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Previous: MAIL BOXES ETC, 10-K, 1996-07-25 |
Next: PUTNAM MICHIGAN TAX EXEMPT INCOME FUND /, N-30D, 1996-07-25 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
MAY 31, 1996
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 33-5384
DERMARX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3301899
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
400 COLORADO BLVD., SUITE 420
Denver, Colorado 80206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 333-4600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 7,225,969 shares
(as of July 1, 1996) of common stock, par value $.01 per share.
<PAGE>
DERMARX CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements 1
Balance Sheet - May 31, 1996 1
Statements of Operations - 2
Three Months Ended May 31, 1996 and 1995
Statements of Cash Flows - 3
Three Months Ended May 31, 1996
and 1995
Notes to Financial 4
Statements
Item 2. Management's Discussion and Analysis 5
of Financial Condition and
Results of Operations
Part II. Other Information
Item 4. Submission of Matters to a Vote of Securities 6
Holders
Item 6. Exhibits and Reports on Form 8-K 6
Signature 7
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
DERMARX CORPORATION
BALANCE SHEET MAY 31, 1996 (Unaudited)
ASSETS
<S> <C>
Current assets:
Cash $477,575
Accounts receivable 2,144
Inventory - Finished goods 107,138
Prepaid expense 8,405
---------
Total current assets 595,262
---------
Property and equipment, net of accumulated
depreciation of $68 $16,425
Other assets:
Patents, net of accumulated amortization of $26,576 117,467
---------
Total Assets $732,440
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (Deficiency)
Current liabilities:
Note payable - bank $4,381
Notes payable - other 0
Accounts payable and accrued expenses 48,309
Accrued interest - notes payable 0
Related party 0
-------
Total current liabilities 52,690
-------
Long-term debt:
Note payable - bank
Accrued expenses 219,750
Notes payable - net of discounts 33,670
Note payable - related party, net of discounts 48,363
Accrued interest - note payable 3,733
Accrued interest - note payable, related party 6,051
--------
Total long-term debt 311,567
-------------------- --------
Commitments and Contingencies
Total Liabilities
Common stockholders' equity (deficiency):
Common stock, $.05 par value: 8,000,000 shares authorized;
7,052,363 shares issued and outstanding 352,618
Additional paid-in capital 3,955,745
Accumulated (deficit) (3,940,179)
-----------
368,184
-----------
Total Liabilities and Stockholder's Equity (deficit) $732,440
===========
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
1
<PAGE>
<TABLE>
<CAPTION>
DERMARX CORPORATION
STATEMENTS OF OPERATIONS
Three Months Ended
May 31, 1996
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Revenues:
Sales, net of discounts $11,944 $15,375
11,944 15,375
---------- ----------
Expenses 193,572 120,692
---------- ----------
Net (Loss) from continuing operations (181,628) (105,317)
Dividends on series A preferred stock - -
(181,628) (105,317)
Net (Loss) from discontinued operations - -
---------- ----------
Net (Loss) attributable to common stock ($181,628) ($105,317)
========== ==========
Net (Loss) per common share:
From continuing operations $(.03) $(.03)
From discontinued operations - -
--------- ---------
$(.03) $(.03)
========= =========
Weighted-average number of common shares
outstanding 7,052,363 3,853,764
========= =========
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
2
<PAGE>
<TABLE>
<CAPTION>
DERMARX CORPORATION
STATEMENTS OF CASH FLOWS
Three Months Ended May 31
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(181,628) $(105,317)
Adjustments to reconcile net (loss) to net cash (used) by
operating activities:
Amortization of discounts on notes 750 2,622
Expenses paid by Issuance of stock
Depreciation and amortization 3,436 2,640
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable 3,551 (3,095)
(Increase) Decrease in inventory (44,461) 5,263
(Increase) Decrease in other assets (1,644) (634)
Increase (Decrease) in accounts payable, accrued interest (14,820) (9,765)
and accrued expenses
Increase (Decrease) dividends in arrears - -
---------- ---------
Net cash (used) by operating activities (234,817) (108,286)
---------- ---------
Cash flows from financing activities:
Net Proceeds of equity sale 230,000
Net proceeds from debt obligations
Purchase Treasury Shares (2,500)
Repayment of debt obligations
---------- ---------
Net cash provided by financing activities 0 227,500
---------- ---------
Net increase in cash and cash equivalents ($234,817) $119,214
Cash and cash equivalents, March 1, 1996 $712,392 5,730
---------- ---------
Cash and cash equivalents, May 31, 1996 $477,575 $124,944
---------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
3
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS
The balance sheet as of May 31, 1996, the statements of
operations for the three months ended May 31, 1996 and 1995 and
the statements of cash flows for the three months ended May 31,
1996 and 1995 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 and cash flows as of May 31, 1996 and
for all periods presented have been made. The results of
operations, for the three months ended May 31, 1996 are not
necessarily indicative of the results to be expected for the full
year.
Certain information and footnote disclosure normally included in
the financial statements prepared in accordance with generally
accepted accounting principles have been omitted. It is
suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's Form 10-KSB for its fiscal year ended February 28,
1996, which was filed with the Securities and Exchange
Commission.
4
<PAGE>
DERMARX CORPORATION and SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
The primary focus of activity for the fiscal quarter ended
May 31, 1996 was preparing the newly developed line of products
for marketing. Results of activities included the U.S. Patent
Office notifying the Company that the DermaMend-TM- Foam and the
DermaMend-TM- Cleanser patents had been allowed; completing export
documentation and receiving quality approval for a distribution
agreement with Boots Healthcare-Australia. Completion of a
number of the products allowed the Company to formally launch its
new line at the Symposium for Advanced Wound Repair in April
1996, and the Wound Ostomy Continence and Nurses Society annual
meeting in May 1996, and to begin the second phase of
distribution negotiations for its wound care products, and is
negotiating with several pharmaceutical companies to license the
diaper rash product.
The Company's revenues decreased to $11,944 in its fiscal
quarter ended May 31, 1996 from $15,375 in its fiscal quarter
ended May 31, 1995, a decrease of $3,431. This decrease is
negligible and not attributable to any particular trend or
effect. Limited resources were devoted to marketing and only
part of the new wound care line was available for sale. Revenues
are expected to increase in the second half of fiscal year 1996.
The Company's costs of goods sold as a percentage of revenues
decreased to 17% from 33% in the three months May 31, 1996 as
compared to the comparable period one year ago. Total expenses
were $193,572, an increase of $72,880 from the comparable period
one year ago. This increase is primarily attributable to an
increase in research and development costs, the costs related to
launching the products such as packaging and new operating
headquarters. Interest expense decreased by $3,110 for the
quarter ended May 31, 1996, compared to the same period in 1995.
For the first quarter of fiscal year 1996, the Company had a net
loss of $181,628 or $.03 per share as compared to a net loss of
$105,317 or $.03 per share for the previous comparable period.
Subsequent Event
A patent application on DermaMend-TM- Gel, the Company's
recently developed amorphous hydrogel, was submitted in July.
Liquidity and Capital Resources
The Company expects its capital requirements to increase
significantly as the Company begins to actively market its
products. The ability to secure additional working capital and
the ability to obtain successful distribution for its products
are reasonably likely to have a material impact on the Company's
short-term or long-term liquidity.
5
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITIES HOLDERS
There was no matter submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the
fiscal quarter ended May 31, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
6
<PAGE>
SIGNATURE
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.
DERMARX CORPORATION
(Registrant)
Dated: July 15, 1996 /S/ Maryanne Carroll
----------------------
Maryanne Carroll,
Chief Executive Officer
7
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> MAY-31-1996
<CASH> 477,575
<SECURITIES> 0
<RECEIVABLES> 2,144
<ALLOWANCES> 0
<INVENTORY> 107,138
<CURRENT-ASSETS> 595,262
<PP&E> 16,425
<DEPRECIATION> 68
<TOTAL-ASSETS> 732,440
<CURRENT-LIABILITIES> 52,690
<BONDS> 311,567
<COMMON> 352,618
0
0
<OTHER-SE> 15,566
<TOTAL-LIABILITY-AND-EQUITY> 732,440
<SALES> 11,944
<TOTAL-REVENUES> 11,944
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 193,572
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (181,628)
<INCOME-TAX> 0
<INCOME-CONTINUING> (181,628)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<NET-INCOME> (181,628)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
<CHANGES> 0
</TABLE>
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