21
<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[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
Commission File Number 0-15382
GAMOGEN,INC.
__________________________________________________________________________
(Exact name of registrant as specified in its charter)
NEW YORK 13-3341562
_____________________________________ ____________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
24 Carpenter Road, Chester, NY, 10918 10918
_____________________________________ ____________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 469-2042
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 during the past 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 lastest practicable date.
Class Outstanding at November 30, 1998
_____________________________ ________________________________
(Common Stock, $.01 par value) 1,230,000
<PAGE>
GAMOGEN,INC.
INDEX
PART I Financial Information Page No.
Condensed Consolidated Balance Sheet -
November 30, 1998; November 30, 1997 and February 28, 1998 3
Condensed Consolidated Statement of Income -
three months and nine months ended November 30, 1998 4
and November 30, 1997
Condensed Consolidated Statements of Cash Flows - 5
nine months ended November 30, 1998 and November 30, 1997
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition and
Results of Operations 7-11
PART II Other Information
Item 1. Other Information 12
Item 2. Exhibits and Reports on Form 8-K 13-19
<PAGE>
FORM 10-Q
PART I - FINANCIAL INFORMATION
GAMOGEN,INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
November 30, November 30, February 28,
1998 1997 1998
--------- --------- ---------
Current Assets
<S> <C> <C> <C>
Cash and cash equivalents $ 33,680 $ 17,724 $ 19,228
Short-term investments 155,025 454,349 463,227
Accounts receivable 22,140 28,355 33,537
Inventory 133,635 165,427 149,078
Prepaid expenses 500 938 500
------- ------- -------
Total current assets 344,980 666,793 665,570
------- ------- -------
Property, plant & equipment, net 711 15,158 11,826
Other assets, net 14,878 145,590 17,593
------- ------- -------
Total property, plant & equip and
other assets 15,589 160,748 29,419
------- ------- -------
Total Assets $ 360,569 $ 827,541 $ 694,989
LIABILITIES
Current liabilities
Accounts payable $ 5,731 $ 5,265 $ 4,315
Accrued expenses 5,922 44,905 35,691
Other liabilities - due to 26,187 44,978 101,505
affiliate ------- ------- -------
Total current liabilities 37,840 95,148 141,511
------- ------- -------
Stockholders' equity
Common stock, $.01 par value
authorized
4,000,000 shares, issued and 12,300 12,300 12,300
outstanding 1,230,000
Warrants outstanding 40 40 40
Additional paid-in capital 1,579,723 1,579,723 1,579,723
Accumumlated (deficit) (1,269,334) (859,670) (1,038,585)
--------- --------- ---------
Total stockholders' equity 322,729 732,393 553,478
--------- --------- ---------
Total Liabilities and Stockholders'
Equity $ 360,569 $ 827,541 $ 694,989
</TABLE>
<PAGE>
FORM 10-Q
GAMOGEN,INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three months ended Nine months ended
November 30, November 30,
1998 1997 1998 1997
------ ------ ------ -------
<S> <C> <C> <C> <C>
Sales
- -------------------
Net sales of products $ 59,280 $ 79,107 $ 184,929 $ 231,131
Sale of impotence
treatment 0 0 0 708,000
------- ------- ------- -------
59,280 79,107 184,929 939,131
Costs and expenses:
- -------------------
Cost of goods sold 38,207 29,150 94,466 78,503
Selling, general and
administrative 53,899 85,163 220,199 310,214
Depreciation and
amortization 4,610 12,287 13,830 37,199
------- ------- ------- -------
96,716 126,600 328,495 425,916
------- ------- ------- -------
Income (loss) from
operations (37,436) (47,493) (143,566) 513,215
Non-operating
income(expense):
- -----------------------
Licensing income 0 0 0 (75,000)
Joint venture - Restore (100,000) 0 (100,000) 0
Interest & other income 2,559 0 13,066 136
-------- -------- --------- -------
(97,441) 0 (86,934) (74,864)
-------- -------- --------- -------
Net income (loss) before
income taxes (134,877) (47,493) (230,500) 438,351
Provision for income tax 0 137 250 25,307
-------- ------- --------- -------
Net Income (Loss) $(134,877) $ (47,356) $ (230,750) $ 413,044
========================== ======== ======= ========= =======
Weighted average number of
shares outstanding
Primary 1,230,000 1,230,000 1,230,000 1,230,000
Fully Diluted 1,430,000 1,230,000 1,430,000 1,430,000
Net income per share
Primary $ (0.11) $ (0.04) $ (0.19) $ 0.34
Fully Diluted $ (0.09) $ (0.03) $ (0.16) $ 0.29
</TABLE>
<PAGE>
FORM 10-Q
GAMOGEN,INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
November 30, November 30,
1998 1997
Cash flow from operating activities: ------------ -----------
- ------------------------------------
<S> <C> <C>
Net Income (Loss) $ (230,750) $ 413,044
Adjustments to reconcile net income
(loss) to Cash provided by (used in)
operating activities:
depreciation and amortization 13,830 37,199
(increase) decrease in short-term
investments 308,202 (454,349)
(increase) decrease in prepaid
expenses 0 3,022
(increase) decrease in accounts
receivable 11,397 (4,698)
(increase) decrease in inventory 15,444 4,073
increase (decrease) in accounts
payable 1,416 5,265
increase (decrease) in accrued
expenses (29,769) 34,436
--------- ---------
Cash provided by (used in) operating 89,770 37,992
activities
Cash flows from investing activities
- -----------------------------------
(acquisition) of equipment 0 (300)
decrease (increase) in other assets 0 0
Cash flows from financing activities
- ------------------------------------
Increase (decrease) in other
liabilities - due to affiliate (75,318) (21,336)
--------- ---------
Net increase in cash and cash 14,452 16,356
equivalents
Cash and cash equivalents - beginning
of year 19,228 1,368
--------- ---------
Cash and cash equivalents - end of year $ 33,680 $ 17,724
- --------------------------------------- ========= =========
</TABLE>
<PAGE>
FORM 10-Q
GAMOGEN,INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Reference is made to Notes to Financial Statements included in the
Company's Annual Report)
Note 1: MANAGEMENT'S STATEMENT
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
It is suggested that these financial statements be read in conjunction with
the financial statements and the notes thereto included in the Company's
latest annual report on Form 10-KSB.
<PAGE>
FORM 10-Q
GAMOGEN,INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Capital Resources and Liquidity
At November 30, 1998, the Company's cash and cash equivalents on a
consolidated basis was $33,680 and net working capital was $307,140. The
Company's cash and cash equivalents and net working capital balances on a
consolidated basis at November 30, 1997 were $17,724 and $571,645,
respectively. The decrease in working capital of $264,505 resulted from
cummulative net losses for the period September 1997 through November 1998
of $457,022 offset by the effect of a decrease in other assets (Impotence
Technology) of $138,390 (see comments below). Working capital was also
reduced by a $100,000 investment in a new impotence joint venture (see
comments below).
On July 10, 1993 the Company acquired the rights to an Oral Treatment for
Male Impotence developed by Dr. Zorgniotti. On April 12, 1994 the Board of
Directors approved and on April 14, 1994 the Company signed with Zonagen, a
small US based biotechnology company, an agreement under which Zonagen
acquired all rights to the Company's Oral Treatment for Male Impotence
("Impotence Agreement"). In exchange for the above rights the Company
received from Zonagen $100,000 in cash and, subject to certain FDA
approvals and the Company's agreement not to compete, future payments of
$200,000 in restricted common stock of Zonagen, and royalties on Zonagen's
future sales of the Oral Treatment.
In the year ended February 1995 the Company recorded income from the
Impotence Agreement of $47,107 ($100,000 in licensing payments made by
Zonagen less related expenses of $52,893). In the year ended February 1996
no payments were received by the Company under the Impotence Agreement.
On May 28, 1996 a stock payment was received by the Company in the form of
19,512 restricted common stock shares of Zonagen in accordance with certain
non-compete terms of the Impotence Agreement. On June 20, 1996 the Company
sold the 19,512 restricted shares to a small group of private investors for
$87,800, approximately 50% of the then NASDAQ market price for Zonagen,
Inc. non-restricted common stock.
On January 24, 1997 the Board of Directors approved and signed with Zonagen
a conditional amendment to the Impotence Agreement granting Zonagen the
right ("Option") to amend the Impotence Agreement eliminating the
following: 1) Gamogen's rights to royalties on Zonagen's future sales of
the Oral Treatment; 2) Gamogen's rights to market the Oral Treatment in
countries where Zonagen does not timely obtain regulatory approval for and
commence marketing of the Oral Treatment.
The Option was conditioned on the payment to Gamogen the amount of $750,000
("Option Price") if the Option were exercised by January 24, 1998 less any
Maintenance Payments (see below) received by Gamogen. The Option included
increases in the Option Price for later exercise of the Option through
January 24, 2000.
Under the conditional amendment Zonagen was granted the option, provided
however, that Zonagen make the following payments ("Maintenance Payments")
in cash to Gamogen: $75,000 upon the execution of the conditional amendment
and $75,000 on each July 24 and January 24 which occurs after the execution
of the conditional amendment and before Zonagen's exercise of the Option.
On January 24, 1997 the Company received from Zonagen the initial
Maintenance Payment of $75,000 which the Company recorded as licensing
income. In July 1997 Gamogen received a second
<PAGE>
maintenance payment of $75,000 under the conditional amendment. In August
1997 Gamogen negotiated with Zonagen for revision to the Conditional
Amendment Number 1 of The Assignment Agreement. In September 1997 the Board
of Directors approved and signed with Zonagen a conditional amendment,
Amendment Number 2 to the Assignment Agreement, establishing an option
price of $708,000 if the option were exercised on or before September 30,
1997. On September 30, 1997 Gamogen received payment from Zonagen for
$558,000 which resulted from the sale of the impotence oral treatment for
$708,000 reduced by credits for maintenance payments previously received of
$150,000. As a result of this payment Zonagen has exercised the Option and
Gamogen has effectively sold its interest in this product and is not
entitled to further payments under the Assignment Agreement and its
amendments.
Due to the approval and subsequent acceptance of Viagra, Gamogen recorded
other expense of $153,567 for Research and Technology - Impotence
Technology, in the fourth fiscal quarter of the year ended February 28,
1998, to reflect the amortization of its Other Asset (Impotence
Technology).
Payroll and certain other Company expenses and purchases are paid directly
by an affiliate and charged to the Company as advances. These advances,
classified as Other liabilities - due to affiliate, are due for payment to
the affiliate following the close of each fiscal quarter and fiscal year.
As of February 1998 outstanding advances from the affiliate were $101,505.
These advances of $101,505 were due and were paid by the Company to the
affiliate on July 9, 1998. During the three month period ended May 31, 1998
advances made by the Company's affiliate were $32,345. These advances of
$32,345 were due and paid to the affiliate on July 15, 1998. For the
quarter ended August 31, 1998 advances made by the Company's affiliate were
$58,803. These advances of $58,803 were paid on November 20, 1998. During
the quarter ended November 30, 1998 advances made by the company's
affiliate were $26,187. These advances of $26,187 are due and payable on
January 15, 1999. Gamogen's current cash and cash equivalents and
anticipated cash flow from operations is expected to be sufficient to
enable it to meet its total net cash requirements through February 1999.
To improve its projected cash flows from operations, on October 28,1998 the
company entered into a joint venture with an affiliate, Repro-Med Systems,
Inc., to develop and market a new vacuum impotence device named Restore
(see attached Exhibit 3). The Company is contributing $175,000 in cash for
which the Company receives 5% of the gross revenues of the Restore product
shipped. Repro-Med Systems which has previously contributed $300,000 to
development, marketing and distribution of the Restore product has agreed
to contribute inventory, marketing, and development costs in excess of the
Company's $175,000 contribution but may terminate the joint venture at its
discretion. The Company paid $100,000 in the third quarter and will
contribute $75,000 in the quarter ending February 28, 1999.
There can be no guarantee that obligations beyond February 1999 can be met
from current projected cash flow without continuing advances from
affiliates. These advances may require extended payment terms as the
company develops alternate sources of funds from products such as Restore
(see above comments).
Any statements which are not historical facts contained in this report are
forward looking statements that involve risks and uncertainties, including,
but not limited to, unexpected increases or decreases in sales of the
Company's products, uncertainty related to Food and Drug Administration or
other government regulation, and other risks identified in the Company's
Securities and Exchange Commission filings.
<PAGE>
Results of Operations-Three months November 1998 vs Three months November
1997:
The Company's sales for the quarter ended November 30, 1998 were $59,280.
This represents a decrease of $19,827 versus the quarter ended November 30,
1997. The Company's loss from operations was $37,436 in the quarter ended
November 30, 1998. This compares to a loss from operations of $47,493 for
the same quarter of the previous fiscal year. The Company posted a consolidated
loss from operations in the quarter ended November 30, 1998 of $37,436 which was
attributable to its subsidiary, Gyneco's operating loss of $50,547. The effect
of Gyneco's operating loss was partially offset by pre-consolidation
operating income from Gamogen's financial results.
In the quarter ended November 30, 1997 the Company's loss from operations of
$47,493 included Gyneco's operating loss of $26,060. The Company's net loss
for the quarter ended November 30, 1998 was $134,877. This includes a
$100,000 non-operating expense for the Restore joint venture and compares
with a net loss of $47,356 in the same quarter of the previous fiscal year.
The Company's net loss per share of common stock was $0.11 in the current
fiscal quarter ended November 30, 1998 versus a loss per share of $0.04 in
the quarter ended November 30, 1997.
Selling, general and administrative expenses were $53,899 in the current
fiscal quarter compared to $85,163 in the same quarter of the prior fiscal
year. The $31,264 reduction in selling, general and administrative
expenses for the three months ended November 30, 1998 is primarily
attributable to reversal of incentive executive bonuses recorded during the
1998 fiscal year which ended on February 28, 1998. The total incentive
bonuses were $27,000. The incentive bonus payments were deferred at February
28, 1998 until cash flow warranted payment. Business conditions do not
warrant payment and the incentive bonuses have been rescinded.
Depreciation and amortization was $4,610 in the quarter ended November 30,
1998 versus $12,287 in the same quarter of the prior fiscal year. The
decrease in depreciation and amortization results from a $7,678 charge for
amortization of other assets (Impotence Technology) in the quarter ended
November 30, 1997, which did not repeat in the quarter ended November 30,
1998 (see Capital Resources and Liquidity section above).
Results of Operations - Nine months November 1998 vs Nine months November
1997:
The Company's sales for the nine month period ended November 30, 1998 were
$184,929. This represents a decrease of $754,202 versus the nine month
period ended November 30, 1997, due primarily to the sale in the quarter
ended August 1997 of the Company's impotence treatment technology for
$708,000 which did not repeat in this quarter. The Company's loss from
operations was $143,566 in the nine month period ended November 30, 1998.
This compares to a profit from operations of $513,215 for the same nine
month period of the previous fiscal year. The Company's loss from
operations in the nine month period ended November 30, 1998 of $143,566
includes Gyneco's operating loss of $129,647. In the nine month period
ended November 30, 1997 the Company's profit from operations of $513,215
included Gyneco's operating loss of $70,415. The Company's net loss for the
nine month period ended November 30, 1998 was $230,750, this includes a
$100,000 non-operating expense for the Restore joint venture. This compares
with a net profit of $413,044 in the same nine month period of the previous
fiscal year. The Company's net profit in the nine month period ended
November 30, 1997 resulted primarily from $708,000 in revenues from sale of
the Company's impotence treatment technology which did not repeat in the
quarter
<PAGE>
ended November 30, 1998. The Company's net loss per share of common stock
was $0.19 in the current fiscal nine month period ended November 30, 1998
versus a profit per share of $0.34 in the nine month period ended November
30, 1997.
Selling, general and administrative expenses were $220,199 in the current
nine month period compared to $310,214 in the same nine month period of the
prior fiscal year. The decrease in selling, general and administrative
expenses in the nine month period of the current fiscal period was $90,015
as compared to the same period of the prior fiscal year. The decrease was
due to certain administrative costs in the prior year period related to the
sale of the impotence treatment technology which did not repeat in the
current fiscal period and to the reversal of incentive executive bonuses
recorded during the 1998 fiscal year which ended on February 28, 1998. The
incentive bonus total was $27,000. The incentive bonus payments were
deferred at February 28, 1998 until cash flow warranted payment. Business
conditions do not warrant payment and the incentive bonuses have been
rescinded. Depreciation and amortization was $13,830 in the nine month
period ended November 30, 1998 versus $37,199 in the same nine month period
of the prior fiscal year. The decrease in depreciation and amortization
results from $23,035 in charges for amortization of other assets (Impotence
Technology) in the nine month period ended November 30, 1997, which did not
repeat in the nine month period ended November 30, 1998 (see Capital
Resources and Liquidity section above).
Year 2000 Compliance
Company State of Readiness - The Company will be ready for the year
2000 in both information technology (IT) and non-IT systems. In terms of IT
systems, the Company has purchased and taken delivery of a software upgrade to
make its primary accounting, sales and manufacturing systems year 2000
compliant. The upgrade will be installed and validated by the summer of
1999. The internal network on which the primary business IT software runs
is currently being upgraded, completion is planned for spring 1999.
In regard to non-IT systems, which refers to systems using embedded
technology like microcontrollers, etc., the Company does not currently
manufacture, nor has it completed development of, products which utilize
microprocessors or similar date related functionality.
The Company is surveying third parties with which it has material
relationships to determine whether there are any known, significant risks
for business interruption, to-date no risk has been identified.
Costs of Year 2000 Issues - The estimated total cost of upgrading the
Company's IT and non-IT systems is under $15,000.
Risks of Year 2000 Issues - The primary risk to the Company in terms
of year 2000 issues, relates to external communication networks in the area
of international telephone systems. This effects a small portion of the
Company's overall business activity in the areas of customers and
suppliers.
Contingency Plans - The Company has the flexibility to temporarily
utilize off-the-shelf, year 2000 compliant software for key portions of
business system applications, should the Company experience an unforeseen
delay or problem with the aforementioned legacy system upgrades.
In regard to the risk of failures in international communications networks,
a contingency plan including provisions for sending and receiving orders
and
<PAGE>
payments using couriers and other secondary methods of communication is
currently being explored.
The Company currently believes that becoming Year 2000 compliant wil not
have a significant impact on the financial position or results of
operations of the Company. Although the Company is not aware of any
material operational issues or costs associated with preparing its products
or internal information systems for the year 2000, there can be no
asurances that the Company will not experience significant unanticipated
negative consequences or costs caused by undetected errors or defects in
the technology used in its internal systems, which are composed
predominately of third party software and hardware, or caused by software
used by its vendors or customers or by goverment agencies.
<PAGE>
FORM 10-Q
GAMOGEN,INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 1. Change in Officers and Directors
On January 15, 1999 a Termination Agreement was agreed to between
J.Garringer and Repro-Med Systems, Inc. At that time Mr. Garringer
tendered his resignation as an officer and director of Gamogen and Repro-
Med Systems, Inc. Also on January 15, 1999, a one year Sales
Representative Agreement was entered into between J. Garringer and Repro-
Med Systems, Inc. For the first 28 weeks of this Sales Representative
Agreement, Mr. Garringer will be paid a minimum draw against commission of
$1,800 per week and insurance benefits. After the first 28 weeks,
commission will be paid on completed sales with no minimum draw against
commission and no company paid benefits. (See Exhibits 1 & 2)
Mr. Garringer held the positions of Executive Vice-President,
Secretary, Director and Chief Financial Officer for the Company. The
positions of Chief Financial Officer, Director and Secretary have been
assumed by Norman E. Rathfelder.
<PAGE>
Item 2. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended
November 30, 1998. The Exhibits filed as part of this report are listed
below.
Exhibit No. Description
1. Sales Representative Agreement
(pages 14-16)
2. Termination Agreement
(pages 17-18)
3. Joint Venture Agreement
(pages 19)
<PAGE>
Item 2. Exhibit 1.
Sales Representative Agreement between J. Garringer and Repro-Med Systems,Inc.
1) J. Garringer (or a new company named by J. Garringer) will be paid
monthly commissions on sales at rates as follows:
Commission Percentage of Sales
Restore (or equivalent, ie, private 15%(d) 10% if under $55(a)
label, OEM, etc.)
Prolong 15%(d) 10% if under $5 (a)
US Military Special 10%
New Account Sales for Other Products (b) 10%
New Capital Raised (c) 5%
(a) equivalent prorata on cost:price basis
(b) paid on new customers initiated by J. Garringer
(c) development, private placement, etc; from persons introduced by J.
Garringer excludes building sale, B-D AsiaPacific, Sabratek
(d) a 5% override commission only, will be paid on customers or sales
introduced by individuals other than J.Garringer and not initiated by J.
Garringer nor related to his or his accounts efforts.
Note the 15% rate will be paid on first $1,000,000 in annual sales, 10%
thereafter.
Sales value used to calculate above commission rates will be reduced by any
other commissions that need to be paid by Repro-Med on the sale.
Monthly sales projections will be provided by J. Garringer on a rolling, 12
month basis.
Company has the last right of acceptance of any customer order tendered and
reserves the right to determine future support level for all products and
the right to sell and/or discontinue products.
J. Garringer understands that for his release of claims against Repro-Med
Systems/Gamogen, he is being given as consideration the opportunity to
establish a relationship as a Manufacturer's Representative/Consultant and
to receive the compensation as described in paragraphs (1), (2), & (3).
The aforementioned compensation is a commission draw and not salary
continuation.
2) For the first 28 weeks of the agreement minimum commissions and benefits
will be paid. Minimum commission payments will be paid at the rate of
$1,800 per week.
Commission Draw $1,800/wk/28 weeks
Benefits (health insurance, dental included at present level; J. Garringer
insurance, auto lease payments, will pay to Repro-Med the standard
long-term disability insurance) employee portion of health and dental
insurance.
During the initial 28 week period, commissions above the $1,800 minimum
will be paid when commissions on total sales exceeds the cumulative
minimums paid-to-date.
Subsequent to the initial 28 week period commissions will be paid based on
the following formula:
At the end of the 28 week period the difference between the total minimum
commissions paid and commissions on sales for the 28 week period will be
calculated. This amount, "commission balance", will be deducted from all
<PAGE>
subsequent monthly commissions at the rate of $750 per month, reducing the
commission balance until the commission balance is reduced to zero.
Commissions will be paid on this formula until commissions on total sales
(including the 28 week period sales) exceed the cumulative minimums paid
for the 28 week period.
When commissions on total sales (including the 28 week period sales) exceed
the cumulative minimums paid for the 28 week period, commissions will then
be paid on the above percentage of sales.
This is a one year, non-exclusive agreement, automatically renewed in one
year increments unless written notice of termination is given 60 days prior
to the end of each year by either party. After termination, J. Garringer
will be paid commission on the customers introduced by J. Garringer for a
period of two years. Provided he maintains adequate customer support. No
override commission will be paid after termination of this agreement.
J. Garringer agrees that for the term of this agreement he will not become
a sales representative for infusion pumps or impotence pumps of companies
whose business includes either of the following and includes the companies
noted:
1.) Manufacturer or distribution of infusion pumps, ie., I-Flow
Corp,;
2.) Manufacturer or distribution of impotence vacuum pumps, ie.,
American MedTech (Rejoyn), Timm Medical (Osbon).
3) Repro-Med will also provide the following incentive and support items:
Incentive Stock Program sales based incentive, (see below)
Office/sales support office space, copying, telephone, word
processing, mailing, and reasonable
administrative support.
Other consulting as requested by Repro-Med at rate of $50/hr.
Note, timesheets are to be submitted on a
weekly basis regardless of whether any
consulting work has been requested.
COBRA insurance coverage after 28 weeks J. Garringer to pay full cost.
(4) During the next several weeks, J. Garringer will direct and train
designated employees of Repro-Med Systems, Inc., with the objective of
transitioning all day-to-day and all other company related activities which
J. Garringer has been responsible to those designated employees. There
will be no additional charges for this work.
Nothing in this Agreement will provide the authority to either party to
bind the other in any respect. Each shall remain an independent contractor
responsible only for his own actions.
Agreed by: Repro-Med Systems, Inc. Agreed by: J. Garringer
/s/ Andrew I. Sealfon /s/ Jesse A. Garringer
Andrew I. Sealfon, President
Date: January 15, 1999 Date: January 15, 1999
<PAGE>
Sales Based Incentive Addendum to Agreement between J. Garringer and Repro-
Med Systems, Inc.
Upon execution of the aforementioned agreement J. Garringer will be given
300,000 shares of Repro-Med stock as an incentive to build sales as a
manufacturers representative/consultant relationship.
As a further incentive to develop sales for the company, the following
table outlines the additional shares of stock J. Garringer will receive
when specfic sales goals are attained. This table is designed to provide
incentive to reach $1,000,000 in Restore sales in any one year during the
term hereof. Other sales are not considered in this stock program. The
program is valid as long as the Agreement between J. Garringer as a
manufacturers representative /consultant and Repro-Med Systems, Inc. is in
effect.
Sales of Restore to Accounts Shares of Repro-Med Stock Granted
Introduced by J. Garringer *
$300,000 200,000
Next $100,000 150,000
Next $100,000 150,000
Next $100,000 100,000
Next $100,000 100,000
Next $100,000 100,000
Next $100,000 100,000
Next $100,000 100,000
For the second and subsequent years, shares of stock will be issued based
on cumulative sales only if sales in such year exceed the level of sales in
all prior years from the beginning of this agreement. For example, if the
first years' sales were $500,000, in the second year shares of stock will
be issued after sales reach $600,000. In this example, for the first
$500,000 of sales stock was awarded in the first year, as each $100,000
increment of sales is attained in the second and subsequent years an
additional stock award will for such increases be granted. This program is
in affect until $1,000,000 of Restore sales are reached from customers
introduced by J. Garringer in any year.
* Does not include override sales.
<PAGE>
Item 2., Exhibit 2
Termination Agreement Between J. Garringer & Repro-Med Systems, Inc.
1) It is understood that Repro-Med Systems, Inc. is restructuring its
staffing and terminating Jesse Garringer as an employee. Jesse Garringer
will tender his resignation as an officer and director of Repro-Med Inc.
and Gamogen, Inc. upon execution of this agreement.
J. Garringer, of his own free will, hereby voluntarily releases and forever
discharges the Company, its subsidiaries and affiliates, and its and their
predecessors, successors, and assigns and its and their current trustees,
directors, officers, shareholders, employees and agents, both individually
and in their official capacities with those entities, of and from any and
all actions or causes of action, suits, claims, demands, liabilities,
charges, complaints, promises, whatsoever, in law or equity, which against
any of them, J. Garringer, his heirs, executors, administrators,
successors, and assigns may now have or hereafter can, shall or may have
for, upon or by reason of any matter, cause, or action whatsoever including
arising out of (a) his employment by Repro-Med or Gamogen (except only such
matter as to which J. Garringer is entitled to coverage as an insured,
pursuant to the terms of any insurance policy owned by Repor-Med/Gamogen at
the time that matter shall be deemed to have occurred), (b) the
compensation, benefits, terms and conditions of his employment and (c) the
cessation of said employment, any alleged violation of Title VII of the
Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991,
Sections 1981 through 1988 of Title 42 of the United States Code, as
amended, the National Labor Relations Act, the Americans with Disabilities
Act of 1990, the Fair Labor Standards Act, the Occupational Safety and
Health Act, the Employee Retirement Income Security Act of 1974, as
amended, the Age Discrimination in Employment Act of 1967, as amended, the
Family Leave and Medical Leave Act, the New York Human Rights Act, and any
other federal, state or local law, regulations or ordinances, and/or public
policy, contract or tort law, having any bearing whatsoever on the terms
and conditions and/or cessation of his employment with Repro-Med Systems,
Inc./Gamogen, Inc. or any or its or their subsidiaries and affiliates and
any predecessors or successors thereof, he ever had, now has, or shall have
as of the date of this Agreement.
J. Garringer waives his right to file any charge or complaint on his own
behalf and/or to participate in any charge or complaint which may be made
by any other person or organization on his behalf before any federal,
state, or local court or administrative agency against Repro-Med or Gamogen
or any of its or their subsidiaries and affiliates and its and their
predecessors, successors, assigns, current and former trustees, directors,
officers, shareholders, employees or agents, except as such waiver is
prohibited by law. Should any such charge or complaint be filed, J.
Garringer agrees that he will not accept any relief or recovery therefrom.
J. Garringer confirms that no charge, complaint, or action exists in any
forum or form. Except as prohibited by law, in the event that any such
claim is filed by J. Garringer, it shall be dismissed with prejudice upon
presentation of this Agreement and J. Garringer shall reimburse Repro-
Med/Gamogen for the costs, including attorney's fees, of defending any such
action filed by J. Garringer. J. Garringer acknowledges he has no claims
against Repro-Med/Gamogen at the current time.
<PAGE>
J. Garringer acknowledges that he has been given the opportunity to
consider this Agreement for twenty-one (21) days before signing it. In the
event J., Garringer signs this Agreement within less than twenty-one (21)
days of his receiving it, he acknowledges that he did so voluntarily and
with knowledge of the opportunity to consider this Agreement for the entire
twenty-one (21) day period. J. Garringer also acknowledges that for a
period of seven (7) days following the date he signs this Agreement he may
revoke its terms by written notice sent to the President of Repro-Med
Systems, Inc. at the Company's principal business address of 24 Carpenter
Road, Chester, New York 10918. This Agreement shall not become effective
or enforceable until the seven (7) day period following his execution
hereof has expired. This Agreement shall be construed to be a contract
entered into and to be governed by the internal laws of the State of New York.
The parties agree that this Agreement represents the entire agreement except
for the Sales Representative Agreement of the parties and supercedes all prior
communications, agreements or understandings, either oral or written, if
any, regarding the same.
Agreed by: Repro-Med Systems, Inc. Agreed by: J. Garringer
/s/ Andrew I. Sealfon /s/ Jesse A. Garringer
Andrew I. Sealfon, President
Date: January 15, 1999 Date: January 15, 1999
<PAGE>
Item 2., Exhibit 3.
JOINT VENTURE AGREEMENT - RESTORE
This agreement entered into as of this 28th day of October 1998
between Repro-Med Systems, Inc.("Repro-Med") and Gamogen Inc. ("Gamogen").
Whereas Repro-Med has been developing a new impotence treatment named
Restore; and
Whereas the parties wish to establish a joint venture relating to the
ownership, development and marketing of Restore on the terms as set forth
herein.
NOW THEREFORE, the parties hereby agree as follows:
1. Repro-Med hereby contributes all of its rights, title and
interest in the Restore product and the trademark, all parts,
molds, drawings and inventory and all goodwill and technology
owned in connection therewith to the joint venture.
Such contribution is valued at $300,000 for purposes hereof.
2. Gamogen shall contribute $175,000 in cash to the joint venture.
3. Repro-Med shall manage the joint venture.
4. Gamogen shall receive 5% of gross revenues of Restore product shipped.
5. Repro-Med shall use its best efforts to market the Restore product.
Except to the extent of the $175,000 paid hereunder, all costs
incurred by Repro-Med in connection with the distribution of the
Restore product and all other marketing expenses and costs of the
joint venture shall be paid by Repro-Med.
6. Repro-Med may terminate the Joint Venture at anytime.
IN WITNESS WHEREOF, the parties have entered into this agreement as of the
day and year first above written.
Repro-Med Systems, Inc. Gamogen, Inc.
By: /s/ Andrew I. Sealfon By: /s/ Andrew I. Sealfon
Andrew I. Sealfon, President Andrew I. Sealfon, President
<PAGE>
FORM 10-Q
GAMOGEN, INC. AND SUBSIDIARY
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 following persons, thereunto duly authorized.
GAMOGEN, INC.
January 18, 1999
/s/ Andrew I. Sealfon
Andrew I. Sealfon
President, Treasurer, Chairman of the Board,
Director, and Chief Executive Officer
/s/ Norman E. Rathfelder January 18, 1999
Norman E. Rathfelder
Chief Financial Officer, Secretary, Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Feb-28-1999
<PERIOD-END> Nov-30-1998
<CASH> 33,680
<SECURITIES> 155,025
<RECEIVABLES> 22,140
<ALLOWANCES> 0
<INVENTORY> 133,635
<CURRENT-ASSETS> 344,980
<PP&E> 173,331
<DEPRECIATION> 172,620
<TOTAL-ASSETS> 360,569
<CURRENT-LIABILITIES> 37,840
<BONDS> 0
0
0
<COMMON> 12,300
<OTHER-SE> 310,429
<TOTAL-LIABILITY-AND-EQUITY> 360,569
<SALES> 184,929
<TOTAL-REVENUES> 184,929
<CGS> 94,466
<TOTAL-COSTS> 328,495
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (230,500)
<INCOME-TAX> 250
<INCOME-CONTINUING> (230,750)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230,750)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.16)
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