For the quarter ended June 30, 2007, the net loss attributable to commonstockholders was $1,209,000, or $0.02 per share, compared to a net loss of$1,612,000, or $0.13 per share, for corresponding period in 2006. For the sixmonths ended June 30, 2007, the net loss was $2,056,000, or $0.03 per share,compared to a net loss of $4,530,000, or $0.38 per share, for the six monthsended June 30, 2006. The net loss was impacted by non-cash expenses relatedto stock options accounted for in accordance with SFAS 123(R) "Share BasedPayment" of $119,000 and $221,000, for the quarter and six months ended June30, 2007, respectively (compared with no expense for the corresponding periodsin 2006), and by the amortization of our intangible assets of $269,000 and$534,000 for the quarter and six months ended June 30, 2007, respectively.
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Income Statement
Revenues for the second quarter of 2007 were $119,000, compared with$312,000 for the same period last year. The decrease of $193,000 is primarilydue to lower licensing fees as a result of a non-recurring milestone of$155,000 for Zindaclin(R) in 2006 and the lack of Aphthasol(R) product salesto our domestic distributor in 2007 due to timing of product orders. Theseitems were partially offset by an increase in royalties associated with theinternational sales of Zindaclin(R) along with an increase in sponsoredresearch.
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Total costs and expenses increased by $216,000 in the second quarter 2007to $1,533,000, compared with the corresponding period in 2006 where totalcosts and expenses were $1,317,000. General and administrative expenses wereresponsible for this increase, as these expenses increased from $463,000 inthe second quarter 2006 to $694,000 in 2007, a $231,000 increase. Increasedcosts include legal expenses for patent prosecution ($82,000), and expensesrelated to being a public company, including director fees ($71,000), annualreport and annual meeting expenses ($31,000). Research and development costsincreased from $478,000 in the second quarter 2006 to $554,000 in 2007. The$76,000 increase is primarily due to fees payable to the Food and DrugAdministration of $58,000 and increased compensation expense of $30,000. Costof product sales declined by $97,000 in 2007 reflecting no shipments to ourdistributor in the 2007 period.
Interest and miscellaneous income increased significantly in secondquarter 2007 to $206,000, compared with $3,000 for the same period last year.The increase of $203,000 is attributable to our increased liquidity due to therecapitalization of the Company in December 2006.
There was no interest expense for the three months ended June 30, 2007 ascompared to the expense of $610,000 for the same period last year. Thedecrease in interest expense relates to the payoff in December 2006 of ouroutstanding secured convertible debentures.
Balance Sheet
Cash and cash equivalents totaled $16,261,000 at June 30, 2007, a decreaseof $657,000 as compared to our cash and cash equivalents at December 31, 2006of $16,918,000. The decrease in net cash for the six months ended June 30,2007 was due to several factors: the expenditure of $531,000 for the purchaseof manufacturing equipment for commercial scale-up of our OraDisc(TM)products, the $350,000 payment in April 2007 of our original asset purchaseobligation, and the net cash used for operations of approximately $51,000.These net cash decreases were partially offset by proceeds of $275,000 fromthe exercise of warrants to purchase our common stock.
Commenting on the quarterly results, Kerry P. Gray, President and CEOstated, "Our loss from operations was significantly lower than our operatingplan despite our revenues being marginally lower than our expectations dueprimarily to s
