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
November 30, 1997
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 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: 7,678,769 (as of November
30, 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 - November 30, 1997 1
Statements of Operations - 2
Three Months Ended November 30, 1997 and 1996
Statements of Cash Flows - 3
Nine Months Ended November 30, 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 November 30, 1997, the statements of operations for the
three months ended November 30, 1997 and 1996 and the statements of cash flows
for the six months ended November 30, 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 November 30, 1997 and for all
periods presented have been made. The results of operations, for the three
months ended November 30, 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 November 30, 1997 were 7,678,769.
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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
Revenues during the third quarter of 1997 were $20,000 greater than the
same quarter for 1996 as the result of a moderate increase in product sales and
two consulting projects. Loss from operations declined by 39% from $123,400 to
$75,700. The decrease was primarily the result of a reduction in research and
development costs.
Subsequent Events
Development and informal effectiveness testing has been completed on the
Company's new topical hemorrhoid product, HemorRxTM. Formal clinical evaluation
is in progress.
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 November
30, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
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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)
Dated: January 15, 1997
/s/ Maryanne Carroll
-----------------------------
Maryanne Carroll
Chief Executive Officer
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PART I. FINANCIAL INFORMATION
DERMARx AND SUBSIDIARY
BALANCE SHEET
NOVEMBER 30, 1997
ASSETS
Current assets:
Cash and cash equivalent $ 20,900
Accounts receivable - trade 22,500
Inventory - Finished goods 115,600
-----------
Prepaid expense 9,300
-----------
Total current assets 168,300
Property and equipment:
Computer equipment, net of accumulated
depreciation of $10,900 9,300
-----------
Other assets:
Security deposits -0-
Patents, net of accumulated amortization of $46,900 103,600
-----------
103,600
-----------
$ 281,200
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - net of discounts $ 111,300
Notes payable - related party, net of discounts 67,000
Accrued interest - notes payable 8,300
Accrued interest - notes payable, related party 10,000
Accounts payable and accrued expenses 113,600
-----------
Total current liabilities 310,200
Long term liabilities: 43,800
-----------
Total liabilities $ 353,900
Common stockholders' equity:
Common stock, $.05 par value: 12,000,000 shares authorized;
7,816,200 shares issued and outstanding $ 390,800
Additional paid-in capital 4,051,400
Accumulated (deficit) (4,514,800)
-----------
(72,600)
-----------
Shareholders' Equity $ 281,300
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DERMARx AND SUBSIDIARY
STATEMENTS OF OPERATIONS
Three Months Ended
11/30/97
1997 1996
---- ----
Revenues:
Sales, net discounts $ 32,200 $ 11,990
Cost of Goods sold 13,500 4,379
----------- -----------
Gross profit 18,700 7,611
General and Administrative 94,400 131,066
----------- -----------
(Loss) from operations (75,700) (123,455)
Other income (expense)
Interest income 100 2,872
Interest expense (2,500) (5,921)
Commission expense (1,200) -0-
----------- -----------
(3,600) (3,049)
----------- -----------
Net (loss) $ (79,300) $ (126,504)
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Net (loss) per common share $(.01) $(.02)
=========== ===========
Weighted average shares outstanding 7,500,000 7,125,969
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DERMARx AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
Nine Months Ended
11/30/97
(Unaudited)
1997 1996
---- ----
Cash Flows from operating activities:
Net profit (loss) ($ 81,000) ($448,538)
Adjustments to reconcile net (loss) to net
cash (used) by operating activities
Accounts payable, accrued expenses
and accrued interest converted
to common stock -0- 8,680
Amortization of discounts on notes -0- 2,250
Expenses paid by issuance of stock -0-
Depreciation and amortization 10,900 10,444
Changes in assets and liabilities
(Increase) decrease in accounts receivable (15,800) (7,547)
(Increase) decrease in inventory 10,100 (66,293)
(Increase) decrease in other assets 23,000 4,423
Increase (decrease) in accounts payable, accrued 79,300 (6,044)
Interest and accrued expenses
Increase (decrease) in dividends in arrears
Net cash (used) by operating activities $ 26,500 $ 531,804
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Cash flows from investing activities:
Purchase of property and equipment -0- (7,209)
--------- ---------
Net cash (used) by investing activities -0- (7,209)
--------- ---------
Cash flows from financing activities:
Net proceeds of equity sale 62,500
Net proceeds from debt obligations 137,900
Purchase of treasury shares -0-
---------
Repayment of debt obligations (231,800)
---------
Net cash provided by financing activities (31,400) -0-
--------- ---------
Net increase in cash and cash equivalents ($ 30,100) ($539,013)
--------- ---------
Cash and cash equivalents, March 1, 1997 $ 51,000 $ 712,392
--------- ---------
Cash and cash equivalents, November 30, 1997 $ 20,900 $ 173,380
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