<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended June 30, 1998
[_] Transaction report under Section 13 or 15 (d) of the Exchange Act For
the transition period from ____________ to ____________
Commission file number 0-22245
NEXMED, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 87-0449967
- -------------------------------------------- ---------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
350 Corporate Boulevard, Robbinsville, NJ 08691
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(609) 208-9688
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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 for
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 [X] No[_]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At August 12, 1998,
8,099,636 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [_] No [X]
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEXMED, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30,
1998
(UNAUDITED)
-----------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 1,246,107
Accounts receivable 1,351,432
Inventories 1,161,249
Due from related party 106,098
Prepaid expenses and other assets 425,479
---------------
Total current assets 4,290,365
Furniture and equipment, net 1,563,272
Debt issuance costs, net of accumulated amortization
of $42,940 25,765
Intangible assets, net of accumulated amortization
of $21,439 232,202
---------------
Total assets $ 6,111,604
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable $ 2,416,348
Due to related party 1,413,146
Accounts payable and accrued expenses 1,959,416
---------------
Total current liabilities 5,788,910
---------------
Minority interest 826,909
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 10,000,000
shares authorized, none issued and outstanding -
Common stock, $.001 par value, 40,000,000
shares authorized, 8,099,636 issued
and outstanding 8,100
Additional paid-in capital 9,891,166
Accumulated deficit (10,378,988)
Cumulative translation adjustments 10,215
---------------
(469,507)
Less: deferred compensation (34,708)
---------------
Total stockholders' equity (504,215)
---------------
Total liabilities and stockholders' equity $ 6,111,604
===============
See notes to unaudited condensed consolidated financial statements
<PAGE>
NexMed, Inc.
Condensed Consolidated Statement of Operations (Unaudited)
[CAPTION]
<TABLE>
For the six months For the three months
ended June 30, ended June 30,
--------------------------- -----------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Product sales $ 2,739,063 $ - $ 1,534,393 $ -
License fees - 50,000 - -
------------ ------------ ------------ -----------
Total revenues 2,739,063 50,000 1,534,393 -
------------ ------------ ------------ -----------
Operating expenses
Cost of product sales 2,421,574 - 1,378,076 -
Selling, general and administrative 1,445,759 947,759 733,485 671,106
Research and development 890,310 787,374 502,654 499,946
------------ ----------- ----------- -----------
Total operating expenses 4,757,643 1,735,133 2,614,215 1,171,052
------------ ----------- ----------- -----------
Loss from operations (2,018,580) (1,685,133) (1,079,822) (1,171,052)
Interest income (expense), net (284,379) 15,937 (156,806) 13,414
------------ ----------- ----------- -----------
Loss before minority interest (2,302,959) (1,669,196) (1,236,628) (1,157,638)
Minority interest 105,405 - 34,817 -
------------ ------------ ------------ -----------
Net loss $ (2,197,554) $ (1,669,196) $ (1,201,811) $ (1,157,638)
============ ============ ============ ============
Basic and diluted loss per share $ (0.33) $ (0.28) $ (0.16) $ (0.19)
------------ ------------ ------------ ------------
Weighted average common shares outstanding
used for basic and diluted loss per share 6,743,673 5,980,174 7,291,700 6,160,098
------------ ------------ ------------ ------------
</TABLE>
See notes to unaudited condensed consolidated financial statements
2
<PAGE>
NexMed, Inc.
Condensed Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
For the six months
ended June 30,
---------------- ---------------
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net loss $ (2,197,554) $ (1,669,196)
Adjustments to reconcile net loss to
net cash from operating activities
Depreciation and amortization 178,016 13,607
Non-cash compensation expense 48,710 66,042
Increase in accounts receivable (483,030) -
Increase in inventories (599,336) -
Increase in prepaid expenses and other assets (323,194) (3,617)
Increase (decrease) in account payable
and accrued expenses 516,704 (53,429)
------------ ------------
Net cash used in operating activities (2,859,684) (1,646,593)
------------ ------------
Cash flow from investing activities
Capital expenditures (73,439) (73,526)
Advances to Joint Venture 1,870,000 _
------------ ------------
Net cash used in investing activities 1,796,561 (73,526)
------------ ------------
Cash flow from financing activities
Issuance of common stock, net of offering
costs 2,560,672 2,096,220
Issuance of notes payable 380,736 100,000
Net decrease in due to/from related party (193,367) _
Repayment of notes payable (500,000) (25,000)
------------ ------------
Net cash from financing activities 2,176,041 2,171,220
------------ ------------
Net increase in cash 1,112,918 451,101
Cash, beginning of period 133,189 194,577
------------ ------------
Cash, end of period $ 1,246,107 $ 645,678
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements
3
<PAGE>
NexMed, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10-01
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended June 30,
1998 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998. For further information, refer to the financial
statements and notes thereto dated March 2, 1998 included in the NexMed, Inc.
(the "Company") Form 10-KSB.
Effective January 1, 1998, upon the consummation of the joint venture agreement
(see Note 2), the Company is no longer considered a development stage company.
2. Joint Venture Agreement with Zhongshan Xiaolan Pharmaceutical Factory.
In July 1997, the Company, through its wholly-owned subsidiary, NexMed (Asia)
Limited, entered into an agreement to form a Chinese joint-venture company,
NexMed Pharmaceuticals (Zhongshan) Ltd. (the "JV") with Zhongshan Xiaolan
Pharmaceuticals Factory (the "JV Partner"). Under the terms of the agreement,
the Company was required to make an initial contribution of $2,170,000, and is
required to make additional contributions of $700,000 and $630,000 by September
1999 and 2000, respectively, in exchange for a 70% equity interest in the JV.
Effective January 1, 1998, the Company contributed $1,870,000 of the $2,170,000
initial payment and the Company was given an extension of time to complete
payment of the remaining $300,000 by the JV Partner until September 1998. In
May 1998, the Company completed its first year funding requirement.
3. New Accounting Pronouncements
Effective January 1, 1998, the Company adopted Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("FAS 130"), which requires the
presentation of the components of comprehensive income in the company's
financial statement for reporting periods beginning subsequent to December 15,
1997. Comprehensive income is defined as the change in the company's equity
during a financial reporting period from transactions and other circumstances
from non-owner sources (including cumulative translation adjustments, minimum
pension liabilities and unrealized gains/losses on available for sale
securities). Comprehensive income for the three and six months ended June 30,
1998 and 1997 is as follows:
Three Months ended June 30,
1998 1997
---- ----
Net loss $ (1,201,811) $ (1,157,638)
Cumulative translation adjustments 18,170 _
------------ ------------
$ (1,183,641) $ (1,157,638)
============ ============
Six Months ended June 30,
1998 1997
---- ----
Net loss $ (2,197,554) $ (1,669,196)
Cumulative translation adjustments 10,215 _
------------ ------------
$ (2,187,339) $ (1,669,196)
============ ============
4
<PAGE>
Effective January 1, 1998, the Company adopted Financial Accounting Standards
No. 131, "Disclosure about Segments of an Enterprise and Related Information"
("FAS 131"), which requires disclosure of information about operating segments
in annual financial statements for reporting periods beginning subsequent to
December 15, 1997. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. The adoption of FAS 131 did
not have a material impact on the Company's financial statements.
4. ISSUANCE OF COMMON STOCK AND OPTIONS
In April 1998, the Company issued 48,500 shares of common stock in a private
placement raising gross proceeds of $60,625.
In April 1998, the Company issued 51,038 shares of common stock to consultants
in exchange for services. The Company has recorded approximately $63,798 of
expense based upon the estimated fair value of the Company's common stock at the
time of issuance.
In April 1998, the Company granted options to acquire 10,000 shares of its
common stock, at an exercise price of $2.00 per share to consultants. The
estimated fair market value of the Company's common stock was $1.25 per share at
the time of issuance. The options are immediately exercisable and have a term
of five years from the date of grant. The Company has recorded $6,160 of
expense based upon the estimated fair value of such options at the time of
grant.
In March 1998, the Company issued 1,360,000 shares of common stock in a private
placement raising gross proceeds of $2,040,000.
In April, May and June 1998, options to acquire 195,000 shares of common stock
at $.25 per share were exercised. The Company received net proceeds of $48,750.
In June 1998, the Company commenced a private offering of a minimum of 200,000
shares and a maximum of 1,200,000 shares of its common stock at an offering
price $2.50 per share.
5. NOTES PAYABLE
In April 1998, the Company and the holders of two notes payable in the aggregate
principal amount of approximately $216,000 rolled over the outstanding principal
and unpaid interest, in the amount of approximately $31,000, into new notes. The
new notes bear interest at rates ranging from 12% to 15% and are payable
together with accrued but unpaid interest on various dates through October 1998.
In June 1998, the Company repaid $200,000 of $483,100 promissory note and the
Company and the note holder agreed to roll over the remaining outstanding
principal and unpaid interest, in the amount of $23,200 into a new note. The
new note in the principal amount of $306,300, bears interest at 12% per annum
and is payable, together with accrued but unpaid interest, in December 1998.
6. RELATED PARTY TRANSACTIONS
In January 1998, the Company was advanced $50,000 from an officer and director
of the Company under an informal agreement. The advance bore interest at 15%
per annum and was due in December 1998. In June 1998, the Company repaid the
advance.
5
<PAGE>
Due to related party of $1,413,146 at June 30, 1998, represents an unsecured,
uncollateralized revolving line of credit with the JV Partner. The line of
credit bears interest at 11.1% per annum and expires in September 2000. The
source of the funds is a line of credit extended to the JV Partner by a Chinese
bank.
7. SUBSEQUENT EVENTS
In July 1998, the JV entered into an RMB 13 million (approximately $1,560,000)
revolving line of credit with a financial institution. The line of credit is
renewable annually and bears interest at 6.3525% per annum.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
NexMed, Inc. ("NexMed"), which has been in existence since 1987, has,
since 1994, positioned itself as a medical and pharmaceutical technology company
with a focus on developing and commercializing therapeutic products based on
proprietary delivery systems. NexMed (together with its subsidiaries, the
"Company") is currently focusing its efforts on:
(i) new and patented pharmaceutical products based on a penetration
enhancement topical delivery technology known as NexACT(TM), which may enable
the active drug to be better absorbed through the skin. Currently, the primary
topical treatment products under development by the Company are Alprox-TD(TM),
an alprostadil cream for the treatment of male erectile dysfunction (impotence),
and Femprox(TM), an alprostadil-based product for the treatment of female sexual
dysfunction. Also targeted for research and development are ibuprofen and
ketoprofen cream formulations for sports medicine and arthritis treatment and an
acyclovir anti-viral cream for the treatment of herpes simplex; and
(ii) the Viratrol(R) device, a proprietary therapeutic medical
device for the treatment of herpes simplex diseases which does not require the
use of any drugs. The Company believes that the electrical current, which is
topically delivered by the patented device to an infected site, may block
lesions from forming or may significantly shorten healing time once lesions
develop; and
(iii) the manufacturing and distributing of generic pharmaceutical
products through its Joint-Venture in China (the "JV"), which became effective
on January 1, 1998. The Company intends to continue and expand upon the
production and distribution in China and export to other international markets
of generic pharmaceutical products currently approved and sold in China.
In the second half of 1998, pending sufficient funding, the Company
intends to expand its research, development, and marketing activities and
capabilities, both domestically and internationally, with regard to its
proprietary pharmaceuticals products and to execute a business strategy with the
goal of achieving a level of development and commercialization sufficient to
enable the Company to attract potential strategic partners
7
<PAGE>
with resources sufficient to further develop and market its proprietary
products. For its generic pharmaceutical business, the Company intends for the
JV to develop new products, acquire new production equipment and working capital
and retrofit the existing production facilities to meet the Chinese Good
Manufacturing Practices (GMP) standards.
With respect to the regulatory approval of its products, the Company
intends to initiate in the second half of 1998, pending sufficient funding,
Phase II studies in the U.S. for the Alprox-TD(TM) treatment cream for male
impotence. During the second quarter of 1998, the Company has initiated a Phase
I safety study for the Femprox(TM) treatment cream for female sexual
dysfunction. In China, the Company has initiated a 200-patient Phase III
double-blind clinical study, and pending satisfactory results, intends to submit
a New Drug Application to the Chinese Department of Health during the fourth
quarter of 1998.
For the Viratrol(R) herpes treatment device, the Company is
conducting a 60-patient, double-blind study in China, and is intending to file
an Investigational Device Exemption (IDE) with the FDA and to initiate clinical
studies in the U.S. The Company has submitted a Notification of Sale for the
Viratrol(TM) device in Canada during the second quarter of 1998, and has
received written confirmation from Health Canada Medical Devices Bureau that the
device is classified as risk Class I or in the lowest risk category, and is
cleared for marketing and distribution in Canada.
COMPARISON OF RESULTS OF OPERATIONS BETWEEN THE SIX MONTHS ENDED JUNE 30 OF 1998
AND OF 1997
Revenues. The Company recorded revenues from the JV's product sales
in China, of $2,739,063 during the first six months of operations in 1998 as
compared to no sales during the same period in 1997. The Company anticipates
that the continued expansion of the JV's production capacity should result in
additional sales revenue during the second half of 1998. The Company recorded no
licensing revenues during the first six months of 1998 as compared to $50,000
during the same period in 1997. The Company does not anticipate that revenues
will be generated during the second half of 1998 from its outstanding licensing
agreements for Taiwan, Argentina and Uruguay. The Company is currently pursuing
additional licensing and partnering agreements with multi-national
pharmaceutical companies for the U.S., European and Japanese markets, which, if
entered into, may result in contract revenues in the second half 1998.
Cost of Products Sold: The cost of product sales were $2,421,574 and
zero in 1998 and 1997, respectively. The cost has been higher than anticipated,
and in large measure, is attributable to the price of the raw materials of the
JV's production of mostly generic antibiotics. The new management at the JV has
identified alternative sources of raw materials at a lower price, and the
Company expects the overall production cost to decrease and gross profit margins
to increase during the second half of 1998.
8
<PAGE>
Research and Development Expenses. Research and development expenses
for the first six months of operation of 1998 and 1997, were $890,310 and
$787,374, respectively. The increase is primarily attributable to the increase
in and scope of clinical studies initiated in the U.S. The Company expects that
pending sufficient funding, total research spending in 1998 will continue to
increase with the expansion in development and clinical activities.
General and Administrative Expenses. General and administrative
expenses were $1,445,759 during the first six months of operation in 1998 as
compared to $947,759 during the same period in 1997. The increase is largely
attributed to the expenses of the JV operation in China and the Company's
international commercialization efforts. The Company's general and
administrative expenses are expected to increase in the future in line with the
research efforts in the U.S., and product commercialization efforts in China and
in other international markets. During the first six months of 1998 and 1997,
the Company recorded non-cash charges of approximately $48,710 and $66,042,
respectively, for certain options and warrants granted to consultants.
Interest Income and Expense. The Company recognized $284,379 in
interest expense during the first six months of 1998, compared with $15,937 in
income during the same period in 1997. The increase is due to the JV's interest
expense for its working line of credit and the Company's notes payable issued in
the fourth quarter of 1997. Interest expense is expected to increase during
1998, in line with the additional borrowings by the Company and the anticipated
increase in working capital required by the JV to increase its production
capability.
Net Loss. The net loss applicable to common shareholders was
($2,197,554) or ($0.33) per share for the first six months of 1998, compared
with a net loss of ($1,669,196) or ($0.28) per share for the same period in
1997. The increase in net loss is attributable to the increase in expenses
associated with the Company's U.S. product development and clinical programs and
international commercialization efforts, as well as with the JV's current
operations and new product development programs.
COMPARISON OF RESULTS OF OPERATIONS BETWEEN THE THREE MONTHS ENDED JUNE 30 OF
1998 AND OF 1997
Revenues. The Company recorded revenues of $1,534,393 compared with
none during the second quarter of operations in 1998 and 1997, respectively. The
1998 revenues were generated from the JV's product sales in China. The Company
anticipates that the increase in the production capacity of the JV should result
in additional sales revenue in 1998.
Cost of Products Sold. The cost of products sold was $1,378,076 in
1998 as compared to zero for the same period in 1997. The cost in large measure
is attributable to the price of the raw materials for the JV's production of
mostly generic antibiotics.
9
<PAGE>
Research and Development Expenses. For the three months ended June
30, research and development expenses were $502,654 in 1998 as compared to
$499,946 in 1997. During 1998, the Company expects its total research spending
to increase as its products under development enter into clinical studies in the
U.S.
General and Administrative Expenses. General and administrative
expenses were $733,485 and $671,106 in 1998 and 1997, respectively. The
Company's general and administrative expenses are expected to increase in line
with its product development in the U.S., and commercialization efforts in China
and in other international markets.
Interest Income and Expense. The Company recognized $156,806 in
interest expense during the second quarter of 1998, compared with $13,414 in
income during the same period in 1997. The increase is due to the JV's interest
expense for its working line of credit and the Company's notes payable issued in
the fourth quarter of 1997. Interest expense is expected to increase during
1998, in line with the anticipated increase in working capital required by the
JV to increase its production capability and in additional borrowings by the
Company.
Net Loss. The net loss applicable to common shareholders was
($1,201,811) or ($0.16) per share for the second quarter in 1998, compared with
a net loss of ($1,157,638) or ($0.19) per share for the same period in 1997. The
net loss during the second quarter of 1998 is attributable to the increase in
expenses associated with the JV's operations and the Company's U.S. product
development and clinical programs.
LIQUIDITY AND CAPITAL RESOURCES
The Company has experienced net losses and negative cash flow from
operations each year since its inception. Through June 30, 1998, the Company
has an accumulated deficit of $10,378,988. The Company has financed its
operations primarily from sales of equity securities and from borrowing.
In consideration for the formation of the JV, the JV partner's parent,
Xiaolan Industrial General Corporation, ("XIGC") has provided the JV with a
$1,566,265 (RMB 13 million) unsecured, uncollateralized, revolving line of
credit for working capital. The JV currently pays interest at a rate of 0.924%
per month, or 11.088% per year. In addition to the payment of interest, the JV
is obligated to pay the principal at the end of the term. XIGC has also provided
the JV with an additional $216,867 (RMB 1.8 million) for working capital, which
the parties have agreed will be repaid on the same terms as the RMB 13 million
line of credit. During the second quarter, the JV applied directly for and
received, in early July, its own line of credit from the China Industrial &
Commercial Bank totalling RMB 13 million. The line of credit is renewable
annually, and bears a fixed interest rate of 6.3525% per year. The line of
credit is expected to increase in order to provide additional working capital
for the anticipated increase in the JV's product sales and inventory. The JV
also intends to use a portion of the proceeds from the new line of
10
<PAGE>
credit to repay the outstanding principle and interest on the line of credit
secured by XIGC.
During the first six months of 1998, the Company repaid $500,000 in
promissory notes and rolled-over $470,000 into new notes at varying interest
rates from 12-15% and due on various dates in the second half of 1998. In
addition, the Company has an additional $316,700 in promissory notes and
$1,820,000 in convertible promissory notes due on various dates during the last
six months of 1998.
The Company's expenditures and capital requirements will depend on
numerous factors, but will mainly be affected by the progress of its research
and development programs, its pre-clinical and clinical testing, its ability to
raise adequate funding, and its ability to complete additional corporate
partnership agreements. The Company's cash needs are expected to continue to
increase significantly in order to fund the additional expenses the Company will
incur as it expands its current research and development programs and completes
its required capital contribution to the China JV.
In the course of its development activities, the Company has incurred
significant losses and expect to incur substantial additional development costs.
As a result, the Company will require additional funds for its U.S. and
international operations and may seek private or public equity investments and
future collaborative arrangements with third parties to meet such needs. In
order to meet its immediate funding requirements, repay short-term indebtedness
and maintain day-to-day operations, the Company estimates that it will require
$5 million over the next 12 months. There is no assurance that such additional
funds will be available for the Company to finance its operations on acceptable
terms, if at all. The Company is actively seeking to raise additional capital,
including through an ongoing private placement. However, if the Company is
unable to raise sufficient funds, the Company may be required to delay, reduce,
or eliminate some or all of its research and development activities, planned
clinical studies, and administrative programs. Based upon the Company's current
resources and anticipated proceeds from the ongoing private placement, the
Company believes that it will have enough cash to sustain its operations through
October 1998. The Company's working capital and additional funding requirements
will depend upon numerous factors, including: (i) the progress of the Company's
research and development programs; (ii) the timing and results of preclinical
testing and clinical trials; (iii) the timing and costs of obtaining regulatory
approvals; (iv) the level of resources that the Company devotes to sales and
marketing capabilities; (v) technological advances; (vi) the activities of
competitors; and (vii) the ability of the Company to conduct clinical trials, to
obtain regulatory approvals and, if such approvals are obtained, to manufacture
and market products.
OTHER FACTORS WHICH MAY AFFECT OPERATING RESULTS
RESEARCH AND DEVELOPMENT
11
<PAGE>
For the first six months ended June 30, 1998, the Company spent
$890,310, and for the year ended December 31, 1997, the Company spent
$2,078,517, on research and development. Since January 1, 1994, when the
Company repositioned itself as a medical and pharmaceutical technology company,
the Company has spent $6,029,797 on research and development.
The Company will need significant funding to pursue its research,
development and commercialization plans. The potential products upon which the
Company intends to focus its current development efforts, including the Alprox-
TD(TM) cream and the Viratrol(R) device, are in the research and development
stage. The Company has not begun to market or generate revenues from the
commercialization of any of these products under development. The Company's
products under development will require significant time-consuming and costly
research, development, preclinical studies, clinical testing, regulatory
approval and significant additional investment prior to their commercialization.
There can be no assurance that the research and development activities funded by
the Company will be successful, that products under development will prove to be
safe and effective, that any of the preclinical or clinical development work
will be completed, or that the anticipated products will be commercially viable
or successfully marketed. In addition, there can be no assurance that the
Company will be successful in obtaining regulatory approval or developing any
additional products, that if successful, it will be able to attract sufficient
capital to complete any development and commercialization undertaken or that any
such development and commercialization will be successful.
FORWARD-LOOKING INFORMATION
This report contains forward-looking information, including statements
regarding the Company's plans, objectives, expectations and intentions. All
forward-looking statements are subject to risks and uncertainties that could
cause the Company's actual results and experience to differ materially from such
projections. Reference should be made to the Company's annual report on Form 10-
KSB for the fiscal year ended December 31, 1997 and, in particular, the sections
entitled "Description of Business" and "Plan of Operation."
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In April, 1998, the Company issued 51,038 shares of its common stock,
$0.001 par value per share ("Common Stock"), at a price of $1.25 per share to
two consultants in exchange for services rendered, pursuant to an exemption from
registration under the Securities Act of 1933 (the "Securities Act") provided by
Rule 506 of Regulation D thereunder.
12
<PAGE>
In May, 1998, the Company sold 1,360,000 shares of Common Stock at a
total offering price of $2,040,000, or $1.50 per share, to 12 individual
investors, pursuant to an exemption from registration under the Securities Act
provided by Rule 506 of Regulation D thereunder. Proceeds of the offering were
used for salaries and benefits of employees, general overhead expenses, the
funding of clinical studies and pre-production activities.
In April, May and June 1998, the Company issued a total of 195,000
shares of Common Stock upon the exercise of options at a price of $0.25 per
share, in reliance upon Section 4(2) of the Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (in accordance with Item 601 of Regulation S-B)
Set forth below are all the exhibits to this Quarterly Report on Form
10-QSB.
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NEXMED, INC.
Date: August 12, 1998 /s/ Y. Joseph Mo
--------------- ----------------------------------------
Y. Joseph Mo
Chairman of the Board of Directors,
President and C.E.O.
Date: August 12, 1997 /s/ Vivian H. Liu
--------------- ----------------------------------------
Vivian H. Liu,
Vice President and Secretary
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,246,107
<SECURITIES> 0
<RECEIVABLES> 1,351,432
<ALLOWANCES> 0
<INVENTORY> 1,161,249
<CURRENT-ASSETS> 4,290,365
<PP&E> 1,728,800
<DEPRECIATION> (165,528)
<TOTAL-ASSETS> 6,111,604
<CURRENT-LIABILITIES> 5,788,910
<BONDS> 0
0
0
<COMMON> 8,100
<OTHER-SE> (512,315)
<TOTAL-LIABILITY-AND-EQUITY> 6,111,604
<SALES> 0
<TOTAL-REVENUES> 2,739,063
<CGS> 2,421,574
<TOTAL-COSTS> 2,421,574
<OTHER-EXPENSES> 2,336,069
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 284,379
<INCOME-PRETAX> (2,197,554)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,197,554)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,197,554)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
