SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
February 29, 2000
OR
|_| TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number
33-15607
GoPublicNow.com
(Exact name of registrant as specified in its charter)
Delaware 13-3301899
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5000 Birch St., West Tower, Suite 4900
Newport Beach, California 92660
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 752-2797
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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|
State issuer's revenues for its most recent fiscal year: $18,048.
As of June 8, 2000, the aggregate market value of the 10,866,240 issued
and outstanding Shares of Common Stock of the registrant (based upon the average
of the bid and asked price of these shares as reported by the NASDAQ Bulletin
Board) held by non-affiliates was approximately $35,315,280.
The number of shares outstanding of the registrant's common stock, par
value $.05, as of February 29, 2000 was 2,099,862 shares. The number of shares
outstanding of the registrant's common stock, par value $.0001, as of June 8,
2000, was 10,657,240.
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INTRODUCTORY NOTE
This Annual Report on Form 10-KSB may be deemed to contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Company intends that
such forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Accordingly, to
the extent that this Annual Report contains forward-looking statements regarding
the financial condition, operating results, business prospects or any other
aspect of the Company, please be advised that the Company's actual financial
condition, operating results and business performance may differ materially from
that projected or estimated by the Company in forward-looking statements. The
differences may be caused by a variety of factors, including but not limited to
adverse economic conditions, intense competition, including intensification of
price competition and entry of new competitors and products, adverse federal,
state and local government regulation, inadequate capital, unexpected costs and
operating deficits, increases in general and administrative costs, lower sales
and revenues than forecast, loss of customers, customer returns of products sold
to them by the Company, disadvantageous currency exchange rates, termination of
contracts, loss of suppliers, technological obsolescence of the Company's
products, technical problems with the Company's products, price increases for
supplies and components, inability to raise prices, failure to obtain new
customers, litigation and administrative proceedings involving the Company, the
possible acquisition of new businesses that result in operating losses or that
do not perform as anticipated, resulting in unanticipated losses, the possible
fluctuation and volatility of the Company's operating results, financial
condition and stock price, losses incurred in litigating and settling cases,
dilution in the Company's ownership of its business, adverse publicity and news
coverage, inability to carry out marketing and sales plans, loss or retirement
of key executives, changes in interest rates, inflationary factors, and other
specific risks that may be alluded to in this Annual Report or in other reports
issued by the Company. In addition, the business and operations of the Company
are subject to substantial risks, which increase the uncertainty inherent in the
forward-looking statements. In light of the significant uncertainties inherent
in the forward-looking information included herein, the inclusion of such
information should not be regarded as a representation by the Company, or any
other person, that the objectives or plans of the Company will be achieved.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development
DermaRx Corporation (the "Company"), a Delaware corporation formerly known
as Innotek, Inc., was organized in June 1985 to develop, design, manufacture and
market products utilizing proprietary speech-generated tactile feedback devices.
The Company completed an initial public offering of its securities in October
1987. On September 1, 1992, the Company's wholly-owned subsidiary, InnoVisions,
Inc., ("InnoVisions Delaware"), acquired all of the outstanding shares of stock
of InnoVisions, Inc. ("InnoVisions Ohio,") InnoVisions Ohio manufactured and
marketed two "over-the-counter" skin care products, BottomBetter(TM) and
DermaMend(TM). In 1993, the Company began to concentrate its efforts on
developing and marketing its skin protective products.
On October 16, 1998, Gerit Mulder resigned as President and Director of
Wound Services, Inc., the Company's wholly-owned would care consulting
subsidiary and as Vice President and Director of DermaRX. Due to the
unexpected and untimely departure of Mr. Mulder, the Company was forced to
suspend its wound care consulting business. Since the consulting business was
the primary source of revenues, revenue goals were not met during fiscal 1998.
During Fiscal 1998, Maryanne Carroll resigned as President and Director of the
Company, and Pedro Valdez resigned as Directors.
Pursuant to an Acquisition Agreement (the "Acquisition Agreement") dated as
of February 24, 2000 among DermaRx Corporation ("DMRX"), shareholders of DMRX
holding a majority of the DMRX shares (the "Shareholders") and
GoPublicNow.com, Inc., a Nevada corporation ("GPN-Nevada"), effective on April
6, 2000, GPN-Nevada was merged with and into DMRX and the separate corporate
existence of GPN-Nevada ceased in a transaction referred to as a "reverse
Acquisition." Simultaneously with the merger, the name of DMRX was changed to
GoPublicNow.com ("GPN" or the "Company"), and all the outstanding shares of
common stock of GPN-Nevada were exchanged on a one-for-one basis for shares of
common stock of the Company. Immediately prior to the merger, the common stock
of DMRX was reduced by a one for five reverse stock split.
When fully operational, GPN's operations will consist of three major
components. First is a network of financial service providers that can satisfy
many of the demands of companies desiring to go public or needing access to
capital or GPN's advanced business services. Second is a unique, interactive
web portal site that can serve as the conduit between the clients, the financial
service providers and GPN, allowing benefits for all parties. Third, the
Company effectively becomes an emerging growth company incubator.
GoPublicNow.com ("GPN") is headquartered in Newport Beach, California.
The Company was initially formed in December 1999 and began generating business
in April 2000.
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Industry
The number of companies going public and requiring access to capital has
significantly increased in recent years (see Industry Description and Trends
below). There is also significant growth in the use of the Internet for
offering efficient business-to-business commerce. GPN intends to offer a
variety of financial consulting services targeted toward this market.
Operations Overview
When fully operational, GPN's operations will consist of three major
components. First is a network of financial service providers that can satisfy
many of the demands of companies desiring to go public or needing access to
capital or GPN's advanced business services. Second is a unique, interactive
web portal site that can serve as the conduit between the clients, the financial
service providers and GPN, allowing benefits for all parties. Third, the
Company effectively becomes an emerging growth company incubator.
Revenue
GPN intends to derive revenue from a number of sources. First, client
companies that wish to become members of the site and access premium online
content will pay a membership fee. Second, to the extent permissible under
applicable regulations, the Company will be paid a small percentage (or finder's
fee') for any business services that are placed through our site. Third, the
Company will receive an equity position in companies that become public in three
years that are a member of GPN's site.
The Company's primary website will be www.gopublicnow.com. GPN presently
owns the following Internet URL's designed to protect the value of its website:
WWW.GOPUBLICNOW.COM
WWW.GOPUBLICNOW.NET
WWW.GOPUBLICNOW.ORG
WWW.GOBIZNOW.COM
WWW.GOBIZNOW.NET
WWW.GOBIZNOW.ORG
WWW.GOPUBLICNETWORK.COM
WWW.GOPUBLICNETWORK.NET
WWW.GPN.COM
GPN recognized the importance of protecting its intellectual property. Our
legal counsel is in the process of seeking to register with the US Patent and
Trademark Office for service marks for the following:
Go Public
Go Public Now
Go Public Network
Services Offered
GPN intends to offer a single source financing solution to any qualified
business that wants to become public or obtain capital, as well as provide other
related services to existing public companies.
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GoPublicNow.com will target companies that are seeking capital and intend
to go public, as well as licensed investment bankers and brokers, etc that are
interested in these types of companies.
Specific web addresses will be targeted toward different audiences,
however, with the exception of the front-end of the site, services will be
equally available to all addresses.
GPN intends to offer the following services:
Free Services
--------------
As a financial Internet portal site, provide free access to timely
financial information in a customizable, easy-to-use format. This information
may include some or all of the following:
Stock quotes
Stock ticker
Market news
Information about Going Public - i.e. IPO's, mergers, shell
mergers, etc., including strategy, timing and costs.
Information about different types of financial programs - i.e.
private placements, secondary offerings, DPO's, Internet
offerings, etc.
The web site will also provide a unique interactive business questionnaire
that will assess whether a candidate company has the potential to Go Public Now.
If the candidate company is qualified through the questionnaire to go public in
accordance with criteria determined by GPN, the site will notify GPN. If a
candidate company does not meet minimum criteria necessary to become a public
company, the site will explain it's reasoning to the candidate company and will
offer the candidate company the ability to contact GPN to discuss further
options.
Professional service providers, including accountants, attorneys, PR and IR
firms, web site designers, etc., will be able to utilize the web site's referral
service feature.
ALTHOUGH THESE FEATURES ARE FREE TO THE CLIENT, GPN (IN MOST CASES) WILL RECEIVE
FEES FROM THE SERVICE PROVIDERS. (SEE PRICING STRATEGY).
Premium Services
-----------------
Listing companies and their financing needs for potential investment under
appropriate regulatory guidelines on the website.
Submitting listed companies to investment sources that are registered on
the Company's website whose financial products match the company's unique
profile.
Evaluating businesses and providing them with a strategy to prepare them
for going public.
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Potential investment by a proprietary proposed incubator bridge/venture in
select companies.
THE COMPANY INTENDS TO CHARGE FOR THESE PREMIUM SERVICES IN EXCHANGE FOR CASH
AND STOCK. (SEE PRICING STRATEGY).
PRICING STRATEGY
GPN intends to develop a pricing strategy which derives revenues from
member companies as well as from service providers.
MEMBER COMPANIES WILL BE CHARGED THE FOLLOWING:
-----------------------------------------------------
$500 client membership fee for access to all premium services.
3% equity interest in client company if client company is a start-up, 2% if
client company is pre-IPO with less than $1 million in annual sales, and 1% if
client company is pre-IPO with over $1 million in annual sales.
Most Investment Bankers charge $25,000 to $50,000 initial fees for due
diligence and expenses without guaranteeing a successful financing. GPN's $500
fee allows companies to access a wide variety of financial services at a
fraction of the cost.
SERVICE PROVIDERS WILL BE CHARGED THE FOLLOWING:
------------------------------------------------------
Up to 10% of fees collected by PR and IR firms.
Up to 10% finder's fee for web design services.
Up to 10% fee from media referrals.
Banner / web advertising fees to be determined under market conditions.
These referral fees are relatively standard in the various industries. By
combining financial services in a "one-stop-shop" format, the Company will
potentially be in the position of being able to receive fees from a broad range
of providers at the same time as well as obtaining favorable pricing for client
companies.
Quality Control
GPN's Management, based on years of combined investment experience, has
developed a series of multiple choice questions and answers for GPN's
interactive web site questionnaire. The questions are designed to analyze
companies for listing on the GPN web site that meet the criteria generally
necessary to become a public company, and to explain to companies that do not
presently meet the criteria why they are not a candidate to GoPublicNow.com.
GPN's screening process for reliable service providers has been developed from
years of Management's experience providing like services.
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Marketing
GPN intends to create a Web-enabled marketplace that targets companies
seeking capital as well as investors, fund managers and other business services
resources. By combining Management's experience in the corporate finance and
IPO marketplace with the exponential growth of the Internet, GPN may provide a
global network of clients with a comprehensive "one-stop-shop" for finding and
utilizing financial business services. The Company is positioned to provide
market leadership in this rapidly growing industry sector due to the Management
team's background and track record of performance in the financial marketplace.
GPN's operations will consist of two major components: first, a network of
financial service providers with wide ranging experience in servicing the IPO
marketplace; second, a unique, interactive website that serves as a value-added
conduit between GPN and its clients, thus allowing both parties to communicate,
collaborate and partner.
A key component to the Company's launch strategy is to quickly build brand
awareness for the GoPublicNow.com website through advertising, publicity and
cross-promotional campaigns. GPN hopes to have a competitive advantage due to
the following:
Being early to market and establishing a commanding client base.
Maintaining high quality financial service providers.
Maintaining a broader range of financial service offerings than
other sites.
Maintaining marketing to maximize web site awareness and traffic.
Utilizing economies of scale to reduce costs, increase margins,
and negotiate preferential agreements.
In order to drive users to the Go Public web site, the Company
plans to do the following:
Utilize Internet marketing via banner ads, link swapping, co-
Promotions, etc.
Utilize traditional marketing programs such as business print ads
and business radio ads.
Attend Investment Banking and Business Development trade shows
and conferences.
Telemarket to investment banking firms and strategic partners.
Telemarket to and/or email follow-up on site visitors through database
management.
Market Assessment & Analysis
As much as $24 billion in fresh funding flowed from Venture Capital firms
to startup companies in 1998, according to The National Association of Venture
Capitalists. According to the Los Angeles Times, investors poured $65 billion
into first time stock offerings in 1999. Twenty First Century Internet Venture
Partners claims they receive approximately 1,600 business plans each year and
are only able to fund no more than four or five of them. Due to GPN's potential
resources, as well as the proposed online screening process, the Company could
theoretically be able to relatively efficiently take those 1,600 or 7,550
business plans and shop them to multiple venture funds.
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International Potential
GPN recognizes that one of the greatest advantages of the Internet is to
lower global boundaries and allow direct personal contact between individuals
and businesses around the world. A key advantage of business-to-business
financing over the Internet is that it removes layers of middlemen that
traditionally exist in current international financing operations. GPN will be
well positioned to assist international companies in accessing US capital. In
the future, the Company expects to offer targeted services for international
clients, and expects to have multiple versions of its web site online featuring
foreign languages and personalized content for different countries and cultures.
Regulatory Issues
The Company will be subject to state and federal regulation with respect to
securities, as well as rules and regulations with respect to certain of the
services it provides. In order to better resolve some of those regulatory
issues, and to support the wide variety of services GPN plans to offer the
companies, GPN intends to acquire or establish a NASD licensed broker/dealer.
The Company's Management presently has the experience and licenses necessary to
Perform some broker/dealer services.
Competition
The market for capital and financing resources for emerging growth
companies is intensely competitive. Additionally, the Company competes in an
industry segment in which numerous competitors exist that have substantially
greater resources than the Company. There are several companies that have a
meaningful presence on the Internet to provide capital to emerging growth
companies, such as Idealabs, Garage.com, and Twenty First Century Internet
Venture Partners. There can be no assurance that existing or potential
competitors of the Company will not develop products equal to or better than
those marketed by the Company. Numerous smaller competitors also exist in this
industry. They tend to be: (I) Specialized (and only offer one type of
financing service); (ii) Traditional (non-Internet, face-to-face operators) or
(iii) Small scale B only able to accommodate a few clients each year. The
Company does not anticipate directly competing with conventional financing
sources. The Company intends to welcome any and all legitimate financing
sources to participate in clients financing needs. The Company will receive a
fee for any financing that comes through the GPN Network.
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Employees
GPN presently has 20 employees, of which 8 are in management. GPN believes
its relations with its employees are good.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company leases 3,460 feet of office space in Newport Beach, California
at a monthly cost of $8,371.
ITEM 3. LEGAL PROCEEDINGS.
The Company may from time to time be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations of discrimination, or
breach of contract actions incidental to the operation of its business. The
Company is not currently involved in any such litigation, which it believes
could have a materially adverse effect on its financial condition or results of
operations.
DermaRX has initiated legal proceedings against its former Vice President
and Director Gerit Mulder. The Company is currently not involved in any legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market information:
GPN's common stock is presently traded on the OTC Bulletin Board operated by
Nasdaq under the symbol "GNOW". Prior to April 6, 2000, the Company's common
stock traded under the symbol "DMRX". The following table sets forth the high
and low closing prices for shares of GPN common stock for the periods noted, as
reported by the National Daily Quotation Service and the Over-The-Counter
Bulletin Board. Quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions.
<TABLE>
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<S> <C> <C> <C>
CLOSING PRICES
YEAR PERIOD HIGH LOW
---- ------ ------- ------
2000 First quarter $3.75 $0.08
Second quarter (through June 8) $6.63 $0.75
1999 First quarter $67.38 $1.48
Second quarter $24.90 $6.25
Third quarter $2.25 $0.75
Fourth quarter $3.12 $0.05
1998 Second quarter $29.78 $21.48
Third quarter $32.72 $20.02
Fourth quarter $21.48 $0.50
</TABLE>
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On September 1, 1999, the Company affected a one for five reverse split of
its Common Stock. Effective April 5, 2000, the Company affected an additional
one for five reverse split of its Common Stock. The table above has been
adjusted to reflect the cumulative effect of these splits.
The number of beneficial holders of record of GPN common stock as of the
date of the merger was approximately 300. Many of the shares of GPN's common
stock are held in "street name" and consequently reflect numerous additional
beneficial owners.
RECENT SALES OF UNREGISTERED SECURITIES
From December 1999 through April 2000, the Company conducted two private
placements of its unregistered securities. Each unit sold included one share of
GPN common stock, one warrant to purchase a share of GPN common stock at $7.50
and one warrant to purchase a share of GPN common stock at $10.00. Total sales
under each of these offerings were as follows:
Round Sales Price/Unit shares $7.50 warrants $10.00 warrants
1 $1,354,500 $2.50 541,800 541,800 541,800
2 $2,134,955 $3.75 569,322 569,322 569,322
---------------------------------------------------------------
Total $3,489,455 1,111,122 1,111,122 1,111,122
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Operations
The Company's prior full fiscal year ending February 29, 2000 is not
indicative of the Company's current business plan and operations. By November
1999, DermaRx was inactive and had no revenues. After the Company's acquisition
by GoPublicNow.com, as previously discussed, the Company's current business plan
was implemented. Therefore, this Management's Discussion and Analysis will
discuss the Company's plans for the development and implementation of its
proposed business under the heading, Plan of Operations. For information
concerning the Company's prior full fiscal years, the Company refers the reader
to the financial statements provided under Part F/S, contained herein.
Plan of Operations
When fully operational, GPN's operations will consist of three major
components. First is a network of financial service providers that can satisfy
many of the demands of companies desiring to go public or needing access to
capital or GPN's advanced business services. Second is a unique, interactive
web portal site that can serve as the conduit between the clients, the financial
service providers and GPN, allowing benefits for all parties. Third, the
Company effectively becomes an emerging growth company incubator.
Liquidity and Capital Resources
At February 29, 2000, DermaRX had approximately $10 thousand in current
assets and $475 thousand in current liabilities and, as such, was substantially
insolvent. Subsequent to the Merger, at April 6, 2000, the Company had
approximately $2.3 million in current assets and $10 thousand in current
liabilities.
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The Company is a start-up, and at April 6 2000 had no revenue. Management
of the Company expects that current assets will diminish as the Company's
business plan is implemented and that revenue will not meet expenses for several
quarters, if at all. There can be no guarantee that the Company's current
resources will be sufficient or that additional resources can be obtained.
Since inception, GoPublicNow.com funded its capital requirements through
funding from its founder and from private equity financing. As of April 17,
2000, the Company's sources of liquidity included cash of approximately $2.3
million.
In December 1999 and January 2000, GoPublicNow funded its initial capital
requirements through the sale of securities to private investors in a private
bridge offering generating a total of $1.35 million. The bridge offering sold
541,800 units at $2.50 per unit, with each unit consisting of one share of
common stock, one warrant to purchase one share of common stock at $7.50 per
share and one warrant to purchase one share of common stock at $10.00 per share.
In March 2000, the Company raised an additional $2.13 million via a private
placement of approximately 569,000 Units at $3.75 per Unit, with each Unit
consisting of one share of Common Stock, one Warrant to purchase one share of
Common Stock at $7.50 per share, and one Warrant to purchase one share of Common
Stock at $10.00 per share.
The Company believes that proceeds from its bridge financing and private
placement funds will be sufficient to cover working capital requirements for at
least 12 months. Should revenue levels expected by the Company not be achieved,
the Company would require additional financing during such period to support its
operations, continued expansion of its business and acquisition of technologies.
Such sources of financing could include capital infusions from strategic
partners of the Company, additional equity financings or debt offerings. The
Company has made no arrangements or commitments for such financing and there can
be no assurance that the Company will be able to obtain such financing on
satisfactory terms, if at all.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements of the Company are attached hereto as pages F-1
through F-13.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
As of the date of the Merger, Paul C. Roberts, Certified Public Accountant,
the independent accountant previously engaged as the principal accountant to
audit the financial statements of the Company was terminated. At the same time,
the firm of Miller and McCollom was engaged to perform the audit of the DermaRX
entity for the period ended February 29, 2000. Also at the same time, the firm
of Corbin & Wertz was engaged as the independent accountants of the Company
going forward.
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The audit reports of Paul C. Roberts on the financial statements of the
Company did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to audit scope or accounting principles. The
decision to change accountants was approved by the board of directors of the
Company. During the Company's two most recent fiscal years and any subsequent
interim period preceding the change, there were no disagreements with the former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of the former accountant, would have caused it
to make reference to the subject matter of the disagreements in connection with
its report.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
The principal offices and positions and the date each such person became a
director or executive officer are listed below. Executive officers are elected
annually by the Board of Directors. Board members serve one-year terms until
their successors are elected. The executive officers serve terms of one year or
until their death, resignation or removal by the Board of Directors. There are
no family relationships between any of the directors and executive officers. In
addition, there was no arrangement or understanding between any executive
officer and any other person pursuant to which any person was selected as an
executive officer.
The Officers, Directors and Executive Management of the Company are as
follows:
Name Age Positions
---- --- ---------
BRUCE BERMAN 42 Founder, President,
Chief Executive Officer and Chairman
ERIC HOPKINS 45 Chief Financial Officer and Treasurer
MARCUS HURLBURT 40 Vice President, Broker Relations
JEFFREY M. DIAMOND 34 Chief Technical Officers and Secretary
BRUCE BERMAN first worked in the emerging growth finance industry, forming
his first finance company at age 23. After generating substantial success and
arranging a successful buyout of his finance company, Mr. Berman co-founded a
renewable energy company in the mid 1980s. Mr. Berman then went on in 1994 to
establish the Michelson Group, Inc., a corporate development firm that has
successfully assisted companies in their quest to become public entities. Mr.
Berman has decided to share and utilize his knowledge, skills and experience
through his current innovation, GoPublicNow.com, which he founded in late 1999.
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ERIC HOPKINS, worked most recently as the Director of Finance for
Unisys-PulsePoint Communications, a NASDAQ manufacturer of telecommunications
products. At Unisys-PulsePoint, Hopkins focused his efforts in stockholder and
lender relations, private equity placements, debt negotiation, and became a
major participant in the company's acquisition by Unisys Corporation. Prior to
his job at Unisys-PulsePoint, Mr. Hopkins served as the Chief Financial
Officer at Tanknology Environmental International, a publicly traded
environmental services company. Hopkins, a CPA, spent several years in public
accounting in both large and small firms. He began his career with Motel 6
L.P., where he worked for more than twelve years in both finance and field
operations. He graduated from Kent State University with a B.A. in accounting
and obtained his MBA from Pepperdine University.
MARCUS HURLBURT, is a Registered Securities Principal with a series 24, 7,
22 and 63 licenses. He has over 10 years of experience as an Investment Banker
assisting emerging growth companies with corporate development and capital
finance. Mr. Hurlburt has been the Executive Vice President and Branch Manager
of the corporate headquarters and Director of Investment Banking for an Irvine
based Broker Dealership in California.
JEFFREY M. DIAMOND, has worked as an Information Technology (IT)
professional since 1982. He founded a Southern California programming company
that expanded into Local Area Networking (LAN) and Wide Area Networking (WAN)
consulting services. After experiencing success in these endeavors, he left his
firm to become the Director of Client Services for a major Novell Networking
firm in Los Angeles. Continuing his IT career, Mr. Diamond maintained the
positions of IT director for a premier Hilton Hotels Resort property as well as
the position of the IT director for a Los Angeles area business law firm. In
1994, Mr. Diamond formed QuickNet, Inc., an Internet-centric Digital Engineering
firms. In 1999, Jeff successfully negotiated the sale of QuickNet Corporation
and its Intellectual Property holdings. Mr. Diamond, a UCI graduate, holds
undergraduate degrees in both Computer Science and Political Science. He
continued his formal education earning a Juris Doctor in law and is a licensed
California attorney with an emphasis in business law and negotiation.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
ten percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the best of the Company's
knowledge, during the year ended February 29, 2000, all Section 16(a) filing
requirements applicable to the Company's officers, directors and greater than
ten percent shareholders were complied with.
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ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table shows certain compensation information for
services rendered in all capacities for the fiscal year ended February 29, 2000
and the fiscal year ended February 29, 1999. Other than as set forth herein, no
executive officer's salary and bonus exceeded $100,000 in any of the applicable
years. The following information includes the dollar value of base salaries,
bonus awards, the number of stock options granted and certain other
compensation, if any, whether paid or deferred.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards Payouts
-------------------------- ------------------------------------------- --------------------
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Position Salary Bonus Compensation Awards Options SARs Payouts Compensation
Year ($) ($) ($) ($) (#) ($) ($)
----------------------------------------------------------------------------------------------------------------------------
Bruce Berman 2000 $0 -0- -0- -0- -0- -0- -0-
Bruce Berman 1999 $0 -0- -0- -0- -0- -0- -0-
Marcus Hurlburt 2000 $0 -0- -0- -0- -0- -0- -0-
Marcus Hurlburt 1999 $0 -0- -0- -0- -0- -0- -0-
Eric Hopkins 2000 $0 -0- -0- -0- -0- -0- -0-
Eric Hopkins 1999 $0 -0- -0- -0- -0- -0- -0-
Jeffrey Diamond 2000 $0 -0- -0- -0- -0- -0- -0-
Jeffrey Diamond 1999 $0 -0 -0- -0- -0- -0- -0-
</TABLE>
Bruce Berman, the Company's Founder, President and Chief Executive Officer,
receives an annual salary of $120,000. When the Company's market capitalization
reaches $140 million, his salary will be increased to $180,000 annually through
2000. Mr.Berman owns 8,000,000 shares of the Company's common stock.
Marcus Hurlburt receives a salary of $95,000 annually, and owns 500,000
shares of the Company's common stock.
The Company has an employment agreement with Eric Hopkins, its Chief
Financial Officer. Pursuant to that Agreement, Mr. Hopkins receives $100,000 in
salary for his first year and $120,000 in salary for his second year. Mr.
Hopkins also received options to purchase 200,000 shares of common stock at
$3.25 per share. These options vest monthly over a two-year period.
Jeffrey M. Diamond, Chief Technical Officer, receives a salary of $100,000
annually. He also received options to acquire 5,000 shares of Common Stock at
$3.75 per share as a signing bonus and options to purchase an additional 50,000
shares of Common Stock at $3.75 per share which will vest on a pro rata monthly
basis over a one-year period.
14
<PAGE>
The Company has not had a bonus, profit sharing or deferred compensation
plan for the benefit of its employees, officers or directors.
Incentive Stock Option Plan and Executive Stock Option Plan:
At the recommendation of management, the board of directors has granted a total
of 330,000 options at prices ranging from $2.50 to $3.75 per share.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 6, 2000,
with respect to (i) each person known to the Company who beneficially owns more
than five percent of the outstanding shares of Common Stock, (ii) each director
of the Company, and (iii) all officers and directors of the Company as a group,
showing in each case, the name (and address, if required), amount and nature of
shares beneficially owned, and the percentage of the class owned by each such
beneficial owner.
Name and Address Beneficial Ownership Percentage
of Class
------------------- -------------------- ----------
Bruce Berman 8,000,000(1) 73.6%
5000 Birch St. Suite 4900
Newport Beach, CA 92660
Marcus Hurlburt 500,000(2) 4.6%
5000 Birch St. Suite 4900
Newport Beach, CA 92660
Eric Hopkins 0 (3) 0.0%
5000 Birch St. Suite 4900
Newport Beach, CA 92660
Jeffrey Diamond 0 (4) 0.0%
5000 Birch St. Suite 4900
Newport Beach, CA 92660
All Officers and Directors 8,500,000 78.2%
as a Group (four persons)
(1) Includes 8,000,000 founder's shares of Common Stock.
(2) Includes 500,000 founder's shares of Common Stock.
(3) Does not include options to purchase 200,000 shares of Common
Stock at $3.25 per share. These options are vest monthly over
a two-year period.
(4) Does not include options to purchase 55,000 shares of Common
Stock $3.75 per share.
15
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements
Independent Auditor's Report.
Consolidated Balance Sheets as of February 29, 2000 and February 28, 1999.
Consolidated Statements of Operations for the years ended February 29, 2000 and
February 28, 1999.
Consolidated Statements of Common Stockholders' Equity (Net Capital Deficiency)
for the years ended February 29, 2000 and February 29, 1999.
Consolidated Statements of Cash Flows for the years ended February 29, 2000 and
February 28, 1999.
Notes to Consolidated Financial Statements.
(a) 3. Other Exhibits
3(a)* Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement No. 33-15607 on Form S-18 under the
Act (the "S-18 Registration Statement")).
3(b)* By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the
S-18 Registration Statement).
3(c)* Vocal Feedback and Associates Apparatus Information Disclosure Statement
filed in the U.S. Patent and Trademark Office on October 11, 1983, Notice or
Recordation of Assignment of Document, Amendment dated January 21, 1985, Notice
of Appeals dated June 1985; Amendment dated July 22, 1985 and
Continuation-in-Part Application filed on November 14, 1985; Notice of Allowance
and Issue Fee Due dated December 10, 1986 (incorporated by reference to Exhibit
10.12 to the S-18 Registration Statement).
10(b)*Sublease Agreement.
10(e)*Securities Registration Agreement used in the Company's March 1993 private
placement (incorporated by reference to Exhibit 10(o) to the 1993 10-KSB).
10(f)*Settlement Agreement dated March 29, 1994 among M. Sue Benford, the
Company, other others (incorporated by reference to exhibit 10(g) to the 1994
10-KSB).
16
<PAGE>
14* Notice of Grant of European Patent (incorporated by reference to Exhibit
14 to the Company's Form 10-K for its fiscal year ended February 28, 1991).
23.1 Consent of Miller and McCollom, Independent Auditors.
23.2 Consent of Paul C. Roberts, Certified Public Accountant.
27.1 Financial Data Schedule
Schedule II Financial Data Schedule
* Indicates previously filed.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during its fiscal year
ended February 29, 2000. The following reports on Form 8-K were filed by the
Company subsequent to its fiscal year ended February 29, 2000.
10.1 Form 8-K dated April 20, 2000 reporting the Company's
acquisition by GoPublicNow.com, Inc.
10.2 Form 8-K dated May 8, 2000 reporting the Company's change
of outside auditor.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By:/s/ Eric J. Hopkins
------------------------
Eric J. Hopkins
Chief Financial Officer
Date: June 13, 2000
----------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Name Title Date
Chief Executive Officer:
President,
----------------------- Chief Executive Officer
/s/ Bruce A. Berman and Director June 13, 2000
-----------------------
Chief Financial Officer:
Vice President,
Chief Financial Officer June 13, 2000
----------------------- and Director
/s/ Eric J. Hopkins
Directors:
----------------------- Vice President, June 13, 2000
Marcus Hurlburt Director
17
<PAGE>
INDEX TO FINANCIAL STATEMENTS
DERMARX CORPORATION
FINANCIAL STATEMENTS
with
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Page
----
Reports of Independent Certified Public Accountants F-2 & F-3
Financial Statements:
Balance Sheets F-4
Statements of Operations F-5
Statements of Changes in Stockholders' (Deficit) F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-8 to F-13
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
DermaRx Corporation
We have audited the accompanying balance sheet of DermaRx Corporation as of
February 29, 2000, and the related statements of operations, changes in
stockholders' (deficit), and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DermaRx Corporation as of
February 29, 2000, and the results of its operations, its changes in
stockholders' (deficit) and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
accompanying financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency. These conditions raise
substantial doubt about the ability of the Company to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Miller and McCollom
Miller and McCollom
Certified Public Accountants
7400 West 14th Avenue, Suite 10
Lakewood, CO 80215
April 21, 2000
F-2
<PAGE>
Paul C. Roberts
Certified Public Accountant
800 Bedford Road
Pleasantville, NY 10570
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
DermaRx, Inc.
I have audited the accompanying balance sheet of DermaRx, Inc. at February 28,
1999, and the related statements of operations, changes in common stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of DermaRx, Inc. at February 28, 1999,
and the results of its operations and its cash flows for them ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's past default on certain loan agreements,
recurring losses, and past deficiencies in working capital raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2 to the financial
statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Paul C. Roberts
Paul C. Roberts
Certified Public Accountants
Pleasantville, New York
June 14, 1999
F-3
<PAGE>
DERMARX CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
February 29, 2000 February 28, 1999
------------------- -------------------
Current assets:
Cash and cash equivalents $ 1,408 $ 22
Accounts receivable - trade 565 5,459
Inventory - finished goods (Note 10) 8,673 39,899
Other receivables (less allowance for doubtful
accounts, $25,000 in 2000 and $0 in 1999 - 31,520
----------------- -----------------
Total current assets 10,646 76,900
Property and equipment:
Equipment, net of accumulated depreciation of
$18,542 in 2000 and $17,357 in 1999 1,762 2,948
Other assets:
Patents, net of accumulated amortization of
$66,461 in 2000 and $57,598 in 1999 84,230 93,093
---------------- ----------------
Total assets $ 96,638 $ 172,941
================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 190,950 $ 175,950
Notes payable - related party 25,000 50,000
Accrued interest - notes payable 40,625 17,601
Accrued interest - notes payable, related party 3,125 14,301
Accounts payable and accrued expenses 31,601 28,464
Accrued compensation 143,333 143,333
License agreement deposit 22,500 -
Other loans payable 17,500 -
---------------- ----------------
Total current liabilities 474,634 429,649
---------------- ----------------
Commitments and contingent liabilities (Note 8)
Redeemable Preferred Stock Note
Preferred Stock $.10 par value 800 shares authorized
None issued in 1999 or 2000
Common stockholders' (deficit): (Notes 6, 11 and 12)
Common stock, $.05 par value: 12,000,000
shares authorized; 399,961 shares issued
and outstanding in 1999 and 419,961
shares in 2000 20,998 19,998
Additional paid-in capital 4,608,610 4,604,980
Accumulated (deficit) (5,007,604) (4,881,686)
---------------- ---------------
Total stockholders' (deficit) (377,996) (256,708)
Total liabilities and stockholders' (deficit) $ 96,638 $ 172,941
================= ===============
</TABLE>
See accompanying auditors' reports and notes to financial statements.
F-4
<PAGE>
DERMARX CORPORATION
STATEMENTS OF OPERATIONS
YEAR ENDED
<TABLE>
<CAPTION>
<S> <C> <C>
February 29, 2000 February 28, 1999
------------------- -------------------
Revenues
Sales, net discounts $ 18,048 $ 121,262
Cost of goods sold (4,420) (18,252)
------------------- -------------------
Gross profit 13,628 103,010
------------------- -------------------
Expenses
General and administrative 97,101 279,428
Write-down of inventory ( Note 10) 30,957 98,465
Research and development - 30,000
----------------- -------------------
128,058 407,893
----------------- ------------------
(Loss) from operations (114,430) (304,883)
Other income (expense)
Interest income 360 48
Interest expense (11,848) (25,605)
------------------ ------------------
Net (loss) $ (125,918) $ (330,440)
=================== ===================
Net (loss) per common share $ (0.31) $ (0.86)
------------------- -------------------
Weighted average shares outstanding 401,627 383,134
=================== ===================
</TABLE>
See accompanying auditors' reports and notes to financial statements.
F-5
<PAGE>
DERMARX CORPORATION
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED FEBRUARY 28, 1999 AND FEBRUARY 29, 2000
COMMON STOCK
<TABLE>
<CAPTION>
Par Additional Paid- Accumulated
Shares Value in Capital Deficit Total
------- ----------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance
February 28, 1998 347,048 $ 17,352 $ 4,474,030 $(4,551,246) $ (59,864)
Shares issued in private placements 24,720 1,236 60,564 - 61,800
Shares issued in connection with
conversion of notes payable 7,466 373 18,293 - 18,666
Shares issued for services and -
accrued expenses 20,727 1,036 51,723 52,759
Net (loss) - - - (330,440) (330,440)
------- ----------- ----------- ------------ ----------
Balance
February 28, 1999 399,961 $ 19,998 $ 4,604,610 $(4,881,686) $(257,078)
Shares issued for legal fees 20,000 1,000 4,000 5,000
- -
Net (loss) - - - (125,918) (125,918)
------- ----------- ----------- ------------ ----------
Balance
February 29, 2000 419,961 $ 20,998 $ 4,608,610 $(5,007,604) $(377,996)
____________ _______ __________ __________ __________ ============
</TABLE>
See accompanying auditors' reports and notes to financial statements.
F-6
<PAGE>
DERMARX CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 29, 2000, AND FEBRUARY 28, 1999
<TABLE>
<CAPTION>
2000 1999
-------------------- ------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (125,918) $ (330,440)
Adjustments to reconcile net (loss) to net cash (used)
by operating activities:
Expenses paid by issuance of stock 5,000 52,759
Discount on notes amortized 0 13,095
Depreciation 1,185 4,831
Amortization of patents 8,863 8,863
Changes in assets and liabilities:
Decrease in accounts receivable 5,164 11,341
Decrease in other receivables 31,250 0
Decrease in inventory including inventory write-off 31,226 89,217
Decrease in prepaid expenses 0 1,487
(Increase) decrease in other assets 0 (28,000)
Increase in accounts payable, accrued interest
and accrued expenses 14,616 44,925
Increase in license agreement deposit 22,500
---------- ---------------
Net cash (used) by operating activities: (6,114) (131,922)
------------ --------------
Cash flow from investing activities: 0 0
Proceeds from issuance of common stock 0 62,000
Proceeds from debt obligations 50,000 10,000
Repayment of debt obligations (50,000) (11,000)
Proceeds from other loans 7,500 0
------------
Net cash provided by financing activities: 7,130 61,000
------------ -------------
- -
Net increase (decrease) in cash and cash equivalents 1,386 (70,900)
Cash and cash equivalents, beginning of year 22 70,922
------------- ---------------
Cash and cash equivalents, end of year $ 1,408 $ 22
--------------- ----------------
Interest paid $ 11,848 $ 22,605
=============== ================
Income Taxes paid $ 0 $ 0
================ =================
</TABLE>
See accompanying auditors' reports and notes to financial statements.
F-7
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The Company was organized on June 4, 1985, under the name Vocaltech, Inc. On
December 11, 1992, the Company changed its name to Innotek, Inc. and on January
24, 1995, again changed its name to DermaRx, Inc (Company). The Company is
engaged in the development and sale of proprietary, non-prescription wound and
skin care products to retailers, hospitals, nursing homes and home health care.
A wholly-owned subsidiary, Dermedics, Inc. was inoperative during the years
ended February 29, 2000, and February 28, 1999.
REVENUE RECOGNITION
The Company recognizes sales and the related costs of sales upon shipment of
goods.
DEPRECIATION AND AMORTIZATION
Property and equipment are reflected at cost.
Property and equipment are being depreciated over estimated useful lives of five
years, principally using the straight-line method for both book and tax
reporting purposes. Patents are being amortized using the straight-line method
over a period of ten to seventeen years. Depreciation expense on property and
equipment for 2000 and 1999 respectively were $ 1,185 and $4,831.
(LOSS) PER SHARE
(Loss) per share is computed on the basis of the weighted-average number of
common shares outstanding during the periods. The weighted-average number of
shares of common stock does not include common equivalent shares for the assumed
exercise of the common stock options and warrants, as the effect would be
antidilutive.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
INTANGIBLES
Intangibles are stated at amortized costs. Amortization is computed using the
straight-line method over the estimated useful lives of the assets.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, trading accounts receivable, accounts payable,
accrued liabilities and amounts due related parties reflected in the financial
statement approximates fair value due to the short-term maturity of the
instruments.
<PAGE>
F-8
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual
results could differ from those estimates.
INVENTORY
Inventory is valued at the lower of cost or market, with cost determined by the
first in, first out (FIFO) method.
COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards ("FAS") No. 130,
"Reporting Comprehensive Income" FAS No. 130 requires that the components and
total amounts of comprehensive income be displayed in the financial statements
beginning in 1998. Comprehensive income includes net income and all changes in
equity during a period that arise from nonowner sources, such as foreign
currency items and unrealized gains and losses on certain investments in equity
securities. The Company does not have any components of comprehensive income
other than net income.
NOTE 2 - OPERATING RESULTS AND MANAGEMENT'S PLANS
The Company has had recurring operating losses of $ 125,918 in 2000 and $
330,440 in 1999 , has been in default of certain debt agreements and has had
deficiencies in working capital of $463,988 in 2000 and $352,749 in 1999 which
raise doubt about the Company's ability to continue as a going concern.
During the year ended February 29, 2000, the Company attempted to raise capital
and entered into an acquisition agreement described in Notes 12 and 13.
F-9
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 3 - SEGMENT INFORMATION
On December 31, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131 "Disclosures about Segments of an Enterprise and Related
Information: ("SFAS 131"). The new rules revise established standards for
public companies relating to the reporting of financial and descriptive
information about their business segments and their enterprise-wide operations.
The Company operates in one segment, and one geographic area.
NOTE 4 - LONG TERM DEBT
During the year ended February 28, 1995, the Company raised $315,500 in a
private placement by issuance of three year notes which bear interest at a rate
of 6% per annum. In connection with the issuance of the notes, the Company
issued 25,240 shares of its common stock to the noteholders. During the year
ended February 28, 1996, holders of $230,500 of the notes plus interest accrued
thereon converted to common stock of the Company. Of this amount $140,500 was
converted by officers and directors of the Company. During the year ended
February 28, 1999, holders of $10,000 of the notes, plus accrued interest
thereon, converted into 7,467 shares of common stock of the Company. Aggregate
maturities of past due notes payable at February 29, 2000, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Fiscal Year Amount
------------------------ ----------
2000 $ 215,950
Less: Current Portion (215,950)
----------
$ -
==========
</TABLE>
NOTE 5 - INCOME TAXES
The Company has changed its method of accounting for income taxes to comply with
the provisions of SFAS No. 109, Accounting for Income Taxes. This accounting
change had no significant impact on the Company's financial statements.
As of February 28, 2000, the Company has net operating loss carry forwards of
approximately $4,675,000 for both financial statement and income tax purposes
which expire in the years 2001 through 2015, and unused research and development
credits of $21,000 which expire in 2001. The Company has provided a full
valuation reserve against the benefit of the net operating loss and unused R&D
Credits due to uncertainty regarding its ability to use them. A change in
ownership of more than 50% of the Company could reduce or eliminate the
Companies ability to utilize those loss carryovers.
Deferred Tax Assets $ 1,850,000
Loss Valuation Allowance 1,850,000
-------------
Net Deferred Tax Assets $ -
=============
F-10
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 6 - REDEEMABLE CONVERTIBLE PREFERRED STOCK
The Company has authorized 800 shares of $.10 par value Series A 14% convertible
preferred stock. The holders of the Series A preferred stock are entitled to 15
votes per share on all matters submitted to a vote of the common shareholders
and are entitled in liquidation to share price plus all accrued and unpaid
dividends. No preferred stock shares were outstanding as of February 29, 2000,
or February 28, 1999.
NOTE 7 - COMMON STOCK
During October 1999, the Company had a 5 to 1 reverse stock split of its $.05
par value stock. On March 6, 2000, the Company had a second 5 for 1 reverse
stock split. In accordance with SAB 83, the financial statements and footnote
disclosure reflect the reverse stock split for all reporting periods.
During the year ended February 28, 1999, the Company issued 24,720 shares of
common stock for net proceeds of $62,000.
During the year ended February 28, 1999, the Company issued 20,725 shares of
common stock for services and conversion of accrued expenses.
During the year ended February 29, 2000, the Company issued 20,000 shares of
common stock for legal services.
NOTE 8 - STOCK WARRANTS
In July 1990, the Company issued warrants to purchase 19,048 shares of common
stock of the Company at $3.15 per share that expired August 1, 1994. These
warrants were issued along with convertible debentures. During the fiscal year
ended February 28, 1992, the debentures were in default. As consideration to
waive the default, the Company extended the date of expiration for five years to
August 1, 1999. None of the warrants were exercised before expiration and all
had expired prior to February 29, 2000.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
In April 1, 1999, The Company filed a lawsuit against a former officer and
director and against a former business manager. Although the Company believes
its claims to be meritorious, however, the ultimate outcome of the suit cannot
be determined.
The Company does not have any outstanding lease obligations.
The Company has commitments and contingencies in connection with the Shell
Acquisition Agreement described in Note 11.
F-11
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE10 - MAJOR CUSTOMERS
For the years ended February 29, 2000, and February 28, 1999, there were three
customers, who accounted for more than ten percent of the Company's sales of its
non-prescription products. The Company has suspended its direct sales efforts
after February 29, 2000. See licensing agreement in Note 13.
NOTE 11 - WRITE-DOWN OF INVENTORY
During the years ended February 29, 2000, and February 28, 1999, the Company
wrote down its inventory reflecting decline in value by $30,957 in 2000 and
$98,465 in 1999.
NOTE 12 - SHELL ACQUISITION AGREEMENT
As of February 29, 2000, the Company entered into an agreement whereby
shareholders owning or representing not less than 51% of the Company's shares
agreed to sell their shares to the acquiring party. The agreement's terms,
among others, provided that the existing business of the Company be transferred
to a subsidiary of the Company with a subsequent spin-off of such subsidiary to
the company's existing shareholders prior to the acquisition.
Other requirements directly related to the Company, its officers and directors,
and to its shareholders were included in the agreement.
NOTE 13 - SUBSEQUENT EVENTS
On March 6, 2000, the Board of Directors approved and later approved by
shareholders, an amendment to the Company's Certificate of Incorporation to
change the name of the Company from DermaRx Corporation to GoPublicNow.com,
Inc. The Company also authorized an increase in the capital stock to
110,000,000 shares from 12,000,000 shares and to change its par value from $.05
per share to $.001 per share. An added class of 10,000,000 shares of preferred
stock, par value $.001, was also authorized.
Subsequent to the above-mentioned stock split, the Company registered the
issuance of 346,100 shares of the new par value stock under a salary
reimbursement plan and legal services agreement.
F-12
<PAGE>
DERMARX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
NOTE 13 - SUBSEQUENT EVENTS, CONTINUED
In connection with arrangements resulting under the acquisition agreement, a
substantial portion of liabilities existing at February 29, 2000, have been paid
or settled.
NOTE 14 - LICENSING AGREEMENT
Effective March 1, 2000, the Company entered into a licensing agreement for the
selling of its skin care products. A fee deposit of $22,500 was received during
February, 2000. The balance of a $50,000 total non-refundable fee was received
subsequent to February 29, 2000. The agreement provides for the amounts
received by the Company to be paid for legal fees including the lawsuit
described in Note 9. The license is for an initial term of three years with
annual renewals so long as the licensee complies with the agreement. The annual
licensing fee is to be 5% of net profits before taxes for the sale of designated
skin products with a minimum of $20,000 annual fee after three years for
renewing the license.
F-13
<PAGE>
Pro Forma Financial Information
On April 6, 2000, DermaRx Corporation, a Delaware corporation, acquired all of
the outstanding common stock of GoPublicNow.com, Inc., a Nevada corporation, in
a businses combination described as a "reverse acquisition." For accounting
purposes, the acquisition has been treated as the acquisition of DermRx by
GoPublicNow.com.
Immediately prior to the acquisition, DermaRx had 750,080 shares of common stock
outstanding. As part of DermaRx's reorganization with GoPublicNow.com, DermaRx
issued 10,326,123 shares of its common stock to the shareholders of
GoPublicNow.com in exchange for 10,326,123 shares of GoPublicNow.com common
stock. Immediately folowing the merger, DermaRx changed its name to
GoPublicNow.com, Inc.
The operations of DermaRx had substantially ceased before the time of the
acquisition and DermaRx had nominal assets and liabilities. The operations of
DermaRx will not be continued by the surviving entity. GoPublicNow (Nevada) was
incorporated in December 1999, and at the time of the acquisition had no
revenue. In light of these facts and circumstances, disclosure of prior
financial information in pro forma presentation is not deemed to be material to
an understanding of future operations and accordingly no pro forma financial
information is presented here. For an understanding of the prior financial
information of GoPublicNow.com (Nevada) and DermaRx, please see the separate
audited financial statements attached as exhibits to this Form 8-K/A. For an
understanding of management's plans for the surviving entity, please see Form
8-K filed April 6, 2000.
