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, 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)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 |_|
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: 2,019,900 of common stock,
par value $.05 per share.
<PAGE>
DERMARx CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Balance Sheet - November 30, 1999 1
Statements of Operations - 2
Three Months Ended November 30, 1999 and 1998
Statements of Cash Flows - 3
Three Months Ended November 30, 1999 and 1998
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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DERMARx AND SUBSIDIARY
BALANCE SHEET
November 30, 1999
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash $ 3,200
Accounts receivable - trade 2,600
Inventory - Finished goods 35,000
Other receivable 25,000
-----------
Total current assets 65,800
-----------
Property and equipment:
Computer equipment, net of accumulated depreciation of $18,300 2,000
-----------
Other assets:
Patents, net of accumulated amortization of $57,000 90,000
-----------
Total other assets 92,000
Total Assets $ 157,800
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes and accumulated interest payable - net of discounts $ 178,000
Notes payable - related party, net of discounts 57,500
Accrued interest - notes payable 24,700
Accrued interest - notes payable, related party 18,300
Accounts payable and accrued expenses 170,000
-----------
Total current liabilities 449,500
Total liabilities $ 449,500
-----------
Common stockholders' equity:
Common stock, $.05 par value: 12,000,000 shares authorized;
2,019,900 shares issued and outstanding $ 101,000
Additional paid-in capital 4,524,000
Accumulated (deficit) (4,915,700)
-----------
Shareholders' Equity $ (290,700)
===========
Total liabilities and shareholders' equity $ 157,800
</TABLE>
1
<PAGE>
DERMARx AND SUBSIDIARY
STATEMENTS OF OPERATIONS
UN-AUDITED
Three Months Ended
November 30, 1999
1998 1999
---- ----
Revenues:
Sales, net discounts $19,800 $8,200
Cost of Goods sold 7,400 2,900
----------- -----------
Gross profit 12,400 5,300
General and Administrative 67,800 5,000
----------- -----------
Profit or (Loss) from operations (55,400) 300
Other income (expense)
Interest income -0- -0-
Interest expense (7,000) (4,000)
Commission expense (17,500) -0-
----------- -----------
(24,500) (4,000)
-----------
Extraordinary item -0- -0-
----------- -----------
Net profit (loss) $(79,900) $(3,700)
=========== ===========
Net (loss) per common share $(.01) $(.001)
Weighted average shares outstanding 9,999,000 2,019,900
=========== ===========
2
<PAGE>
DERMARx AND SUBSIDIARY STATEMENTS OF CASH FLOWS
FOR QUARTER ENDED NOVEMBER 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended
1998 1999
---- ----
<S> <C> <C>
Cash Flows from operating activities:
Net (loss) $(79,900) $(3,700)
Adjustments to reconcile net (loss) to net
cash (used) by operating activities:
Accounts payable, accrued expenses and accrued
interest converted to common stock -0- -0-
Amortization of discounts on notes -0- -0-
Expenses paid by issuance of stock -0- -0-
Depreciation and amortization 3,900 1,300
Changes in assets and liabilities
(Increase) decrease in accounts receivable (28,200) (1,600)
(Increase) decrease in inventory 22,500 (3,000)
(Increase) decrease in other assets 4,600 -0-
Increase (decrease) in accounts payable, accrued
interest and accrued expenses 55,000 1,500
(Increase) decrease in prepaid expenses -0- -0-
Increase (decrease) in dividends in arrears -0- -0-
Net cash (used) by operating activities (22,100) (5,500)
============ ============
Cash flows from financing activities:
Proceeds from issuance of common stock 12,000 -0-
Proceeds from debt obligations 10,000 -0-
Repayment of debt obligations -0- -0-
------------ ------------
Net cash provided by financing activities 22,000 -0-
------------ ------------
Net increase (decrease) in cash and cash equivalents (100) (1,200)
------------ ------------
Cash and cash equivalents, beginning of period 6,800 4,400
------------ ------------
Cash and cash equivalents, end of period $6,700 $3,200
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest -0- -0-
</TABLE>
3
<PAGE>
DERMARx CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS
The balance sheet as of November 30, 1999, the statements of operations for the
three months ended November 30, 1999 and 1998 and the statements of cash flows
for the three months ended November 30, 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 of operations and cash flows as of November 30,
1999, and for all periods presented have been made. The results of operations,
for the three months ended November 30, 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 statements 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 November 30, 1999, were 2,019,900. The
number of shares outstanding reflects a recent 1 for 5 reverse stock split.
4
<PAGE>
DERMARx CORPORATION and SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management Plans
The Board of Directors plans to hire a new management team and begin the
development of an e-commerce business platform, DermaRx.com. Because the Company
has exhausted its working capital it will attempt to complete a private
placement to fund the development of DermaRx.com and to purchase inventory.
There are no assurances that the company will be successful in this regard, and
failure to raise capital will jeopardize any plans by the Board of Directors to
hire new management, purchase inventory, or to pursue any other opportunities.
DermaRx.com is to be the Company's Internet skin/wound repair boutique that
provides information and over-the-counter treatments for all types of skin
related problems including pressure ulcers, acne, psoriasis, wrinkles,
hemorrhoids, nail fungus, diaper rash, burns, age spots, etc. The Company will
market its own proprietary skin/wound repair products as well as a variety of
complementary topical products, related vitamins and supplements.
Results of Operations
Pending new financing as discussed above, the Company is not currently
actively engaged in operations. The Company is pursuing its lawsuits against
former officer and director Gerit D. Mulder and business manager Lora L. Booras
seeking damages based on breach of fiduciary duty among other things.
Subsequent Events
The Company has plans to develop an informational website, DermaRx.com,
which is expected to be online by the end of January, 2000.
Liquidity and Capital Resources
The Company expects its capital requirements to increase significantly if
the business again becomes operational. The ability to successfully raise
working capital and successfully distribute its products as well as other
products offered through its Internet boutique will likely have a material
impact on the Company's short-term and long-term liquidity.
5
<PAGE>
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, 1999.
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: January 14, 2000 /s/ Maryanne Carroll
-----------------------------------
Maryanne Carroll
Director
7
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> SEP-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 3200
<SECURITIES> 0
<RECEIVABLES> 2600
<ALLOWANCES> 0
<INVENTORY> 35,000
<CURRENT-ASSETS> 65,000
<PP&E> 2000
<DEPRECIATION> (18,300)
<TOTAL-ASSETS> 157,800
<CURRENT-LIABILITIES> 449,500
<BONDS> 0
0
0
<COMMON> 101,000
<OTHER-SE> (290,700)
<TOTAL-LIABILITY-AND-EQUITY> 157,800
<SALES> 8,200
<TOTAL-REVENUES> 8,200
<CGS> 2,900
<TOTAL-COSTS> 5,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,000
<INCOME-PRETAX> (3,700)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,700)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
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