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, 1999
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) 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: 9,999,019 of common stock,
par value $.01 per share.
<PAGE>
PART I. FINANCIAL INFORMATION
DERMARX AND SUBSIDIARY
BALANCE SHEET
May 31, 1999
ASSETS
Current assets:
Cash and Cash Equivalent $ 10,765
Accounts receivable - trade 0
Inventory - Finished goods 39,099
Other Receivables 31,500
-----------
Total current assets 81,364
Property and equipment:
Equipment, net of accumulated depreciation of $17,505 2,800
Other assets:
Patents, net of accumulated amortization of $57,691 93,000
-----------
Total assets $ 177,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - net of discounts $ 176,000
Notes payable - related party, net of discounts 57,500
Accrued interest - notes payable 21,132
Accrued interest - notes payable, related party 17,170
Accounts payable and accrued expenses 171,570
-----------
Total current liabilities 443,372
Common stockholders' equity:
Common stock, $.05 par value: 12,000,000 authorized;
9,999,019 shares issued and outstanding 499,951
Additional paid-in capital 4,125,027
Accumulated (deficit) (4,819,185)
Total Stock holder Equity (266,208)
Total Liabilities and Stockholder's Equity 177,164
See accompanying Auditor's Report and notes to Financial Statement. 1
<PAGE>
DERMARX AND SUBSIDIARY
STATEMENTS OF OPERATIONS
Three Months Ended
May 31
1999 1998
---- ----
Revenues:
Sales, net discounts $ 2,700 $ 31,300
Cost of goods sold 800 13,400
----------- -----------
Gross profit 1,900 17,900
General and administrative 5,000 102,000
----------- -----------
(Loss) from operations (3,100) (84,100)
Other income (expense)
Interest income -0- 10
Interest expense (6,400) -0-
Net profit (loss) (9,500) (84,100)
Net (Loss) per common share: $ (.001) $ (.01)
Weighted-average
number of common shares outstanding 9,999,019 9,271,258
See accompanying Auditor's Report and notes to Financial Statement. 2
<PAGE>
DERMARX AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
Three Months Ended
May 31
(Unaudited)
1999 1998
---- ----
Cash flows from operating activities:
Net (loss) $ (9,500) $(84,100)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Accounts payable, accrued expenses and accrued
interest converted to common stock -0- 27,100
Depreciation and amortization 241 4,200
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable 5,479 (4,400)
(Increase) Decrease in inventory 800 4,800
(Increase) Decrease in other assets -0- 1,200
Increase (Decrease) in accounts payable,
accrued interest and accrued expenses 6,173 (18,500)
(Increase) Decrease in prepaid expenses -0- 2,300
Net cash (used) by operating activities 3,193 (67,400)
Cash flows from financing activities:
Proceeds from issuance of common stock 60,000
Proceeds from issuance of notes payable 7,550 -0-
Net cash provided by financing activities 7,550 60,000
-------- --------
Net increase (decrease) in cash and cash equivalents 10,743 (7,400)
Cash and cash equivalents, February 28 22 71,000
-------- --------
Cash and cash equivalents, May 31 $ 10,765 $ 63,600
======== ========
See accompanying Auditor's Report and notes to Financial Statement. 3
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS
The balance sheet as of May 31, 1999, the statements of operations for the three
months ended May 31, 1999 and 1998 and the statements of cash flows for the
three month ended May 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 and cash flows as of May 31, 1999 and for all periods
presented have been made. The results of operations, for the three months ended
May 31, 1999, 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 statement and notes thereto included in the
Company's Form 10-K for its fiscal year ended February 28, 1999, which was filed
with the Securities and Exchange Commission.
NOTE 2 - OUTSTANDING SHARES
Shares issued and outstanding as of May 31, 1999, were 9,999,019.
See accompanying Auditor's Report and notes to Financial Statement. 1
<PAGE>
DERMARX CORPORATION and SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management Plans
The Company's primary goal is to focus resources on the development and
marketing of its consumer line of products, including the diaper rash,
hemorrhoidal, and psoriasis treatments. Marketing plans for the domestic market
include e-commerce. International marketing plans are based on selling exclusive
distributorships to distributors in various foreign countries. The company is
seeking a merger partner to add products and management. Additional working
capital is required to purchase inventory and to proceed with marketing efforts.
Results of Operations
On May 20, 1999, the Company was notified by the U.S. Patent Office that certain
claims had been allowed for patent approval on the Company's new topical
hemorrhoid product.
On April 5, 1999, the Company filed a lawsuit against Gerit D. Mulder, a former
officer and director and Lee Booras, a former Business Manager seeking damages
based on breach of fiduciary duty among other things.
Gross revenues decreased from $31,000 for the first quarter of 1998 to $2,700
for the first quarter of 1999. Cost of goods sold decreased from $13,400 to
$800. The Company does not expect sales revenues to increase until additional
working capital in available.
Subsequent Events
None.
See accompanying Auditor's Report and notes to Financial Statement. 2
<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 19, 1999. /s/ Peter Martin
--------------------------------------
Peter Martin, Director
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