketing and Distribution Agreement, dated as of September 29,
2006, between the Registrant and Inverness. (6)
|
10.16
|
Joint
HIV Barrel Product Commercialization Agreement, dated as of September 29,
2006, between the Registrant and StatSure. (6)
|
10.17
|
Settlement
Agreement, dated September 29, 2006, between the Registrant and StatSure.
(6)
|
10.18
|
Contract
for Transfer of Technology and Materials with Bio-Manguinhos.
(7)
|
10.19
|
License
and Supply Agreement dated as of August 30, 2002 by and between Chembio
Diagnostic Systems Inc. and Adaltis Inc. (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.
|
(1)
|
Incorporated
by reference to the Registrant’s registration statement on Form SB-2 filed
with the Commission on August 23, 1999 and the Registrant's Forms 8-K
filed on May 14, 2004, December 20, 2007 and April 18,
2008.
|
(2)
|
Incorporated
by reference to the Registrant’s Current Report on Form 8-K filed with the
Commission on May 14, 2004.
|
(3)
|
Incorporated
by reference to the Registrant’s annual report on Form 10-KSB filed with
the Commission on March 31, 2005.
|
(4)
|
Incorporated
by reference to the Registrant’s Current Report on Form 8-K filed with the
Commission on July 3, 2006.
|
(5)
|
Incorporated
by reference to the Registrant’s Current Report on Form 8-K filed with the
Commission on June 21, 2006.
|
(6)
|
Incorporated
by reference to the Registrant’s Current Report on Form 8-K filed with the
Commission on October 5, 2006.
|
(7)
|
Incorporated
by reference to the Registrant’s registration statement on Form SB-2/A
filed with the Commission on August 4,
2004.
|
(8)
|
Incorporated
by reference to the Registrant’s registration statement on Form SB-2 filed
with the Commission on June 7,
2004.
|
(9)
|
Incorporated
by reference to the Registrant’s Current Report on Form 8-K filed with the
Commission on January 31, 2005.
|
(10)
|
Incorporated
by reference to the Registrant’s registration statement on Form SB-2 filed
with the Commission on March 28,
2005.
|
(11)
|
Incorporated
by reference to the Registrant’s annual report on Form 10-KSB filed with
the Commission on March 12, 2008.
|
(12)
|
Incorporated
by reference to the Registrant’s Current Report on Form 8-K/A filed with
the Commission on May 3, 2007.
|
(13)
|
Incorporated
by reference to the Registrant’s definitive proxy statement on Schedule
14A filed with the Commission on May 11,
2005.
|
(14)
|
Incorporated
by reference to the Registrant’s definitive proxy statement on Schedule
14A filed with the Commission on April 14,
2008.
|
Date:
|
November
12, 2008
|
By:
/s/ Lawrence A.
Siebert
|
Lawrence
A. Siebert
|
||
Chief
Executive Officer
(Principal
Executive Officer)
|
||
Date:
|
November
12, 2008
|
By:
/s/ Richard J.
Larkin
|
Richard
J. Larkin
|
||
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
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):
|