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
August 31, 1997
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANE 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 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: 7,666,200 (as of August 31,
1997) of common stock, par value $.05 per share.
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DERMARx CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheet - August 31, 1997 1
Statements of Operations - 2
Three Months Ended August 31, 1997 and 1996
Statements of Cash Flows - 3
Six Months Ended August 31, 1997 and 1996
Notes to Financial Statements 4
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 6
Securities Holders
Item 6. Exhibits and Reports on Form 8-K 6
Signature 7
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DERMARx CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS
The balance sheet as of August 31, 1997, the statements of operations for the
three months ended August 31, 1997 and 1996 and the statements of cash flows for
the six months ended August 31, 1997 and 1996 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 August 31, 1997 and for all periods
presented have been made. The results of operations, for the three months ended
August 31, 1997 are not necessarily indicative of the results to be expected for
the full year.
Certain information and footnote disclosures 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 note thereto included in the
Company's Form 10-K for its fiscal year ended February 28, 1997, which was filed
with the Securities and Exchange Commission.
NOTE 2 - OUTSTANDING SHARES
Shares issued and outstanding as of August 31, 1997 were 7,666,200.
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DERMARx CORPORATION and SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management Plans
The Company's goal is to market its line of skin and wound care products
and its wound care consulting services in the United States and Australia. Plans
include hiring a sales/marketing manager, seeking private label agreements and
raising additional capital. Failure to secure additional working capital
jeopardizes the continued operation of the Company as a going concern.
Results of Operations
The Company entered into an agreement with GeriCare Providers, Inc. to
private label its polyurethane foam product and received FDA 510(k) approval to
market a gauze impregnated hydrogel. Revenues and gross profit remained
unchanged between August 31, 1996 and August 31, 1997. Loss from operations
decreased by 35% from $173,900 in August 1996 to $120,700 in August 1997,
primarily as the result of a decrease in research and development expenditures.
Subsequent Events
None
Liquidity and Capital Resources
The Company expects its capital requirements to increase significantly as
marketing efforts and inventory requirement increase. 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 and long-term liquidity.
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 August 31,
1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
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PART I. FINANCIAL INFORMATION
DERMARx AND SUBSIDIARY
BALANCE SHEET
AUGUST 31, 1997
ASSETS
Current assets:
Cash and cash equivalent $ 43,500
Accounts receivable - trade 8,300
Inventory - Finished goods 101,000
Prepaid expense 10,500
-----------
Total current assets 163,300
-----------
Property and equipment:
Computer equipment, net of accumulated depreciation of $9,600 10,600
-----------
Other assets:
Security deposits 1,000
Patents, net of accumulated amortization of $44,500 106,000
-----------
107,000
-----------
$ 280,900
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - net of discounts $ 155,000
Notes payable - related party, net of discounts 50,000
Accrued interest - notes payable 6,500
Accrued interest - notes payable, related party 9,100
Accounts payable and accrued expenses 73,600
-----------
Total current liabilities 294,200
-----------
Common stockholders' equity:
Common stock, $.05 par value: 12,000,000 shares authorized;
7,666,200 shares issued and outstanding $ 383,300
Additional paid-in capital 4,037,100
Accumulated (deficit) (4,407,100)
-----------
(13,300)
-----------
$ 280,900
===========
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DERMARx AND SUBSIDIARY
STATEMENTS OF OPERATIONS
Three Months Ended
08/31/97
1997 1996
----------- -----------
Revenues:
Sales, net discounts $ 6,500 $ 7,400
Cost of Goods sold 2,400 2,800
----------- -----------
Gross profit 4,100 4,600
General and Administrative 118,700 184,300
----------- -----------
(Loss) from operations (114,600) (179,700)
Other income (expense)
Interest income 100 5,900
Interest expense (800) (0)
Commission expense (5,400) (0)
----------- -----------
(6,100) 5,900
----------- -----------
Net (loss) $ (120,700) $ (173,800)
=========== ===========
Net (loss) per common share $ (.02) $ (.02)
Weighted average shares outstanding 7,450,000 7,139,200
=========== ===========
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DERMARx AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
Six Months Ended
08/31/97
(Unaudited)
1997 1996
Cash Flows from operating activities:
Net profit (loss) ($ 11,200) ($351,200)
Adjustments to reconcile net (loss) to net
cash (used) by operating activities
Accounts payable, accrued expenses and accrued
interest 8,700
Discount on notes amortized 700 13,200
Expenses paid by issuance of stock 6,300
Depreciation and amortization 7,300 6,800
Changes in assets and liabilities
(Increase) decrease in accounts receivable (1,600) (4,700)
(Increase) decrease in inventory 14,600 (50,600)
(Increase) decrease in other assets 7,600 (5,000)
Increase (decrease) in accounts payable, accrued 32,100 (28,600)
Interest and accrued expenses 800
Net cash (used) by operating activities $ 56,600 ($411,400)
=========
Cash flows from investing activities:
Purchase of property and equipment (7,200)
---------
Net cash (used) by investing activities (7,200)
---------
Cash flows from financing activities:
Proceeds from issuance of common stock 148,500
=========
Repayment of debt obligations (231,800)
---------
Net cash provided by financing activities (83,300) -0-
--------- ---------
Net increase in cash and cash equivalents ($ 26,700) ($418,600)
--------- ---------
Cash and cash equivalents, June 1 $ 44,800 $ 712,400
--------- ---------
Cash and cash equivalents, August 31 $ 43,500 $ 293,900
========= =========
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed don its behalf by the
undersigned thereunto duly authorized.
DERMARx CORPORATION
(Registrant)
/s/ Maryanne Carroll
Dated: October 13, 1997 ------------------------------
Maryanne Carroll
Chief Executive Officer
