SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999 Commission File Number 1-9370
FEMINIQUE CORP.
(Formerly BIOPHARMACEUTICS INC.)
DELAWARE 13-3186327
(State of Incorporation) (I.R.S. Employer Identification No.)
990 Station Road, Bellport, New York 11713
(Address of Principal Executive Office) (Zip Code)
Registrant telephone number, including area code: (516) 286-5900
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of June 30, 1999.
Class Outstanding
Common Stock - $.001 Par Value 22,755,399
Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 of the Securities and Exchange Act of 1934 during the
preceding twelve 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 ninety days. Yes __X__ No _____
<PAGE>
FEMINIQUE CORP.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheet
June 30, 1999 (Unaudited) and September 30, 1998 (Audited) 3
Consolidated Condensed Statements of Operations
Three Months and Nine Months Ended June 30, 1999 and 1998 (Unaudited) 4
Consolidated Condensed Statement of Shareholders' Equity
for the Nine Months Ended June 30, 1999 (Unaudited) 5
Consolidated Condensed Statement of Cash Flows
for the Nine Months Ended June 30, 1999 and 1998 (Unaudited) 6
Notes to the Consolidated Condensed Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Default upon Senior Securities 9
Item 4. Submission of materials to a
vote of security holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
2
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FEMINIQUE CORP.
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 149,055 $ 34,421
Trade receivables, less allowance for
doubtful accounts 349,143 290,268
Inventories 310,926 179,401
Prepaid expenses and other assets 270,090 124,958
------------- -------------
Total current assets 1,079,214 629,048
Property, plant and equipment, at cost, net of
accumulated depreciation of $3,166 in June 1999
and $410 in Sept. 1998 67,739 1,005
Intangible assets, at cost, net of accumulated amortization
of $612,300 in June 1999 and $471,000 in Sept. 1998 3,161,616 3,300,425
------------- -------------
$ 4,308,569 $ 3,930,478
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable-trade $ 420,069 $ 180,147
Accrued expenses 1,158,601 1,423,319
Net liability of discontinued operations 62,543 349,269
State income taxes payable 3,372 29,000
Current maturities of long-term debt 173,908 104,341
------------- -------------
Total current liabilities 1,818,493 2,086,076
Long-term debt 1,281,441 1,426,688
------------- -------------
Convertible debentures payable 575,000 575,000
------------- -------------
Shareholders' equity:
Common Stock - par value $.001 per share 22,755 17,370
Authorized - 75,000,000 shares
Issued 22,755,399 in June 1999 and 17,370,118 in
Sept. 1998
Additional paid-in capital 34,848,012 33,871,890
Deficit (33,292,520) (33,101,934)
------------- -------------
1,578,247 787,326
Less Treasury Stock, at cost
(103,432 shares) (944,612) (944,612)
------------- -------------
633,635 (157,286)
------------- -------------
$ 4,308,569 $ 3,930,478
============= =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
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FEMINIQUE CORP.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------- -------------------------
1999 1998 1999 1998
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 332,695 $ 444,901 $ 1,671,700 $ 1,687,274
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 201,280 255,584 703,718 714,359
Selling, general and administrative 303,560 406,485 1,073,815 1,080,079
Amortization of intangibles 47,100 47,100 141,300 142,200
------------ ------------ ------------ ------------
551,940 709,169 1,918,833 1,936,638
------------ ------------ ------------ ------------
(219,245) (264,268) (247,133) (249,364)
Other income (Deductions):
Other income 151,520 --- 209,158 ---
Interest expense (55,468) (44,153) (152,611) (122,396)
------------ ------------ ------------ ------------
Net income-continuing operations (123,193) (308,421) (190,586) (371,760)
Net income-discontinued operations --- (989,618) --- 785,386
----------- ------------ ------------ ------------
Net Income $ (123,193) $(1,298,039) $ (190,586) $ 413,626
=========== ============ ============ ============
Income (Loss) per share
Continuing operations $(0.01) $ 0.00 $(0.01) $0.00
Discontinued operations 0.00 (0.08) 0.00 0.02
------- ------- ------- -----
Income (Loss) per share $(0.01) $(0.08) $(0.01) $0.02
======= ======= ======= ======
Average shares outstanding 22,755,399 17,111,223 21,352,027 16,919,454
========== ========== ========== ==========
<FN>
The nine months ended June 30, 1998 reflects certain reclassifications.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
FEMINIQUE CORP.
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
NINE MONTHS ENDED JUNE 30, 1999
<TABLE>
Common Stock
---------------------- Additional
Number of Par Paid-In Treasury
Shares Value Capital Deficit Stock Total
---------- ------- ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1998 17,370,118 $17,370 $33,871,890 $(33,101,934) $(944,612) $(157,286)
(Audited)
Shares issued to debenture
holders in lieu of interest
payment 121,867 122 23,033 --- --- 23,155
Shares issued in payment of
note payable and interest due 101,846 102 18,230 --- --- 18,332
Shares issued pursuant to
sale of common stock 4,444,443 4,444 795,556 --- --- 800,000
Shares issued in payment
of professional services 717,125 717 139,303 --- --- 140,020
Net loss for the nine months
ended June 30, 1999 --- --- --- (190,586) --- (190,586)
---------- ------ ----------- ----------- --------- --------
Balance, June 30, 1999 22,755,399 $22,755 $34,848,012 $(33,292,520) $(944,612) $633,635
========== ======= =========== ============= ========== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
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FEMINIQUE CORP.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
(UNAUDITED)
NINE MONTHS ENDED JUNE 30,
<TABLE>
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Income (loss) from continuing operations $ (190,586) $ (371,760)
Income from discontinued operations --- 785,386
Operating activities:
Adjustments to reconcile net income (loss) to
Net cash provided by (used in)
Operating activities:
Write-off of Investment --- 250,750
Shares issued in lieu of payment 181,507 388,813
Depreciation and amortization
Continuing operations 144,056 144,000
Depreciation and amortization
Discontinued operations --- 577,622
Changes in certain assets and liabilities:
Accounts receivable (58,875) (178,808)
Inventories (131,525) (45,145)
Other current assets (145,132) (71,516)
Other assets --- 260,392
Accounts payable and accrued expenses (337,150) (406,465)
Payment in settlement of litigation --- (250,000)
------------ ------------
Net cash provided by (used in) operating activities (537,705) 1,083,269
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (71,981) (149,268)
------------ ------------
Net cash provided by (used in) investing activites (71,981) (149,268)
------------ ------------
Cash flows from financing activities:
Sale of common stock 800,000 101,139
Repayments of long-term debt (75,680) (1,527,000)
------------ ------------
Net cash provided by (used in) financing activities 724,320 (1,425,861)
------------ ------------
Net change in cash 114,634 (491,860)
Cash at beginning of period 34,421 502,304
------------ -------------
Cash at end of period $ 149,055 $ 10,444
============ =============
<FN>
The nine months ended June 30, 1998 reflects certain reclassifications.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
6
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FEMINIQUE CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
A. Consolidated Condensed Financial Statements
The Consolidated Condensed Balance Sheet as of June 30, 1999, the
Consolidated Condensed Statement of Operations for the three and nine month
periods ended June 30, 1999 and 1998, the Consolidated Condensed Statement of
Shareholders' Equity for the nine month period ended June 30, 1999, and the
Consolidated Condensed Statements of Cash Flows for the periods ended June 30,
1999 and 1998 have been prepared by the Company without audit. In the opinion
of Management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at June 30, 1999 and for all periods presented have been made.
For information concerning the Company's significant accounting
policies and Basis of Presentation, reference is made to the Company's Annual
Report on Form 10-K for the year ended September 30, 1998. Results of operations
for the period ended June 30, 1999 are not necessarily indicative of the
operating results to be expected for the full year and such results are subject
to year-end adjustment and independent audit.
The Consolidated Financial Statements include the accounts of the
Company and its wholly owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated in consolidation. The
Consolidated Statements of Operations for all periods reflect the ongoing
operations of the Company.
At the Annual Meeting held June 2, 1999, the shareholders voted for
and the Board of Directors passed a resolution to change the Company's name
from Biopharmaceutics, Inc. to Feminique Corp. The Company's Articles of
Incorporation were amended to reflect the name change which became effective
June 28, 1999. The Company's new ticker symbol on the NASDAQ Bulletin Board is
FEMQ.
B. Discontinued Operations
On December 11, 1998, the Company completed the sale of its wholly
owned subsidiary, Caribbean Medical Testing Centers, Inc. ("CMT"), which was
in the business of multi-phase specialty medical testing and laboratory services
throughout Puerto Rico. Under the terms of the sale, common stock of CMT was
sold for $4,700,000, payable as follows: $600,000 to be held in escrow for
specified outstanding taxes, $2,600,000 in cash and the waiver of the Company's
guaranty of a $1,500,000 note held by the purchaser. In addition and as part
of its settlement with other creditors, the Company settled an outstanding
indebtedness to Dondo Associates, Inc. ("Dondo") by assigning $2,600,000 of
the cash proceeds from the CMT sale to Dondo in exchange for the cancellation
of the Company's outstanding promissory note (incurred by the Company as a
result of the acquisition of CMT) to Dondo totaling $4,117,715 inclusive of
interest. The results of operations of CMT for the fiscal year ended September
30, 1998, have been classified as discontinued operations.
In connection with the Company's restructuring plan, the manufacturing
operations of its generic pharmaceutical product subsidiary were discontinued
effective September 30, 1998. The Company is presently liquidating the entire
manufacturing operations.
The quarter ended June 30, 1999 reflects only the continuing
operations of the feminine hygiene product line.
The three and nine month numbers for CMT and the manufacturing
operations for the period ended June 30, 1998 have been reclassified as
discontinued operations.
7
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operating requirements, for the last
three years, primarily by the issuance of long and short-term debt, convertible
debentures or notes and the sale of common stock. The Company incurred
$2,000,000 of long-term debt in fiscal 1996 for the acquisition of the feminine
hygiene product line. The payment of this note was restructured in December
1998. In fiscal 1997, the Company incurred long-term debt of $575,000 with the
issuance of Convertible Debentures. As of September 30, 1998, all other
long-term debt was converted to common stock, repaid or canceled. In December
1998, the Board of Directors authorized the issuance of Rule 144 restricted
shares of common stock in a private placement to raise up to $1,000,000 in order
to provide immediate and essential working capital. As a result of this private
placement, the Company has raised $800,000: $100,000 in December 1998, $500,000
in January 1999 and $200,000 in February 1999. The Company also raised capital
from the sales of common shares, the proceeds of which are as follows:
$2,547,658 in Fiscal 1996, $1,075,000 in Fiscal 1997 and $182,556 in Fiscal
1998. As of June 30, 1999, the Company has cash of $149,055.
With the restructuring of the Company, the feminine hygiene branded
products have become the core business with which the company expects to grow.
The brands, which were acquired in March 1996, have been established over
approximately thirty years on average and are sold under the brand names
Vaginex*, Koromex* and Feminique*. Sales of these Brands are being made to food
and drug store chains, drug wholesalers, domestic and overseas distributors,
clinics and government agencies. The Company expects to expand sales of these
brand names through increased advertising, new packaging for existing products
and aggressive sales marketing by the Company's new nationwide independent sales
representative, as well as new marketing programs and products.
The Company has implemented a strategic business plan, the purpose of
which, among other things, is to increase revenues and enhance the value of the
Company's brands through targeting new and existing consumer markets with
innovative products, to be distributed under the Company's flagship brand names.
It is expected that this strategic focus will result in substantially increased
sales.
RESULTS OF OPERATIONS
Revenues of continuing operations for the quarter ended June 30, 1999
were $332,695 representing a decrease over revenues of $444,901 in the
comparable quarter ended June 30, 1998. For the nine months ended June 30,
1999 revenues were $1,671,700 versus $1,687,274 in the comparable nine months
of fiscal 1998. Revenues for fiscal 1999 and 1998 remained fairly constant even
though the industry as a whole has been consolidating.
Gross margins of continuing operations for the quarter ended June 30,
1999 were 39.5% compared to 42.6% in the same quarter in 1998. Gross margins of
continuing perations of the nine months ended June 30, 1999 were 57.9% compared
to 57.7% in the same period in 1998. The net loss of continuing operation for
the third quarter of fiscal 1999 was $123,193 or 37.0% compared to $308,421 or
69.3% in 1998. For the nine months ended June 30, 1999 the net loss of
continuing operations was $190,586 or 11.4% compared to $371,760 or 22.0% in
1998. For the nine months ended June 30, 1999 the overall net loss was $190,586
compared to a net profit in 1998 of $413,626 which includes income of $785,386
from discontinued operations. The decrease in gross margin for the quarter from
continuing operations was primarily due to the product mix and climate of the
industry.
Selling, general and administrative expenses of continuing operations
decreased to $303,560 from $406,485 and $1,073,815 from $1,080,079 for the
quarter and nine months ended June 30, 1999 respectively. The decrease in their
quarter expenses was primarily due to Management's continuing efforts to reduce
costs.
Interest expense of continuing operations for the quarter ended June
30, 1999 was $55,468 compared to $44,153 in the same quarter in 1998. For the
nine months ended June 30,1999 interest expense was $152,611 versus $122,396 for
the same period in 1998. The increase in interest expense was primarily due to
the Company's note obligations which was restructured December 15, 1998.
*Registered Trademark
8
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
On July 28, 1998, the Company's former President tendered his
resignation but remained with the Company as a consultant. The consulting
arrangement was terminated shortly thereafter by the Company. The former
President commenced an action on September 15, 1998 against the Company
asserting non-payment of, among things, salary of $23,000 and fees arising
from a consulting agreement aggregating approximately $94,000. The Company
has been vigorously defending this lawsuit and has filed counterclaims for
breach of contract and breach of fiduciary duty. Due to uncertainties inherent
in litigation and the Company's intention to pursue its counterclaims, only
$23,000 of accrued payment has been provided for in the Consolidated Financial
Statements.
The Company has accrued estimated settlements of pending litigation
aggregating $219,000 and recorded this amount in its Consolidated Statements of
Operations for the year ended September 30, 1998. These claims are substantially
in connection with alleged legal services performed and disputes over
merchandise purchases. As of June 30, 1999, $172,000 of the above mentioned
pending litigation have been settled.
Item 2. Changes in Securities-Not applicable
Item 3. Default upon Senior Securities-Not applicable
Item 4. Submission of materials to a vote of security holders-Not applicable
Item 5. Other information-Not applicable
Item 6. Exhibits and Reports on Form 8-K-Not applicable
9
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SIGNATURES
Pursuant to the requirements of Section 13 of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
/s/ Jonathan Rosen
FEMINIQUE CORP.
REGISTRANT
By: JONATHAN ROSEN, Acting President and Chief Executive Officer
/s/ John J. Grein
JOHN J. GREIN
Sr. Vice President-Finance/Secretary
Dated: July 30, 1999
10
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