Table
        of Contents
  
  **UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
 
 **FORM
        10-QSB**
 
 (Mark
        One)
 [X]
        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
        ACT OF 1934
 **For
        the quarterly period ended March 31, 2007**
 
 [
        ]
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 ACT
        OF
        1934
 For
        the
        transitional period from __________________ to __________________
 
 **BIOSPECIFICS
                  TECHNOLOGIES CORP.**
 (Exact
        name of small business issuer as specified in its charter)
 
 **Delaware**
              **0-19879**
              **11-3054851**(State
                  or other jurisdiction
              (Commission
                  file number)
              (I.R.S.
                  Employerof
                  incorporation or organization)
              
              Identification
                  No.)
  **35
        Wilbur Street**
 **Lynbrook,
        NY 11563**
 (Address
        of principal executive office)
 
 **516.593.7000**
 (Issuer’s
        telephone number)
 
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or such shorter period
        that
        the registrant was required to file such reports), and (2) has been subject
        to
        such filing requirements for the past 90 days.
  Yes
        [  ]  No  [X]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
  Yes
        [  ]  No  [X]
  State
        the
        number of shares outstanding of the issuer's classes of common equity, as
        of the
        latest practicable date:
 
 Class
                  of Stock
              Outstanding September
                  4, 2007Common
                  Stock ($.001 par value)
              5,316,101
 
 Transitional
        Small Business Disclosure Format (Check one): Yes [  ] No
        [X]
 
 Table
            of Contents
 
 **BIOSPECIFICSTECHNOLOGIES
        CORP.**
 
 **TABLE
        OF CONTENTS**
 
 
 **Page****PART
                  I – FINANCIAL INFORMATION****ITEM
                  1.**
              Consolidated
                  Financial
                  Statements
              2Consolidated
                  Balance Sheet as of March 31,
                  2007
              2Consolidated
                  Statements of Operations for
                  the Three Months Ended March 31, 2007 and 2006
              3Consolidated
                  Statements of Cash Flows for
                  the Three Months Ended March 31, 2007 and 2006
              4Notes
                  to Consolidated Financial
                  Statements
              5**ITEM
                  2.**
              Management’s
                  Discussion and
                  Analysis
              11**ITEM
                  3.**
              Controls
                  and Procedures
              16**PART
                  II – OTHER INFORMATION**
              17**ITEM
                  1.**
              Legal
                  Proceedings
              17**ITEM
                  2.**
              Unregistered
                  Sales of Equity Securities and Use
                  of Proceeds
              17**ITEM
                  3.**
              Defaults
                  Upon Senior Securities
              17**ITEM
                  4.**
              Submission
                  of Matters to a Vote of Security
                  Holders
              17**ITEM
                  5.**
              Other
                  Information
              17**ITEM
                  6.**
              Exhibits
              17
   Table
            of Contents
  **Introductory
        Comments – Terminology**
 
 Throughout
        this quarterly report on Form 10-QSB (this “Report”), the terms “BioSpecifics,”
“Company,” “we,” “our,” and “us” refer to BioSpecifics Technologies Corp. and
        its subsidiaries, Advance Biofactures Corporation (“ABC-NY”), which it still
        currently owns, Advance Biofactures of Curacao, N.V. (“ABC-Curacao”), which was
        sold in 2006, and BioSpecifics Pharma GmbH, which was liquidated in 2005.
        We
        also owned two dormant companies, BioSpecifics N.V. and Biota N.V., which
        were
        liquidated in January 2007.
 
 **Introductory
        Comments – Forward Looking Statements**
 
 This
        Report includes “forward-looking statements” within the meaning of
        Section 27A of the Securities Act of 1933, as amended, and Section 21E
        of the Securities and Exchange Act of 1934, as amended. All statements other
        than statements of historical facts are “forward looking statements” for
        purposes of these provisions, including any projections of earnings, revenues
        or
        other financial items, any statements of the plans and objectives of management
        for future operations, any statements concerning proposed new products or
        licensing or collaborative arrangements, any statements regarding future
        economic conditions or performance, and any statement of assumptions underlying
        any of the foregoing. In some cases, forward-looking statements can be
        identified by the use of terminology such as “may,” “will,” “expects,” “plans,”
“anticipates,” estimates,” “potential,” or “continue” or the negative thereof or
        other comparable terminology. Although we believe that the expectations
        reflected in the forward-looking statements contained in this Report are
        reasonable, there can be no assurance that such expectations or any of the
        forward-looking statements will prove to be correct, and actual results could
        differ materially from those projected or assumed in the forward-looking
        statements. Our future financial condition and results of operations, as
        well as
        any forward-looking statements, are subject to inherent risks and uncertainties,
        including but not limited to the risk factors set forth below, and for the
        reasons described elsewhere in this Report. All forward-looking statements
        and
        reasons why results may differ included in this Report are made as of the
        date
        hereof, and we assume no obligation to update these forward-looking statements
        or reasons why actual results might differ.
  Table
            of Contents
 
 **PART
        I– FINANCIAL INFORMATION**
 
 **Item1:  Consolidated
        Financial
        Statements**
 
 **BIOSPECIFICSTECHNOLOGIES
                  CORP. AND
                  SUBSIDIARIES****Consolidated
                  Balance Sheets**
 **March
                  31,****2007**(unaudited)**Assets****Current
                  assets:**
 Cash
                  and cash equivalents
              
              $
              3,525,209Accounts
                  receivable, net
              
              
              25,339Prepaid
                  expenses and other current assets
              
              
              89,691**Total
                  current assets**
              
              ****
              **3,640,239**Property,
                  plant and equipment, net
              
              
              59,787**Total
                  assets**
              
              ****
              **3,700,026****Liabilities
                  and Stockholders' Equity**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              
              2,084,954Deferred
                  revenue
              
              
              1,437,116Accrued
                  tax and other accrued liabilities of discontinued
                  operations
              
              
              78,138**Total
                  current liabilities**
              
              ****
              **3,600,208**Long-term
                  deferred revenue
              
              
              3,984,470**Stockholders'
                  equity (deficit):**Series
                  A Preferred stock, $.50 par value, 700,000 shares authorized; none
                  outstanding
              
              
              -Common
                  stock, $.001 par value; 10,000,000 shares authorized; 5,392,816
                  and
                  5,365,816
                shares
                  issued and outstanding at March 31, 2007 and December 31, 2006,
                  respectively
              
              
              5,393Additional
                  paid-in capital
              
              
              4,144,010Retained
                  earnings (deficit)
              
              
              (6,714,324
              )Treasury
                  stock, 131,267 shares at cost at March 31, 2007 and December 31,
                  2006
              
              
              (693,957
              )Notes
                  receivable from former CEO and Chairman and other related
                  party
              
              
              (625,774
              )**Total
                  stockholders' equity (deficit)**
              
              ****
              **(3,884,652**
              **)****Total
                  liabilities and stockholders’ equity**
              
              **$**
              **3,700,026**
 **See
                  accompanying notes to consolidated financial
                  statements**
 
  2
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 **BIOSPECIFICSTECHNOLOGIES
                  CORP. AND
                  SUBSIDIARIES****Consolidated
                  Statements of Operations**(unaudited)**Three
                  Months Ended**
                **March
                  31,****2007**
              
              
              **2006****Revenues:**Net
                  sales
              
              $
              1,100
              
              
              $
              6,793Licensing
                  fees
              
              
              289,279
              
              
              
              289,279Consulting
                  fees
              
              
              70,000
              
              
              
              23,333360,379
              
              
              
              319,405**Costs
                  and expenses:**General
                  and administrative
              
              
              1,097,467
              
              
              
              972,395Research
                  and development
              
              
              386,359
              
              
              
              745,3651,483,827
              
              
              
              1,717,760**Operating
                  loss from continuing operations**
              
              ****
              **(1,123,448**
              **)**
              
              ****
              **(1,398,355**
              **)****Other
                  income (expense):**Interest
                  income
              
              
              41,249
              
              
              
              17,825Interest
                  expense
              
              
              -
              
              
              
              (505
              )41,249
              
              
              
              17,320Loss
                  from continuing operations before benefit (expense) for income
                  tax
              
              
              (1.082,199
              )
              
              
              (1,381,035
              )Income
                  tax benefit (expense)
              
              
              (3,600
              )
              
              
              -**Net
                  income (loss) from continuing operations**
              
              ****
              **(1,085,799**
              **)**
              
              ****
              **(1,381,035**
              **)****Discontinued
                  operations:**Net
                  gain (loss) from discontinued operations
              
              
              -
              
              
              
              (1,115,704
              )Net
                  gain on the sale of assets
              
              
              -
              
              
              
              3,601,102**Net
                  loss**
              
              **$**
              **(1,085,799**
              **)**
              
              **$**
              **1,104,363****Basic
                  net income (loss) per share:**From
                  continuing operations
              
              $
              (0.21
              )
              
              $
              (0.27
              )From
                  discontinued operations
              
              $
              -
              
              
              $
              0.48**Basic
                  net loss per share**
              
              **$**
              **(0.21**
              **)**
              
              **$**
              **0.21****Diluted
                  net income (loss) per share:**From
                  continuing operations
              
              $
              (0.21
              )
              
              $
              (0.27
              )From
                  discontinued operations
              
              $
              -
              
              
              $
              0.48**Diluted
                  net loss per share**
              
              **$**
              **(0.21**
              **)**
              
              **$**
              **0.21****Shares
                  used in computation of basic net income (loss)  per
                  share**
              
              ****
              **5,235,149**
              
              
              ****
              **5,178,374****Shares
                  used in computation of diluted net income (loss)  per
                  share**
              
              ****
              **5,235,149**
              
              
              ****
              **5,178,454****See
                  accompanying notes to consolidated financial
                  statements**
 
 
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 **BIOSPECIFICSTECHNOLOGIES
                  CORP. AND
                  SUBSIDIARIES****Consolidated
                  Statements of Cash Flows**(unaudited)**Three
                  Months Ended March 31,****Cash
                  flows from operating activities:**
              
              **2007**
              
              
              **2006**Net
                  loss
              
              $
              (1,085,799
              )
              
              $
              (1,381,035
              )Adjustments
                  to reconcile net loss to net cash providedby
                  operating activities:Depreciation
                  and amortization
              
              
              8,036
              
              
              
              18,243Stock-based
                  compensation expense
              
              
              138,547
              
              
              
              418,975Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              21,484
              
              
              
              (64,374
              )Prepaid
                  expenses and other current assets
              
              
              (40,977
              )
              
              
              12,573Accounts
                  payable and accrued expenses
              
              
              370,056
              
              
              
              567,613Deferred
                  revenue
              
              
              40,721
              
              
              
              112,389**Net
                  cash provided by (used in) operating activities from continuing
                  operations**
              
              ****
              **(547,932**
              **)**
              
              ****
              **313,552****Net
                  cash provided by (used in) discontinued
                  operations**
              
              ****
              **(321,037**
              **)**
              
              ****
              **1,072,691****Net
                  cash provided by investing activities from discontinued
                  operations**
              
              ****
              **-**
              
              
              ****
              **6,058,713****Cash
                  flows from financing activities:**Proceeds
                  received from stock option exercises
              
              
              27,000
              
              
              
              -Payment
                  to minority
                  shareholders
              
              
              -
              
              
              
              (83,406
              )**Net
                  cash provided by (used in) financing activities from continuing
                  operations**
              
              ****
              **27,000**
              
              
              ****
              **(83,406**
              **)****Net
                  cash used in financing activities from discontinued
                  operations**
              
              ****
              **-**
              
              
              ****
              **-**Increase
                  in cash and cash equivalents
              
              
              (841,969
              )
              
              
              6,732,382Cash
                  and cash equivalents at beginning of year
              
              
              4,367,178
              
              
              
              539,380**Cash
                  and cash equivalents at end of period**
              
              **$**
              **3,525,209**
              
              
              **$**
              **7,271,762****Supplemental
                  disclosures of cash flow information:**Cash
                  paid during the periods for:Interest
              
              $
              -
              
              
              $
              505**Supplemental
                  disclosures of non-cash transactions:**
                In March 2007, in full repayment of the $304,398
                  loan
                  owed to the Company by Wilbur Street Corporation (“WSC”),
                  WSC
                  offset $304,398 in back rent due from the Company in repayment
                  of the
                  loan.  The transaction was recorded by reducing the rent payable by
                  $304,398 and the receivable from the former CEO and Chairman by
                  $98,253
                  and increasing additional paid in capital by $206,145.For
                  the year ended December 31, 2006, the Company reduced its liability
                  to the
                  employee stock bonusplan
                  by issuing $162,300 of common stock. The remaining balance of $6,600
                  was
                  cancelled.In
                March 2006, we sold our topical collagenase business to DFB.  In
                order to effectuate the transaction with DFB, we repurchased all of
                the outstanding shares of ABC-NY and ABC-Curacao held by minority
                shareholders in exchange for a combination of approximately $83,000
                in
                cash and 102,574 restricted shares of our treasury stock.**See
                  accompanying notes to consolidated financial
                  statements**
 
 
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 **BIOSPECIFICSTECHNOLOGIES
        CORP.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **March
        31, 2007**
 **(Unaudited)**
 
 **1.ORGANIZATION
        AND DESCRIPTION OF
        BUSINESS**
 
  We
        are a
        biopharmaceutical company that has been involved in the development of
        injectable collagenase for multiple indications. We have a development and
        license agreement with Auxilium Pharmaceuticals, Inc. (“Auxilium”) for
        injectable collagenase (which Auxilium has named “XIAFLEX TM”
(formerly
        known
        as “AA4500”)) for clinical indications in Dupuytren’s disease, Peyronie’s
        disease and frozen shoulder (*adhesive capsulitis*), and Auxilium has an
        option to acquire additional indications that we may pursue, including cellulite
        and lipomas.  Injectable collagenase has completed a pivotal clinical
        trial for the treatment of Dupuytren’s disease. A Phase III clinical trial had
        been initiated and was put on clinical hold.  In a press release dated
        September 10, 2007, Auxilium announced that it has restarted its Phase III
        clinical trials for XIAFLEX TMfor the
        treatment
        of Dupuytren’s disease.
  **DISCONTINUED
        OPERATIONS**
 
 Prior
        to
        March 2006, we were a party to an exclusive license agreement with Abbott
        Laboratories, Inc. and its subsidiaries (“Abbott”), for the production of the
        active pharmaceutical ingredient (“API” or “API Enzyme”) for topical
        collagenase. In March 2006, we sold our topical collagenase business to DFB
        Biotech, Inc. and its affiliates (“DFB”), including all rights to the exclusive
        license agreement and we were released of any obligations
        thereunder.
 
 In
        addition, DFB acquired all of the issued and outstanding shares of Advance
        Biofactures of Curacao, N.V. (“ABC-Curacao“), pursuant to the Asset Purchase
        Agreement (the “Asset Purchase Agreement”) between us, DFB and Advance
        Biofactures Corp. (“ABC-NY”). ABC-Curacao manufactured the API Enzyme, which in
        its final formulation was marketed by Abbott. The operating results of
        ABC-Curacao and certain operations of ABC-NY have been classified as
        discontinued operations in the Consolidated Financial Statements for all
        periods
        presented.
 
 At
        the
        closing of the Asset Purchase Agreement, DFB (i) acquired from us certain
        inventory and manufacturing equipment used in the topical collagenase business,
        (ii) was granted a perpetual royalty free license to use, solely in connection
        with the topical collagenase business, certain intangible assets retained
        by us
        and (iii) was granted the right (for a limited period of time) to use, solely
        in
        connection with the topical collagenase business, certain tangible assets
        retained by us. As part of the sale, we transferred to DFB our FDA manufacturing
        license.
  As
        consideration for the purchased assets including our API inventory we received
        $8 million in cash, DFB’s assumption of certain liabilities, and the right to
        receive earn out payments in the future based on sales of certain products.
        In
        connection with the closing of the Asset Purchase Agreement, we agreed to
        provide certain technical assistance and certain transition services to DFB
        in
        consideration of fees and costs totaling over $1.4 million. DFB paid to us
        a
        partial payment of $425,000 in
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 respect to
        the technical assistance to be provided by us. The consulting obligations
        generally expire during March 2011.
  On
        January 8, 2007, we entered into an Amendment to the Asset Purchase Agreement
        with ABC-NY and DFB (the “Amendment”) in order to clarify the intent of the
        parties with respect to certain provisions of the Asset Purchase Agreement
        and
        the parties are discussing further clarifications to address certain concerns
        raised by Auxilium.
  **2.     SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
  **Basis
        of Presentation**
  The
        accompanying consolidated financial statements are unaudited, but include
        all
        adjustments (consisting only of normal, recurring adjustments) which we consider
        necessary for a fair presentation of our financial position at such dates
        and
        the operating results and cash flows for those periods. Although we believe
        that
        the disclosures in our financial statements are adequate to make the information
        presented not misleading, certain information normally included in financial
        statements prepared in accordance with accounting principles generally accepted
        (“GAAP”) in the United States (the “U.S.”) has been condensed or omitted
        pursuant to the rules and regulations of the Securities and Exchange Commission
        (the “SEC”) for quarterly reporting.
 
 The
        information included in this Report should be read in conjunction with the
        consolidated financial statements and accompanying notes included in our
        Annual
        Report on Form 10-KSB for the year ended December 31, 2006 filed with the
        SEC on September 26, 2007. The Consolidated Balance Sheet as of
        December 31, 2006 is derived from our audited consolidated financial
        statements as of that date.
 
 **Principles
        of Consolidation**
 
 The
        unaudited consolidated financial statements include the accounts of the Company
        and its majority-owned subsidiaries, Advance Biofactures Corp., (“ABC-NY”),
        which it still currently owns, Advance Biofactures of Curacao, N.V.
        (“ABC-Curacao”) which was sold in 2006, BioSpecifics of Curacao N.V. and Biota
        N.V. and its wholly-owned subsidiary, which were liquidated in January 2007,
        BioSpecifics Pharma GmbH ("Bio Pharma") of Germany, which was liquidated
        during
        December 2005, after elimination of inter-company accounts and transactions.
        Due
        to the sale of Advanced Biofactures of Curacao N.V. in March 2006 to DFB
        all
        accounts of this former subsidiary and certain operations of ABC-NY are
        classified as discontinued operations in all periods presented.
 
 **Management
        Estimates**
 
 The
        preparation of unaudited consolidated financial statements in conformity
        with
        accounting principles generally accepted in the U.S. requires the use of
        management’s estimates and assumptions that affect the amounts reported in the
        unaudited consolidated financial statements and accompanying notes. Actual
        results could differ from those estimates.
 
 **Revenue
        Recognition**
  We
        recognize revenues resulting from product sales, from licensing and use of
        our
        technology, and from other services we sometimes perform in connection with
        the
        licensed technology under the guidance of Staff Accounting Bulletin (SAB)
        No. 104, “Revenue Recognition.”
  If
        we
        determine that separate elements exist in a revenue arrangement under Emerging
        Issues Task Force Issue No. 00-21, “Revenue Arrangements with Multiple
        Deliverables” (EITF 00-21), we recognize revenue for delivered elements only
        when the fair values of undelivered elements are known, when the associated
        earnings process is complete, when payment is reasonably assured and, to
        the
        extent the milestone amount relates to our performance obligation, when our
        customer confirms that we have met the requirements under the terms of the
        agreement.
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 Revenues,
        and their respective treatment for financial reporting purposes, are as
        follows:
 
 ***Product
        Sales***
 
 We
        recognize revenue from product sales when there is persuasive evidence that
        an
        arrangement exists, title passes, the price is fixed or determinable and
        collectability is reasonably assured. No right of return exists for our products
        except in the case of damaged goods. To date, we have not experienced any
        significant returns of our products.
 
 Net
        sales
        include the sales of the API Enzyme that are recognized at the time the product
        is shipped to customers for laboratory use.
 
 ***License
        Fees***
 
 We
        include revenue recognized from upfront licensing and milestone payments
        in
“License Fees” in our unaudited consolidated statements of operations in this
        Report.
 
 *Upfront
        License Fees*
 
 We
        generally recognize revenue from upfront fees when the agreement is signed,
        we
        have completed the earnings process and we have no ongoing performance
        obligation with respect to the arrangement. Nonrefundable upfront technology
        license fees for product candidates for which we are providing continuing
        services related to product development are deferred and recognized as revenue
        over the development period.
 
 *Milestones*
 
 Milestones,
        in the form of additional license fees, typically represent nonrefundable
        payments to be received in conjunction with the achievement of a specific
        event
        identified in the contract, such as completion of specified development
        activities and/or regulatory submissions and/or approvals. We believe that
        a
        milestone represents the culmination of a distinct earnings process when
        it is
        not associated with ongoing research, development or other performance on
        our
        part. We recognize such milestones as revenue when they become due and
        collection is reasonably assured. When a milestone does not represent the
        culmination of a distinct earnings process, we recognize revenue in a manner
        similar to that of a nonrefundable upfront license fee.
 
 The
        timing and amount of revenue that we recognize from licenses of technology,
        either from upfront fees or milestones where we are providing continuing
        services related to product development, is primarily dependent upon our
        estimates of the development period. We define the development period as
        the
        point from which research activities commence up to regulatory approval of
        either our, or our partners’, submission assuming no further research is
        necessary. As product candidates move through the development process, it
        is
        necessary to revise these estimates to consider changes to the product
        development cycle, such as changes in the clinical development plan, regulatory
        requirements, or various other factors, many of which may be outside of our
        control. Should the FDA or other regulatory agencies require additional data
        or
        information, we would adjust our development period estimates accordingly.
        The
        impact on revenue of changes in our estimates and the timing thereof is
        recognized prospectively over the remaining estimated product development
        period.
  7
 Table
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  ***Consulting
        and Technical Assistance Services***
 
 We
        recognize revenues from a consulting and technical assistance contract primarily
        as a result of our agreement with DFB. Consulting revenues are recognized
        ratably over the term of the contract. The consulting obligations to DFB
        generally expire during March 2011.
 
 **Stock-Based
        Compensation**
  Under
        the
        provisions of Statement of Financial Accounting Standards (SFAS)
        No. 123(R), we estimate the fair value of our employee stock awards at the
        date of grant using the Black-Scholes option-pricing model, which requires
        the
        use of certain subjective assumptions. The most significant of these assumptions
        are our estimates of the expected volatility of the market price of our stock
        and the expected term of the award. When establishing an estimate of the
        expected term of an award, we consider the vesting period for the award,
        our
        recent historical experience of employee stock option exercises (including
        forfeitures) and the expected volatility. As required under the accounting
        rules, we review our valuation assumptions at each grant date and, as a result,
        our valuation assumptions used to value employee stock-based awards granted
        in
        future periods may change.
  Further,
        SFAS 123(R) requires that employee stock-based compensation costs be recognized
        over the requisite service period, or the vesting period, in a manner similar
        to
        all other forms of compensation paid to employees. The allocation of employee
        stock-based compensation costs to each operating expense line are estimated
        based on specific employee headcount information at each grant date and
        estimated stock option forfeiture rates and revised, if necessary, in future
        periods if actual employee headcount information or forfeitures differ
        materially from those estimates. As a result, the amount of employee stock-based
        compensation costs we recognize in each operating expense category in future
        periods may differ significantly from what we have recorded in the current
        period.
  In
        November 2005, the FASB issued FASB Staff Position No. 123R-3, “Transition
        Election Related to Accounting for the Tax Effects of Share-Based Payment
        Awards.” On January 1, 2007, we have adopted the simplified method to calculate
        the beginning balance of the additional paid-in-capital (APIC) pool of the
        excess tax benefit and to determine the subsequent effect on the APIC pool
        and
        Consolidated Statements of Cash Flows of the tax effects of employee stock-based
        compensation awards that were outstanding upon our adoption of FAS
        123(R).
 
 Employee
        stock-based compensation expense recognized under SFAS 123(R) was as
        follows:
  **Three Months Ended**
              
              
              **Three Months Ended****March
                  31, 2007**
              
              
              **March
                  31, 2006**Research
                  and development
              
              $
              2,580
              
              
              $
              60,605General
                  and administrative
              
              
              135,967
              
              
              
              358,370Total
                  employee stock-based compensation expense
              
              
              138,547
              
              
              
              418,975Total
                  stock-based compensation expense
              
              $
              138,547
              
              
              $
              418,975
 
 *Stock
        Option Activity*
  A
        summary
        of our stock option and warrant activity during the three months ended March
        31,
        2007 is presented below:
  **Option**
                
                **Total Number**
                  **of
                    Shares**
                
                
                **Weighted-Average**
                  **Exercise
                    Price**Outstanding
                    as of December 31, 2006
                
                1,281,125
                
                
                $1.17Granted
                
                92,000
                
                
                $4.11
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  Forfeited
                
                (9,400)
                
                
                $3.28Exercised
                
                (27,000)
                
                
                $1.00Expired
                
                -
                
                
                -Outstanding
                    as of March 31, 2007
                
                1,336,725
                
                
                $1.38Exercisable
                    as of March 31, 2007
                
                1,142,225
                
                
                $1.27
  The
        weighted-average grant-date fair value for options granted during the three
        months ended March 31, 2007 was $4.11 per share and $1.02 per share in the
        corresponding three month period of 2006. During the three months ended March
        31, 2007 and 2006, $27,000 and zero was received from stock options exercised
        by
        employees, respectively.
  The
        aggregate intrinsic value of options outstanding and exercisable as of March
        31,
        2007 was approximately $3,583,591. Aggregate intrinsic value represents the
        total pre-tax intrinsic value, based on the closing prices of our common
        stock
        of $4.40 on March 31, 2007, which would have been received by the option
        holders
        had all option holders exercised their options as of that date. Total
        unrecognized compensation cost related to nonvested stock options outstanding
        as
        of March 31, 2007 was $407,635 which we expect to recognize over a
        weighted-average period of 0.7 years.
 
 **Recent
        Accounting Pronouncements**
 
 In
        July
        2006, FASB issued Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes,” (“SFAS No. 48”) which is effective for fiscal years beginning
        after December 15, 2006. The Interpretation prescribes a recognition
        threshold and measurement attribute for the financial statement recognition
        and
        measurement of a tax position taken or expected to be taken in a tax return.
        The
        Interpretation also provides guidance on derecognition, classification, interest
        and penalties, accounting for interim periods, disclosure, and transition.
        We
        adopted the Interpretation on January 1, 2007. The application of SFAS No.
        48 is not expected to have a material effect on our financial position
        and results of operations.
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
        No. 157”). SFAS No. 157 provides a framework for measuring fair value in
        accordance with GAAP, and expands disclosures regarding fair value measurements
        and the effect on earnings. SFAS No. 157 is effective for financial statements
        issued for fiscal years beginning after November 15, 2007, and interim periods
        within those fiscal years. We are in the process of evaluating the impact
        SFAS
        No. 157 will have on our financial position and results of
        operations.
 
 **3.DISCONTINUED
        OPERATIONS**
 
 Prior
        to
        March 2006, we were a party to an exclusive license agreement with Abbott
        for
        the production of the API for topical collagenase.In
        March 2006 we sold our topical collagenase business to DFB, including all
        rights
        to the exclusive license agreement and we were released of any obligations
        thereunder.
 
 In
        addition, DFB acquired all of the issued and outstanding shares of ABC-Curacao,
        pursuant to the Asset Purchase Agreement between us, DFB and ABC-NY. ABC-Curacao
        manufactured the API Enzyme, which in its final formulation was marketed
        by
        Abbott.
 
 At
        the
        closing of the Asset Purchase Agreement, DFB (i) acquired from us certain
        inventory and manufacturing equipment used in the topical collagenase business,
        (ii) was granted a perpetual royalty free license to use, solely in connection
        with the topical collagenase business, certain intangible assets retained
        by us
        and (iii) was granted the right (for a limited period of time) to use, solely
        in
        connection with the topical collagenase business, certain tangible assets
        retained by us. As part of the sale, we transferred to DFB our FDA manufacturing
        license.
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  As
        consideration for the purchased assets including our API inventory we received
        $8 million in cash, DFB’s assumption of certain liabilities, and the right to
        receive earn out payments in the future based on sales of certain products.
        In
        connection with the closing of the Asset Purchase Agreement, we agreed to
        provide certain technical assistance and certain transition services to DFB
        in
        consideration of fees and costs totaling over $1.4 million. At the closing,
        DFB
        paid to us a partial payment of $425,000 in respect to the technical
        assistance to be provided by us. The consulting obligations generally expire
        during March 2011.
 
 For
        accounting purposes, the operating results of ABC-Curacao and certain operations
        of ABC-NY have been classified as discontinued operations in the Consolidated
        Statement of Operations for all periods presented.
 
 Discontinued
        operations are as follows:
 **Three
                    Months Ended March 31,****2007**
                
                
                **2006**Net
                    loss from discontinued operations
                
                $
                -
                
                
                $
                (1,115,704
                )Pre-tax
                    gain on disposal of discontinued operations (1)
                
                
                -
                
                
                
                3,601,102Net
                    income (loss) from discontinued operations
                
                $
                -
                
                
                $
                2,485,398
  **_____________________________________________________________________________**
  (1)
        We
        did not record any tax liability associated with the gain on the disposal
        of
        discontinued operations in 2006 due to our large net operating loss
        carryforwards.
  **4.      NET
        LOSS PER SHARE**
  In
        accordance with SFAS No. 128, “Earnings Per Share” (SFAS 128), basic net
        loss per share amount is computed using the weighted-average number of shares
        of
        common stock outstanding during the periods presented, while diluted net
        loss per share is computed using the sum of the weighted-average number of
        common and common equivalent shares outstanding. Common equivalent shares
        used
        in the computation of diluted earnings per share result from the assumed
        exercise of stock options, and warrants using the if converted method. For
        the
        three months ended March 31, 2007 and 2006, we incurred a net loss from
        continuing operations and, as such, we did not include the effect of outstanding
        stock options or warrants in the diluted net loss per share calculations,
        as
        their effect would have been anti-dilutive.
 
 The
        following table summarizes the number of common equivalent shares excluded
        from
        the calculation of diluted net loss per share from continuing operations
        reported in the consolidated statement of operations as their effect would
        have
        been anti-dilutive:
  **Three
                    Months Ended**
                  **March
                    31,****2007**
                
                
                **2006**Stock
                    options
                
                
                1,336,725
                
                
                
                1,348,363Warrants
                
                
                10,000
                
                
                
                10,000Total
                
                
                1,346,725
                
                
                
                1,358,363
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  **5.      OTHER
        ACCRUED LIABILITIES**
  Other
        accrued liabilities consisted of the following:
  **March
                  31,**
                **2007**
              
              
              **December
                  31,**
                **2006**Trade
                  accounts payable and accrued expenses
              
              $
              1,826,843
              
              
              $
              1,751,014Accrued
                  legal and other professional fees
              
              
              107,000
              
              
              
              120,030Accrued
                  payroll and related costs
              
              
              151,111
              
              
              
              148,252Total
              
              $
              2,084,954
              
              
              $
              2,019,296
 
 **6.      INCOME
        TAXES**
 
 We
        recorded minimum income tax provisions for the three month period ended March
        31, 2007 of $3,600 and zero for the comparable period of 2006.
 
 **7.      RELATED
        PARTY TRANSACTIONS**
 
 In
        March
        2007, in full repayment of the $304,398 loan owed to the Company by Wilbur
        Street Corporation (“WSC”), WSC offset $304,398 in back rent due from the
        Company in repayment of the loan.
 
 **8.      SUBSEQUENT
        EVENTS**
 
 On
        May 7,
        2007, Lawrence Dobroff, our Chief Financial Officer, was terminated and Tom
        Wegman assumed the role of the “Principal Accounting Officer” for purposes of
        making the certifications required by the Sarbanes-Oxley Act of
        2002.
 
 On
        June,
        18, 2007, we entered into change of control agreements with our Directors
        and
        President providing certain benefits in the event of a change of control
        of the
        Company.
 
 On
        June
        25, 2007, we elected Toby and Mark Wegman to the Board of Directors of the
        Company.
  In
        a press release dated September 10, 2007, Auxilium
        announced that it has restarted its Phase III clinical trials for XIAFLEX
        for
        the treatment of Dupuytren's disease.
 
 **Item2:  
Management’s
        Discussion and
        Analysis or Plan of Operation**
 
 *The
        following discussion should be read in conjunction with the Financial Statements
        and related notes thereto included elsewhere in this Report.*
 
 ***Overview***
  We
        are a
        biopharmaceutical company that has been involved in the development of
        injectable collagenase for multiple indications. We have a development and
        license agreement with Auxilium for injectable collagenase (which Auxilium
        has
        named “XIAFLEX TM”) for
        clinical
        indications in Dupuytren’s disease, Peyronie’s disease and frozen shoulder
        (*adhesive capsulitis*), and Auxilium has an option to acquire additional
        indications that we may pursue, including cellulite and lipomas. A Phase
        III
        clinical trial had been initiated and was put on clinical
        hold.  In a press release dated September 10, 2007, Auxilium announced
        that it has restarted its Phase III clinical trials for XIAFLEX TMfor the
        treatment
        of Dupuytren’s disease.
  In
        March
        2006, we sold the collagenase topical business to DFB to refocus our efforts on
        the clinical indications related to our collagenase injection business. Sales
        of
        this topical collagenase had declined
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  significantly
        since the peak year of 1999. Under the terms of the Asset Purchase Agreement,
        DFB assumed ownership and operation of our wholly-owned subsidiary, ABC-Curacao,
        where the API is manufactured, along with certain other assets, including
        our
        FDA manufacturing license.
  Prior
        to
        the sale of our collagenase topical business in March 2006, we had been in
        the
        business of manufacturing the API for a topical collagenase prescription
        product.  This topical collagenase product is a FDA approved biologic
        product indicated for debridement of chronic dermal ulcers and severely burned
        areas.  Under the terms of our agreement with Abbott, Abbott
        compounded the API into a topical collagenase ointment utilizing the API
        Enzyme
        manufactured by us. The topical collagenase was sold primarily to long-term
        care
        centers.
 **Outlook**
  We
        foresee the potential to generate income from limited sources in the next
        several years. Under the terms of our agreement with DFB, we are scheduled
        to
        receive certain contractual anniversary payments and, if DFB exceeds a certain
        sales target, we would be entitled to an earn out on sales. Under the terms
        of
        our agreement with Auxilium, we may receive milestone payments upon their
        achieving certain regulatory progress and if Auxilium elects to pursue
        additional indications for injectable collagenase (“Additional
        Indications”).  In addition, as a result of our transaction with DFB
        in the first quarter of 2006, our costs have been significantly reduced due
        mainly to the reduction in our workforce.  Based on our current
        business model, we expect to have adequate cash reserves until the third
        quarter
        of 2008. In the longer term, a significant portion of our revenues are tied
        directly to the success of Auxilium in commercializing XIAFLEX TM.
  **Significant
        Risks**
 
 We
        are
        dependent to a significant extent on third parties, and our principal licensee,
        Auxilium, may not be able to successfully develop products, obtain required
        regulatory approvals, manufacture products at an acceptable cost, in a timely
        manner and with appropriate quality, or successfully market products or maintain
        desired margins for products sold, and as a result we may not achieve sustained
        profitable operations.
 
 **Critical
        Accounting Policies, Estimates and Assumptions**
 
 The
        preparation of unaudited consolidated financial statements in conformity
        with
        accounting principles generally accepted in the U.S. requires management
        to make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the unaudited consolidated financial statements and the reported amounts
        of
        revenues and expenses during the reporting period. These estimates are based
        on
        historical experience and on various other assumptions that we believe are
        reasonable under the circumstances. The information at March 31, 2007 and
        for
        the three months ended March 31, 2007 and 2006 is unaudited but includes
        all
        adjustments (consisting only of normal recurring adjustments) which, in the
        opinion of management, are necessary to state fairly the financial information
        set forth herein. The December 31, 2006 balance sheet amounts and
        disclosures included herein have been derived from the Company’s
        December 31, 2006 audited consolidated financial statements. The interim
        results are not necessarily indicative of results to be expected for the
        full
        fiscal year. These unaudited consolidated financial statements should be
        read in
        conjunction with the audited consolidated financial statements for the years
        ended December 31, 2006 and 2005 included in the Company’s Form 10-KSB
        filed with the SEC on September 26, 2007. While our significant accounting
        policies are described in more detail in the notes to our unaudited consolidated
        financial statements, we believe the following accounting policies to be
        critical to the judgments and estimates used in the preparation of our unaudited
        consolidated financial statements.
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  ***Revenue
        Recognition****.* We recognize revenues from product sales
        when there is persuasive evidence that an arrangement exists, title passes,
        the
        price is fixed and determinable, and payment is reasonably assured. We currently
        recognize revenues resulting from the licensing and use of our technology
        and
        from services we sometimes perform in connection with the licensed
        technology.
  We
        enter
        into product development licenses, and collaboration agreements that may
        contain
        multiple elements, such as upfront license fees, and milestones related to
        the
        achievement of particular stages in product development and royalties. As
        a
        result, significant contract interpretation is sometimes required to determine
        the appropriate accounting, including whether the deliverables specified
        in a
        multiple-element arrangement should be treated as separate units of accounting
        for revenue recognition purposes, and if so, how the aggregate contract value
        should be allocated among the deliverable elements and when to recognize
        revenue
        for each element.
  We
        recognize revenue for delivered elements only when the fair values of
        undelivered elements are known, when the associated earnings process is complete
        and, to the extent the milestone amount relates to our performance obligation,
        when our licensee confirms that we have met the requirements under the terms
        of
        the agreement, and when payment is reasonably assured. Changes in the allocation
        of the contract value between various deliverable elements might impact the
        timing of revenue recognition, but in any event, would not change the total
        revenue recognized on the contract. For example, nonrefundable upfront product
        license fees, for product candidates where we are providing continuing services
        related to product development, are deferred and recognized as revenue over
        the
        development period.
 
 Milestones,
        in the form of additional license fees, typically represent nonrefundable
        payments to be received in conjunction with the achievement of a specific
        event
        identified in the contract, such as completion of specified clinical development
        activities and/or regulatory submissions and/or approvals. We believe that
        a
        milestone represents the culmination of a distinct earnings process when
        it is
        not associated with ongoing research, development or other performance on
        our
        part. We recognize such milestones as revenue when they become due and payment
        is reasonably assured. When a milestone does not represent the culmination
        of a
        distinct earnings process, we recognize revenue in a manner similar to that
        of
        an upfront product license fee.
 
 We
        recognize revenues from a consulting and technical assistance contract primarily
        as a result of the Asset Purchase Agreement. Consulting revenues are recognized
        ratably over the term of the contract. The consulting obligations under the
        Asset Purchase Agreement generally expire during March 2011.
  ***Receivables
        and Deferred
        Revenue***.  Under our agreement with DFB, we agreed to provide
        certain technical assistance and transitional services in consideration of
        fees
        and costs totaling over $1.4 million.  DFB paid to us a partial payment of
        $425,000 in respect to the technical assistance to be provided by us.  In
        March 2007, DFB paid us an additional $400,000 under the terms of the
        agreement.  The consulting obligations generally expire during March
        2011.  As of March 31, 2007 the remaining accounts receivable balance due
        was $575,000 for future services and was offset by the associated deferred
        revenues to be recognized in future periods of $575,000.
 
 ***Inventory
        and Warranty Provisions*****.** Our inventories are
        stated at the lower of cost or realizable market value. In assessing the
        ultimate realization of inventories, we are required to make judgments as
        to
        future demand requirements and compare that with the current inventory
        levels.  In March 2006 we sold our topical collagenase business to
        DFB, including certain product inventory. As of a result of this sale our
        product inventory for the three months ended March 31, 2007 was
        zero.
  ***Stock
        Based Compensation*****.** Effective January 1, 2006, we
        account for employee stock-based compensation in accordance with SFAS No.
        123,
“Share Based Payment (Revised 2004)” (“SFAS 123(R)”), which supersedes our
        previous accounting under Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees” (“APB 25”), and related
        interpretations. We adopted SFAS 123(R) using the modified prospective
        application transition method, which requires that compensation expense be
        recognized in the financial statements for all awards granted after the date
        of
        adoption as well as for existing awards for which the requisite service has
        not
        been rendered as of the date of adoption. The modified prospective transition
        method does not require restatement of prior periods to reflect the impact
        of
        SFAS 123(R).
  Under
        the
        provisions of SFAS 123(R), we estimate the fair value of our employee stock
        awards at the date of grant using the Black-Scholes option-pricing model,
        which
        requires the use of certain subjective assumptions. The most significant
        assumptions are our estimates of the expected volatility of the market
  13
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  price
        of
        our stock and the expected term of the award. Expected volatility is based
        on
        the historical volatility of our common stock. When establishing an estimate
        of
        the expected term of an award, we consider the vesting period for the award,
        our
        historical experience of employee stock option exercises (including forfeitures)
        and the expected volatility. As required under the accounting rules, we review
        our valuation assumptions at each grant date and, as a result, we are likely
        to
        change our valuation assumptions used to value employee stock-based awards
        granted in future periods.
 
 Further,
        SFAS 123(R) requires that employee stock-based compensation costs be recognized
        over the requisite service period, or the vesting period, in a manner similar
        to
        all other forms of compensation paid to employees. The allocation of employee
        stock-based compensation costs to each operating expense line are estimated
        based on specific employee headcount information at each grant date and
        estimated stock option forfeiture rates and revised, if necessary, in future
        periods if actual employee headcount information or forfeitures differ
        materially from those estimates. As a result, the amount of employee stock-based
        compensation costs we recognize in each operating expense category in future
        periods may differ significantly from what we have recorded in the current
        period.
 
 **RESULTS
        OF OPERATIONS**
 
 As
          a
          result of selling our topical collagenase business in March 2006, we treated
          this disposition as discontinued operations and reclassified the financial
          information reported for all periods presented. Discontinued operations
          are more
          fully discussed in Note 3 to our consolidated financial statements,
          included in this Report.
 
 **THREE-MONTHS
        ENDED MARCH 31, 2007 AND MARCH 31, 2006**
 
 **Revenues**
 
 *Product
        Revenues, net*
 
 Product
        revenues include the sales of the API Enzyme recognized at the time it is
        shipped to customers. From continuing operations, we had a small amount of
        revenue from the sale of collagenase for laboratory use.  For the
        three months ended March 31, 2007 and 2006 product revenues were $1,100 and
        $6,793, respectively. This decrease of $5,693 or 518% was primarily related
        to
        the amount of material required to perform testing by our
        customers.
 
 *Licensing
        Revenues*
 
 For
        each
        of the three months ended March 31, 2007 and 2006 we recognized licensing
        revenue of $289,279.  Licensing revenues recognized are related to the
        cash payments received under the Auxilium Agreement in calendar years 2005
        and
        2004 and amortized over the expected development period.
 
 Under
        current accounting guidance, nonrefundable upfront license fees for product
        candidates where we are providing continuing services related to product
        development, are deferred and recognized as revenue over the development
        period.
        The remaining balance will be recognized over the respective development
        periods
        or when we determine that we have no ongoing performance
        obligations.
 
 *Consulting
        Services*
 
 We
        recognize revenues from a consulting and technical assistance contract primarily
        as a result of the Asset Purchase Agreement. Consulting revenues are recognized
        ratably over the term of the contract. The consulting obligations under the
        Asset Purchase Agreement generally expire during March 2011. For the three
        months ended March 31, 2007 and 2006 consulting revenues were $70,000 and
        $23,333,
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  respectively.
        This increase of $46,667 or 67% in consulting revenues was primarily the
        result
        of the timing of the Asset Purchase Agreement.
 
 **Costs
        and Expenses**
 
 *Research
        and Development Activities*
 
 Research
        and development expenses were $386,359 and $745,365 respectively, for the
        three
        months ended March 31, 2007 and 2006. This decrease of $359,006 or 48% in
        research and development expenses was primarily due to lower licensing fees,
        employee stock-based compensation expense and research and development personnel
        costs which were partially offset by an increase in external development
        costs.
 
 *General
        and Administrative Expenses*
 
 General
        and administrative expenses were $1,097,467 and $972,395 for the three months
        ended March 31, 2007 and 2006, respectively. The increase in general and
        administrative expenses of $125,072 of 11% was primarily due to increased
        employee-consulting expenses and legal expenses partially offset by lower
        employee stock-based compensation expense and general and administrative
        personnel costs.
 
 *Other
        Income (expense), net*
 
 Other
        income (expense), net, was $41,249 and $17,320 for the three months ended
        March
        31, 2007 and 2006, respectively. The increase in other income, net during
        the
        first quarters of 2007 as compared to the 2006 period reflects the amount
        of
        time during each of the quarterly period that our cash was invested.Although
        our
        invested balances were higher in the 2006 period, our cash was invested for
        a
        shorter period during the quarter.
  *Income
        Taxes*
 
 The
        expense for income taxes for the three months ended March 31, 2007 and 2006
        was
        $3,600 and zero, respectively. The income tax recorded in the 2007 period
        was
        primarily related to the minimum income taxes required under state
        regulations.
 
 **Liquidity
        and Capital Resources**
  To
        date,
        we have financed our operations primarily through product sales, debt
        instruments and licensing revenues and royalties under agreements with third
        parties. At March 31, 2007 and December 31, 2006, we had cash and cash
        equivalents in the aggregate of $3,525,209 and $4,367,178,
        respectively.
 
 ***Continuing
        Operations***
 
 Net
        cash
        used in operating activities for the three months ended March 31, 2007 was
        $547,932 as compared to net cash used in operating activities in the 2006
        period
        of $313,552.  In the 2007 period, as compared to the 2006 period, the
        changes in net cash used in operating activities was primarily attributable
        to
        lower accounts payable and accrued expenses in the 2007 period.
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  Net
        cash
        provided by financing activities for the three months ended March 31, 2007
        was
        $27,000 as compared to net cash used in financing activities for the 2006
        period
        of $85,470. Net cash provided by financing activities for the 2007 period
        was
        primarily the result of stock option exercises. Net cash used in financing
        activities for the 2006 period was primarily the result of the issuance of
        treasury stock to the minority shareholders of ABC-Curacao and ABC-NY related
        to
        the Asset Purchase Agreement.
 
 ***Discontinued
        Operations***
 
 Cash
        flow
        changes from discontinued operations are primarily due to the operating results
        of ABC-Curacao and certain operations of ABC-NY, which have been classified
        as
        discontinued operations.
 
 Net
        cash
        provided by operating activities from discontinued operations in the 2007
        and
        2006 periods was $321,037 and $1,072,691, respectively.
 
 Net
        cash
        provided by investing activities from discontinued operations in the 2007
        and
        2006 periods was zero and $378,234, respectively.
 
 Net
        cash
        used in financing activities from discontinued operations in each period
        of 2007
        and 2006 was zero.
 
 **Risk
        Factors**
 
 See
“Risk
        Factors” under Item 1, “Description of Business” included in our Annual Report
        on Form 10-KSB for the year ended December 31, 2006.
 
 **Item3.  
Controls
        and
        Procedures**
  ***Evaluation
        of disclosure controls and procedures.*** Under the supervision
        and with the participation of our management, including our Principal Executive
        and Accounting Officer, we evaluated the effectiveness of the design and
        operation of our disclosure controls and procedures (as defined in Rules
        13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange
        Act) as of the end of the period covered by this report. Based on this
        evaluation, our Principal Executive and Accounting Officer concluded that
        our
        disclosure controls and procedures are effective in reaching a reasonable
        level
        of assurance that information required to be disclosed by us in the reports
        that
        we file or submit under the Exchange Act is recorded, processed, summarized
        and
        reported within the time period specified in the Securities and Exchange
        Commission’s rules and forms.
  ***Changes
        in internal controls.*** There were no changes in our internal
        controls over financial reporting during the quarter ended March 31, 2007
        that have materially affected, or are reasonably likely to materially affect,
        our internal control over financial reporting.
  ***Limitations
        on the effectiveness of controls.*** A control system, no matter
        how well conceived and operated, can provide only reasonable, not absolute,
        assurance that the objectives of the control system are met. Because of inherent
        limitations in all control systems, no evaluation of controls can provide
        absolute assurance that all control issues, if any, within an organization
        have
        been detected. We continue to improve and refine our internal controls and
        our compliance with existing controls is an ongoing process.
 
 Additionally,
        following the death of our former Chairman and CEO, Edwin H. Wegman, on February
        16, 2007 and the termination of our Chief Financial Officer, Lawrence Dobroff,
        on May 7, 2007, the Audit Committee adopted the following two
        procedures:
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  ·
              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.
 
 **PARTII:   OTHER
        INFORMATION**
 
 **Item1.      Legal
        Proceedings**
 
 None.
 
 **Item2.       Unregistered Sales of Equity
        Securities and Use of Proceeds**
 
 None.
 
 **Item3.       Defaults
        Upon Senior Securities**
 
 None.
 
 **Item4.        Submission of Matters to a
        Vote of Security Holders**
 
 None.
 
 **Item5.        Other
        Information**
 None.
 
 **Item6.        Exhibits**
 
 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).
 31.1
              Certification
                  of Principal Executive Officer and
                  Principal Financial Officer pursuant to
                  Rule13a-14(a)/15d-14(a).
 32.1
              Certification
                  of Principal Executive Officer and
                  Principal Financial Officer pursuant to Section 906 of Sarbanes-Oxley
                  Act
                  of 2002.
  17
 Table
            of Contents
  **SIGNATURES**
 
 Pursuant
        to the requirements of the
        Securities Exchange Act of 1934, the registrant has duly caused this report
        to
        be signed on its behalf by the undersigned thereunto duly
        authorized.
 
 
 **BIOSPECIFICS
                    TECHNOLOGIES CORP.**(Registrant)
 
 
 Date:  September
                  26, 2007
              /s/
                    Thomas L. WegmanThomas
                  L. Wegman
                President
                (Principal
                  Executive and Financial Officer)
 /s/
          Thomas L. Wegman
 
 Thomas
          L.
          Wegman
 President
 (Principal
          Executive Officer and Principal Financial
          Officer)