<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, 1995
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 33-15607
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.)
284 Jackson Street
Denver, Colorado 80206
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (303) 399-1632
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 [ ]
Check if there is no disclosure of delinquent filers
pursuant to Item 405 of Regulation S-B contained herein, and will
not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 4,356,126 of common stock, par value $.01 per share.
<PAGE>
DERMARX CORPORATION
INDEX
Page No.
Part I. Financial Information
Financial Statements 1
Item 1.
Balance Sheet - May 31, 1995 1
Statements of Operations - 2
Three Months and Nine Months
Ended May 31, 1995 and 1994
Statements of Cash Flows - 3
Nine Months Ended May 31, 1995
and 1994
Notes to Financial 4
Statements
Item 2. Management's Discussion and Analysis 5
of Financial Condition and
Results of Operations
Part II. Other Information 6
Item 4. Submission of Matters to a Vote 6
of Securities Holders
Item 6. Exhibits and Reports on Form 8-K 6
Signature 7
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
DERMARX CORPORATION
BALANCE SHEET
MAY 31, 1995
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 124,944
Accounts receivable - trade 14,555
Inventory - Finished goods 73,665
Prepaid expense 1,682
-----------
Total current assets 214,846
-----------
Other assets: 126,330
-----------
Patents, net of accumulated amortization of $24,361 $ 341,176
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (Deficiency)
Current liabilities:
Note payable - bank $ 6,000
Notes payable - other 60,000
Accounts payable and accrued expenses 293,409
Accrued interest - notes payable 12,834
Related party 37,500
-----------
Total current liabilities 409,743
-----------
Long-term debt:
Note payable - bank 5,000
Notes payable - net of discounts 116,147
Note payable - related party, net of discounts 178,192
Accrued interest - note payable 6,570
Accrued interest - note payable, related party 12,141
-----------
Total long-term debt 318,050
-----------
Commitments and Contingencies
Common stockholders' equity (deficiency):
Common stock, $.05 par value: 5,000,000 shares
authorized; 4,077,931 shares issued and outstanding 191,448
Additional paid-in capital 2,822,491
Accumulated (deficit) (3,400,556)
------------
(386,617)
------------
$ 341,176
============
</TABLE>
1
<PAGE>
<TABLE>
DERMARX CORPORATION
STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended May 31
1995 1994
---- ----
<S> <C> <C>
Revenues:
Sales, net discounts $ 15,375 $ 11,241
15,375 11,241
---------- ----------
Expenses 120,692 111,135
---------- ----------
Net (Loss) from continuing operations (105,317) (99,894)
Dividends on series A preferred stock - -
(105,317) (99,894)
Net (Loss) from discontinued operations - -
Net (Loss) attributable to common stock $(105,317) ($99,894)
========== =========
Net (Loss) per common share:
From continuing operations $(.03) $(.04)
From discontinued operations
$(.03) $(.04)
====== ======
Weighted-average number of common shares 3,853,764 1,400,813
outstanding ========= =========
</TABLE>
2
<PAGE>
<TABLE>
DERMARX CORPORATION
STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended May 31
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (105,317) $ (99,894)
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
Amortization of discounts on notes 2,622 188
Expenses paid by Issuance of stock
Depreciation and amortization 2,640 2,256
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable (3,095) 3,926
(Increase) Decrease in inventory 5,263 1,692
(Increase) Decrease in other assets (634) -
Increase (Decrease) in accounts payable,
accrued interest and accrued expenses (13,265) 79,088
Increase (Decrease) dividends in arrears - (12,000)
--------- --------
Net cash (used) by operating activities (108,286) 75,150
Cash flows from financing activities:
Net Proceeds of equity sale 230,000 -
Net proceeds from debt obligations - (147,500)
Purchase Treasury Shares (2,500) -
Repayment of debt obligations
--------- ---------
Net cash provided by financing activities 227,500 43,000
--------- ---------
Net increase in cash and cash equivalents $ 119,214 $ 18,256
Cash and cash equivalents, beginning of year $ 5,730 3,843
--------- ---------
Cash and cash equivalents, end of year $ 124,944 $ 22,099
========= =========
</TABLE>
3
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS
The balance sheet as of May 31, 1995, the statements of
operations for the three months ended May 31, 1995 and 1994 and
the statements of cash flows for the three month ended May 31,
1995 and 1994 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, 1995 and
for all periods presented have been made. The results of
operations, for the three months ended May 31, 1995 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 statement and notes thereto included in the
Company's Form 10-K for its fiscal year ended February 28, 1995,
which was filed with the Securities and Exchange Commission.
NOTE 2 - MANAGEMENT PLANS
The Company is now in the process of obtaining capital in a
private placement. During the three months ended May 31, 1995,
the Company has raised capital (net) of $230,000. Subsequent to
the three months ended May 31, 1995, additional capital of
$48,750 has been raised in this private placement.
4
<PAGE>
DERMARX CORPORATION and SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's revenues increased to $15,375 in its fiscal
quarter ended May 31, 1995 from $11,241 in its fiscal quarter
ended May 31, 1994, an increase of $4,134. This increase is
negligible and not attributable to any particular trend or
effect. The Company's costs of goods sold as a percentage of
revenues increased to 33% from 15% in the three months ended May
31, 1994 as compared to the comparable period one year ago.
Total expenses were $120,692, an increase of $9,557 from the
comparable period one year ago. Interest expense decreased by
$74 for the quarter ended May 31, 1995, compared to the same
period in 1994, a negligible amount. For the first quarter of
fiscal year 1995, the Company had a net loss of $105,317 or $.03
per share as compared to a net loss of $99,894 or $.04 per share
for the previous comparable period.
LIQUIDITY AND CAPITAL RESOURCES
During the fiscal year ended February 28, 1995 the Company
raised an aggregate of $315,500 from seven investors by selling
units for $50,000 each which consisted of (a) 100,000 shares of
common stock and (b) an unsecured non-negotiable three year
promissory note in the principal amount of $50,000 which bears
interest at the rate of 6% per year. Mr. Richard Melnick, the
Secretary and a Director of the Company, purchased 1.81 units in
this Private Offering; Innovative Research Associates, Inc., a
Company controlled by Mr. Luis Mejia, then a Director of the
Company, purchased one-half unit in this offering; Mr. Pedro
Valdez, a Director of the Company, purchased one unit; Ms.
Maryanne Carroll, the Company's Chief Executive Officer and a
Director, purchased one unit in this offering. Subsequent to the
fiscal year ended February 28, 1995 the Company raised $278,750
in a separate Private Placement Offering at the price of $.50 per
common share.
The Company is experiencing significant cash flow shortages.
The Company is exploring several options to raise additional
capital in order to fund operations, including a private
placement of its securities (either debt or equity). There can
be no assurance however, that the Company will be successful in
raising additional capital or in meeting its cash requirements.
Unless the Company's sales increase and/or it is able to
raise additional capital, the Company may not be able to continue
operations. Except for the repayment of a bank loan in the
amount of $30,000 from Society National Bank, Dublin, Ohio the
Company was unable to pay either principal or interest on certain
loans currently due and owing. However, the majority of the
Company's debt is neither due or owing, and therefore remains
current.
5
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITIES HOLDERS
In April 1995, a majority of the Company's Shareholders
consented in writing to increase the number of authorized shares
that the corporation shall have authority to issue to 8,000,800.
The Company has submitted the Amendment to Article of
Incorporation to the Secretary of State of Delaware, the
Company's place of incorporation.
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: October 7, 1995 /S/
-----------------------
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-31-1995
<CASH> 124,944
<SECURITIES> 0
<RECEIVABLES> 14,555
<ALLOWANCES> 0
<INVENTORY> 73,665
<CURRENT-ASSETS> 214,846
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 341,176
<CURRENT-LIABILITIES> 409,743
<BONDS> 318,050
<COMMON> 191,448
0
0
<OTHER-SE> (578,065)
<TOTAL-LIABILITY-AND-EQUITY> 341,176
<SALES> 15,375
<TOTAL-REVENUES> 15,375
<CGS> 5,263
<TOTAL-COSTS> 5,263
<OTHER-EXPENSES> 106,290
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,139
<INCOME-PRETAX> (105,317)
<INCOME-TAX> 0
<INCOME-CONTINUING> (105,317)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<NET-INCOME> (105,317)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
<CHANGES> 0
</TABLE>
