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, 1998
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: of
common stock, par value $.01 per share.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DERMARX AND SUBSIDIARY
BALANCE SHEET
NOVEMBER 30, 1998
UN-AUDITED
ASSETS
Current assets:
Cash $6,700
Accounts receivable - trade 30,800
Inventory - Finished goods 119,000
Prepaid expense 2,500
-----------
Total current assets 159,000
Property and equipment:
Computer equipment, net of accumulated depreciation
of $15,500 4,000
Other assets:
Patents, net of accumulated amortization of $54,000 96,000
-----------
100,000
Total assets $259,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes and accumulated interest payable - net of discounts $250,000
Accounts payable and accrued expenses 153,500
Total current liabilities 403,500
Common stockholders' equity:
Common stock, $.05 par value: 12,000,000 authorized;
9,999,000 shares issued and outstanding 499,000
Additional paid-in capital 4,122,000
Accumulated (deficit) (4,766,400)
-----------
Shareholders' Equity 259,000
1
<PAGE>
DERMARX AND SUBSIDIARY
STATEMENTS OF OPERATIONS
UN-AUDITED
Three Months Ended
November 30
1997 1998
---- ----
Revenues:
Sales, net discounts $ 32,200 $ 19,800
Cost of goods sold 13,500 7,400
----------- -----------
Gross profit 18,700 12,400
General and administrative 94,400 67,800
----------- -----------
(Loss) from operations (75,700) (55,400)
Other income (expense)
Interest income 100 -0-
Interest expense (2,500) (7,000)
Commission expense (1,200) -0-
Extraordinary items -0- (17,500)
----------- -----------
(3,600) (24,500)
Net profit (loss) (79,300) (79,900)
Net (Loss) per common share: $ (.01) $ (.01)
Weighted-average number of common shares outstanding 7,500,000 9,999,000
2
<PAGE>
DERMARX AND SUBSIDIARY STATEMENTS OF CASH FLOWS
FOR QUARTER ENDED NOVEMBER 30, 1998
UN-AUDITED
Cash flows from operating activities:
Net (loss) $(79,900)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Gain on extinguishment of debt -0-
Expenses paid by issuance of stock -0-
Discount on notes amortized -0-
Depreciation and amortization 3,900
Changes in assets and liabilities:
(Increase) Decrease in accounts receivable (28,200)
(Increase) Decrease in inventory 22,500
(Increase) Decrease in pre-paid expenses -0-
(Increase) Decrease in other assets 4,600
Increase (Decrease) in accounts payable,
accrued interest and accrued expenses 55,000
---------
Net cash (used) by operating activities (22,100)
Cash flows from investing activities:
Purchase of property and equipment -0-
Net cash (used) by investing activities -0-
Cash flows from financing activities:
Proceeds from issuance of common stock 12,000
Proceeds from debt obligations 10,000
Repayment of debt obligations -0-
--------
Net cash provided by financing activities 22,000
Net increase (decrease) in cash and cash equivalents (100)
Cash and cash equivalents, beginning of year 6,800
--------
Cash and cash equivalents, end of year 6,700
--------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest -0-
3
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS
The balance sheet as of November 30, 1998, the statements of operations for the
three months ended November 30, 1998 and 1997 and the statements of cash flows
for the three month ended November 30, 1998 and 1997 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, 1998 and for all
periods presented have been made. The results of operations, for the three
months ended November 30, 1998, 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, 1998, which was filed
with the Securities and Exchange Commission.
NOTE 2 - OUTSTANDING SHARES
Shares issued and outstanding as of November 30, 1998, were 9,999,000.
4
<PAGE>
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 focus resources on the development and marketing
of its consumer line of products, including the diaper rash, hemorrhoidal and
psoriasis treatments. The Company is offering the wound care products line for
sale and is actively seeking a merger partner to provide management and product
depth to the consumer products.
Results of Operations
Gross revenues decreased from $32,200 in the three month ended November
30, 1997, to $19,800 for the three months ended November 30, 1998. This decrease
was insignificant. There was no significant change in the Cost of Good Sold. The
Company intends to write down the wound care inventory which is no longer being
marketed at the rate of $20,000 per quarter over the next four quarters for a
total of $80,000.
On October 16, 1998, Gerit Mulder resigned as President and Director of
Wound Services, Inc., the Company's wholly owned wound care consulting
subsidiary as a Vice President and Director of DermaRx. The ownership of the
Consulting Business is currently in dispute with Dr. Mulder.
Subsequent Events
On December 16, 1998, Maryanne Carroll resigned as President and Director
of DermaRx. She is continuing to perform limited services on a consulting basis.
5
<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: March 10, 1999. /s/ Peter G. Martin
-----------------------
Peter Martin, Director
6
