SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------------------
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000 Commission File Number 1-9370
FEMINIQUE CORPORATION
(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: (631) 286-5800
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of March 31, 2000.
CLASS OUTSTANDING
----- -----------
Common Stock - $.001 Par Value 23,344,085
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 CORPORATION
INDEX
-----
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheet
March 31, 2000 (Unaudited) and
September 30, 1999 (Audited) 3
Consolidated Condensed Statements of Operations
Three Months and Six Months Ended
March 31, 2000 and 1999 (Unaudited) 4
Consolidated Condensed Statement of Shareholders' Equity
for the Six Months Ended March 31, 2000 (Unaudited) 5
Consolidated Condensed Statement of Cash Flows
for the Six Months Ended
March 31, 2000 and 1999 (Unaudited) 6
Notes to the Consolidated Condensed
Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
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
<PAGE>
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
---------------------
FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
March 31, September 30,
2000 1999
---- ----
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
<S> <C> <C>
Cash $ 30,347 $ 78,334
Trade receivables, less allowance for
doubtful accounts 66,105 295,812
Inventories 0 156,716
Prepaid expenses and other assets 114,953 130,892
------------ ------------
Total current assets 211,405 661,754
Property, plant and equipment, at cost, net of write-off and
accumulated depreciation of $4,121 in Mar. 2000
and $4,405 in Sept. 1999 13,776 68,969
Intangible assets, at cost, net of write-off and accumulated 2,017,825 3,112,025
------------ ------------
amortization of $753,600 in Mar. 2000 and $659,400 in Sept. 1999
$ 2,243,006 $ 3,842,748
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable-trade $ 693,865 $ 537,121
Accrued expenses 604,166 668,899
Net liability of discontinued operations 179,745 187,926
Current maturities of long-term debt 258,216 205,685
Conv. Prom. Note payable 137,000 100,000
Convertible debentures payable 575,000 575,000
------------ ------------
Total current liabilities 2,447,992 2,274,631
------------ ------------
Long-term debt 1,081,860 1,221,003
------------ ------------
Shareholders' equity:
Common Stock - par value $.00l per share 23,344 22,765
Authorized - 75,000,000 shares
Issued 23,344,085 in Mar. 2000 and 22,765,399 in
Sept. 1999
Additional paid-in capital 34,964,953 34,850,702
Deficit (35,330,531) (33,581,741)
------------ ------------
(342,234) 1,291,726
Less Treasury Stock, at cost
(103,432 shares) (944,612) (944,612)
------------ ------------
(1,286,846) 347,114
------------ ------------
$ 2,243,006 $ 3,842,748
============ ============
The accompanying notes are an integral part of these financial statements
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------- ---------
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Net sales $ 127,205 $ 620,223 $ 696,312 $ 1,339,005
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 228,757 256,392 529,769 502,438
Selling, general and
administrative 268,233 412,491 629,842 770,255
Amortization of intangibles 47,100 47,100 94,200 94,200
------------ ------------ ------------ ------------
544,090 715,983 1,253,811 1,366,893
------------ ------------ ------------ ------------
(416,885) (95,760) (557,499) (27,888)
Other income (Deductions):
Other income -- 57,638 290 57,638
Interest expense (58,804) (50,280) (117,304) (97,143)
Intangible asset write-off (1,000,000) -- (1,000,000) --
Abandonment of fixed assets write-off (52,711) -- (52,711) --
Other promotional expenses write-off (18,520) -- (18,520) --
------------ ------------ ------------ ------------
Net income (Loss) continuing operations (1,546,920) (88,402) (1,745,744) (67,393)
Net income (Loss) discontinued operations (3,439) -- -- (3,046)
------------ ------------ ------------ ------------
Net Income (Loss) $ (1,550,359) $ (88,402) $ (1,748,790) $ (67,393)
============ ============ ============ ============
Income (Loss) per share
Continuing operations $ (0.07) $ 0.00 $ (0.08) $ 0.00
Discontinued operations (0.00) 0.00 0.00 0.00
------------ ------------ ------------ ------------
Income (Loss) per share $ (0.07) $ 0.00 $ (0.08) $ 0.00
============ ============ ============ ============
Average shares outstanding 22,927,003 21,718,985 22,862,042 19,861,253
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
SIX MONTHS ENDED MARCH 31, 2000
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, 1999 22,765,399 $ 22,765 $ 34,850,702 $(33,581,741) $ (944,612) $ 347,114
(Audited)
Shares issued to debenture
holders for interest 220,305 220 28,420 -- -- 28,640
Shares issued in payment
of professional services 358,381 359 85,831 -- -- 86,190
Net loss for the six months
ended March 31, 2000 -- -- -- (1,748,790) -- (1,748,790)
------------ ------------ ------------ ------------ ------------ ------------
Balance, March 31, 2000 23,344,085 $ 23,344 $ 34,964,953 $(35,330,531) $ (944,612) $ (1,286,846)
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
(UNAUDITED)
SIX MONTHS ENDED MARCH 31,
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Income (Loss) from continuing operations $(1,748,790) $ (67,393)
Operating activities:
Adjustments to reconcile net income (loss) to
Net cash provided by (used in) Operating activities:
Shares issued in lieu of payment 114,830 181,507
Depreciation and amortization
Continuing operations 96,682 96,795
Intangible asset write-off 1,000,000 --
Abandonment of fixed assets write-off 52,711 --
Changes in certain assets and liabilities:
Accounts receivable 229,707 (289,723)
Inventories 156,716 (118,272)
Other current assets 15,939 (62,964)
Accounts payable and accrued expenses 120,830 (94,150)
----------- -----------
Net cash provided by (used in) operating activities 38,625 (354,200)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment -- (45,344)
----------- -----------
Net cash provided by (used in) investing activities -- (45,344)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock -- 800,000
Repayments of long-term debt (86,612) (47,689)
----------- -----------
Net cash provided by (used in) financing (86,612) 752,311
----------- -----------
Net change in cash (47,987) 352,767
Cash at beginning of period 78,334 34,421
----------- -----------
Cash at end of period $ 30,347 $ 387,188
=========== ===========
The accompanying notes are an integral part of these financial statements.
6
</TABLE>
<PAGE>
FEMINIQUE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2000
A. Consolidated Condensed Financial Statements
The Consolidated Condensed Balance Sheet as of March 31, 2000, the
Consolidated Condensed Statement of Operations for the three and six months
ended March 31, 2000 and 1999, the Consolidated Condensed Statement of
Shareholders' Equity for the six month period ended March 31, 2000, and the
Consolidated Condensed Statements of Cash Flows for the periods ended March 31,
2000 and 1999 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 March 31, 2000 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, 1999. Results of operations
for the period ended March 31, 2000 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 Corporation. 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. Continuing Operations
Feminique Corporation entered into a Licensing Agreement with Clay-Park
Labs, Inc. (CPL) on May 4, 2000. The Agreement is for an initial term of six (6)
months with automatic renewal for an additional term ending December 31, 2005,
notwithstanding CPL's option to cancel the Agreement earlier, and gives CPL the
right to manufacture and sell Quality Health Products, Inc.'s over-the-counter
women's health branded products. As long as the Agreement is in force, the
Company will receive a royalty based on net sales of the branded products.
The Company entered into a Restructuring Agreement dated December 15,
1998 with London International Group, Inc., now known as SSL Americas, Inc.
(SSL) whereby its trade payable to SSL was converted to long-term debt and its
existing long-term debt was given extended terms. The original Agreement was for
the purchase of the feminine hygiene products sold under the names of
Koromex(R), Koroflex(R), Vaginex(R) and Feminique(R). The Company has not made
payment relating to this contract since March 1, 2000 and is therefore in breach
of said Agreement. The Company is presently negotiating with SSL as part of its
Licensing Agreement with CPL.
The Company has two convertible Promissory Notes with Renaissance
Capital Group, Inc. totaling $137,000. In accordance with the Notes, all
interest and principle was due and payable June 1, 2000. The Company has not
paid interest since October 31, 1999 on $100,000 and has paid no interest since
January 6, 2000 on $37,000, nor the principle amount due; therefore the Company
is in breach of its Agreement with Renaissance Capital Group, Inc.
The Company is contemplating filing for bankruptcy protection in order
to protect the interest of its shareholders, and in the expectation of
"cleaning" up the corporation, so that fresh revenue-generating assets may be
injected into the Company.
7
<PAGE>
C. Discontinued Operations
In December 1998, the Company completed the sale of CMT. Under the
terms of the sale, the common stock of CMT was sold for $4,700,000, payable as
follows: $600,000 to be held in escrow for outstanding taxes, $2,600,000 in full
settlement of promissory notes payable of $4,117,715 and the return of the note
payable to the purchaser of $1,500,000. The forgiveness of debt of $1,517,715,
on the settlement of the aforementioned note payable was credited to
discontinued operations in 1998. The results of operations of CMT were
classified as discontinued operations and prior periods were restated,
accordingly. In addition, the Company wrote-off the excess of CMT's assets over
liabilities as a loss on disposal of discontinued operations in its consolidated
statement of operations for the year ended September 30, 1998.
In connection with the Company's restructuring plan, the manufacturing
operations of its generic pharmaceutical product subsidiary were discontinued
effective September 30, 1998.
The Consolidated Statement of Operations for the three and six months
ended March 31, 2000 and 1999 reflects both the continuing operations of the
feminine hygiene product line and discontinued operations.
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 short and long-term debt,
convertible debentures or notes, and the sale of common stock in the Company. 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
incurred was converted to common stock, repaid or canceled. The Company also
raised capital from the sales of common shares the proceeds of which were as
follows: $1,075,000 in fiscal 1997, $182,556 in fiscal 1998 and $800,000 in
fiscal 1999. As of March 31, 2000, the Company had cash of approximately $30,000
With the restructuring of the Company, the feminine hygiene
branded products had become the core business with which the company expected to
grow. The acquisition price of approximately $3,600,000 in March 1996 was
financed by a combination of Regulation S common stock sales, and notes for
$2,000,000 whose payment was restructured in December 1998. The Brands which
were acquired have been established approximately thirty years on average and
are sold under the names Vaginex(R), Koromex(R), Koroflex(R) and Feminique(R).
Since the Company entered into a Licensing Agreement with
Clay-Park Labs, Inc. (CPL) on May 4, 2000, CPL is now responsible for selling
the Brands to food and drug chains, drug wholesalers, domestic and overseas
distributors, clinics and domestic government agencies, and via the Internet.
The Company's sales were conducted by one independent Sales Representative
Organization, which called on key accounts that carry the lines. This
independent Sales Representative Organization terminated their services on March
10, 2000.
8
<PAGE>
RESULTS OF OPERATIONS
---------------------
Revenues of continuing operations for the quarter ended March
31, 2000 were $127,205 compared to $620,223 for the quarter ended March 31,
1999. For the six months ended March 31, 2000 revenues were $696,312 versus
$1,339,005 in the comparable six months of fiscal 1999.
Gross margins of continuing operations for the quarter ended
March 31, 2000 were (79.8%) compared to 58.7% in the same quarter in 1999. Gross
margins of continuing operations for the six months ended March 31, 2000 were
23.9% compared to 62.5% in the same period in 1999. The net loss of continuing
operations for the second quarter of fiscal 2000 was $1,546,920 compared to
$88,402 in 1999. For the six months ended March 31, 2000 the loss of continuing
operations was $1,745,744 compared to $67,393 in 1999. The decrease in gross
margin and the net losses from continued operations were primarily due to
discounts given and certain intangible assets written off.
Selling, general and administrative expenses of continuing
operations decreased to $268,233 from $412,491 and $629,842 from $770,255 for
the quarter and six months ended March 31, 2000 and 1999 respectively.
Interest expense of continuing operations for the quarter
ended March 31, 2000 was $58,804 compared to $50,280 in the same quarter in
1999. For the six months ended March 31, 2000 interest expense was $117,304
versus $97,143 for the same period in 1999. The increase in interest expense was
primarily due to the Company's note obligations which was restructured December
15, 1998 and the addition of promissory notes.
PART II OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
The Company is currently negotiating with the Food and Drug
Administration ("FDA"), to prevent the FDA from debarring Biopharmaceutics, Inc.
from submitting abbreviated drug applications. Biopharmaceutics, Inc. New York
discontinued its generic pharmaceutical products operations effective September
30, 1998. Management and counsel are of the opinion that this debarment will not
affect its current operations within its consumer feminine hygiene products'
subsidiary. This proceeding arose as a result of the Company and its prior
management being convicted of certain violations, for which the resulting
penalties and fines were paid in full in October 1997.
On July 28, 1998, the Company's former President tendered his
resignation and then 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 intends to vigorously defend 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 payroll has been provided for in the accompanying
financial statements.
The Company has accrued estimated settlements of pending
litigation aggregating $47,000 and recorded this amount in its consolidated
statements of operations. These claims are substantially in connection with
disputes over merchandise purchased.
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
<PAGE>
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 CORPORATION
REGISTRANT
By: JONATHAN ROSEN, Acting President and Chief Executive Officer
Dated: June 21, 2000
