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 December 31, 1999 Commission File Number 1-9370
FEMINIQUE CORPORATION
(Formerly BIOPHARMACEUTICS, INC.)
DELAWARE 13-3186327
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(State of Incorporation) (I.R.S. Employer Identification No.)
990 STATION ROAD., BELLPORT, NEW YORK 11713
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(Address of Principal Executive Office) (Zip Code)
Registrant telephone number, including area code: (631) 286-5900
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of December 31, 1999.
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CLASS OUTSTANDING
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Common Stock - $.001 Par Value 22,825,399
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 CORPORATION
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheet
December 31, 1999 (Unaudited) and September 30, 1999
(Audited) 3
Consolidated Condensed Statements of Operations
Three Months Ended December 31, 1999 and 1998 (Unaudited) 4
Consolidated Condensed Statement of Shareholders' Equity
for the Three Months Ended December 31, 1999 (Unaudited) 5
Consolidated Condensed Statement of Cash Flows
for the Three Months Ended December 31, 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
2
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PART I FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
---- ----
(UNAUDITED) (AUDITED)
ASSETS
Current assets:
<S> <C> <C>
Cash $ 14,037 $ 78,334
Trade receivables, less allowance for
doubtful accounts 404,288 295,812
Inventories 114,740 156,716
Prepaid expenses and other assets 136,581 130,892
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Total current assets 669,646 661,754
Property, plant and equipment, at cost, net of
accumulated depreciation of $5,646 in Dec. 1999
and $4,405 in Sept. 1999 68,083 68,969
Intangible assets, at cost, net of accumulated amortization
of $706,500 in Dec. 1999 and $659,400 in Sept. 1999 3,064,925 3,112,025
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$ 3,802,654 $ 3,842,748
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable-trade $ 668,646 $ 537,121
Accrued expenses 692,287 668,899
Net liability of discontinued operations 187,926 178,391
Current maturities of long-term debt 237,413 205,685
Conv. Prom. Note payable 100,000 100,000
Convertible debentures payable 575,000 575,000
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Total current liabilities 2,451,737 2,274,631
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Long-term debt 1,159,927 1,221,003
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Shareholders' equity:
Common Stock - par value $.001 per share 22,825 22,765
Authorized - 75,000,000 shares
Issued 22,825,399 in Dec. 1999 and 22,765,399 in
Sept. 1999
Additional paid-in capital 34,892,949 34,850,702
Deficit (33,780,172) (33,581,741)
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1,135,602 1,291,726
Less Treasury Stock, at cost
(103,432 shares) (944,612) (944,612)
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190,990 347,114
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$ 3,802,654 $ 3,842,748
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1999 1998
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Revenues:
<S> <C> <C>
Net sales $ 569,107 $ 718,782
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Costs and expenses:
Cost of sales 301,012 246,046
Selling, general and
administrative 361,609 357,764
Amortization of intangibles 47,100 47,100
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709,721 650,910
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(140,614) 67,872
Other income (Deductions):
Other income 290 --
Interest expense (58,500) (46,863)
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Net Income (Loss) Continuing operations $ (198,824) $ 21,009
Net Income (Loss) Discontinued operations 393 --
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Net Income (Loss) $ (198,431) $ 21,009
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Income (Loss) per share
Continuing operations $ (0.01) $ 0.00
Discontinued operations 0.00 0.00
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Income (Loss) per share $ (0.01) $ 0.00
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Average shares outstanding 22,797,790 17,626,004
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</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
NUMBER OF PAR PAID-IN TREASURY
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SHARES VALUE CAPITAL DEFICIT STOCK TOTAL
------ ----- ------- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, Sept. 30, 1998 22,765,399 $ 22,765 $ 34,850,702 $(33,581,741) $ (944,612) $ 347,114
(Audited)
Shares issued in payment
of professional services 60,000 60 42,247 -- -- 42,307
Net loss for the three months
ended Dec. 31, 1999 -- -- -- (198,431) -- (198,431)
------------ ------------ ------------ ------------ ------------ ------------
Balance, Dec. 31, 1999 22,825,399 $ 22,825 $ 34,892,949 $(33,780,172) $ (944,612) $ 190,990
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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FEMINIQUE CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Income (Loss) from continuing operations $(198,431) $ 21,009
Operating activities:
Adjustments to reconcile net income (loss) to
Net cash provided by (used in) Operating activities:
Shares issued in lieu of payment 42,307 66,507
Depreciation and amortization
Continuing operations 48,341 47,175
Changes in certain assets and liabilities:
Accounts receivable (108,476) (303,219)
Inventories 41,976 (10,278)
Other current assets (5,689) 28,109
Accounts payable and accrued expenses 145,378 72,354
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Net cash provided by (used in) operating activities (34,594) (78,343)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (355) --
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Net cash provided by (used in) investing activities (355) --
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock -- 100,000
Repayments of long-term debt (29,348) (15,100)
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Net cash provided by (used in) financing activities (29,348) 84,900
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Net change in cash (64,297) 6,557
Cash at beginning of period 78,334 34,421
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Cash at end of period $ 14,037 $ 40,978
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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FEMINIQUE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1999
A. Consolidated Condensed Financial Statements
The Consolidated Condensed Balance Sheet as of December 31, 1999, the
Consolidated Condensed Statement of Operations for the three months ended
December 31, 1999 and 1998, the Consolidated Condensed Statement of
Shareholders' Equity for the three month period ended December 31, 1999, and the
Consolidated Condensed Statements of Cash Flows for the periods ended December
31, 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 December 31, 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, 1999. Results of operations
for the period ended December 31, 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 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. 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 quarter ended
December 31, 1999 reflects both the continuing operations of the feminine
hygiene product line and discontinued operations.
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
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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 December 31, 1999, the Company had cash of approximately
$14,000
With the restructuring of the Company, the feminine hygiene
branded products have become the core business with which the company expects 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).
Sales of these Brands are being made to food and drug chains,
drug wholesalers, domestic and overseas distributors, clinics and domestic
government agencies, and via the Internet. The Company's sales are conducted by
one independent Sales Representative Organization, which calls on the key
accounts that carry the lines. The Company expects its sales representative to
expand sales of the lines by expanding the customer base, by receiving greater
support from the Company in promoting the products, and by introducing a broader
product mix to existing customers.
The Company believes that through its new repackaging of the
products and its addition of new products to the feminine hygiene line, sales of
the Company's products should be enhanced.
RESULTS OF OPERATIONS
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Revenues of continuing operations for the quarter ended
December 31, 1999 were $569,107 representing a decrease over revenues of
$718,782 in the comparable quarter ended December 31, 1998. Revenues for the
quarter ended December 31, 1999 were lower compared to the same period in 1998,
as a result of industry consolidation.
Gross margins of continuing operations for the quarter ended
December 31, 1999 were 47.1% compared to 65.8% in the same quarter in 1998. The
Company owned old inventory that required liquidation to make room for fresh
product with current dating and as such, prices were marked down to accelerate
this process. As a result, margins for the quarter ended December 31, 1999 were
significantly lower. The net loss of continuing operations for the first quarter
of fiscal 2000 was $198,824 compared to a net gain of $21,009 in fiscal 1999.
Selling, general and administrative expenses of continuing
operations increased slightly to $361,609 from $357,764 for the quarter ended
December 31, 1999.
Interest expense of continuing operations for the quarter
ended December 31, 1999 was $58,500 compared to $46,863 in the same quarter in
1998. The increase in interest expense was primarily due to the Company's note
obligations which was restructured December 15, 1998.
8
<PAGE>
PART II OTHER INFORMATION
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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
9
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SIGNATURES
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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
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FEMINIQUE CORPORATION
REGISTRANT
By: JONATHAN ROSEN, Acting President and Chief Executive Officer
/S/ JOHN J. GREIN
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JOHN J. GREIN
By: Sr. Vice President-Finance/Secretary
Dated: February , 2000
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