U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
COMMISSION FILE NO. 33-20897-D
HELIX BIOMEDIX, INC.
COLORADO 84-1080717
2151 E. LAKESHORE DR., BATON ROUGE, LA 70808
(504)387-1112
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the 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 [ ]
The number of shares outstanding of Registrant's common stock, no par
value at March 31, 1996 was 1,159,644 shares.
DOCUMENTS INCORPORATED BY REFERENCE : YES, SEE INDEX ON PAGE 3.
EXHIBITS: Indexed at Page 3.
PAGES: This form 10-QSB consists of 4 pages, plus pages F-1 through
F-5, and pages F-10 through F-13 of Exhibit No. 99-b.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
Please see Pages F-1 through F-5.
The following financial statements are filed as part of this report:
Page
Accountants' Report F-1
Balance Sheet as of March 31, 1996 F-2
Statements of Operations F-3
Statements of Cash Flows F-4
Notes to Financial Statements F-5
These financial statements should be read in conjunction with the
audited financial statements at December 31, 1995. Those statements
are incorporated herein by reference as part of Exhibit No. 99-a.
Exhibit No. 99-b, filed herewith, includes revised footnotes to the
audited financial statements at December 31, 1995. Minor revisions
to language of the footnotes were made by the Auditors shortly after
Registrant filed the 10-KSB report referenced in Exhibit No. 99-b.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item is incorporated by reference to Item 6-Part II of Registrant's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1995.
(Exhibit No. 99-a). That Report was dated April 12, 1996 and, except
for the financial statements, the information therein is current and
fully applicable to this Report.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None in the period covered by this Report. See Item 3-Part I of Exhibit
No. 99-a incorporated herein by reference.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description and Location
99-a Registrant's Annual Report on From 10-KSB for the fiscal
year ended December 31, 1995.
Incorporated by reference to Form 10-KSB for 1995 filed
by Registrant with the SEC (File No. 33-20897-D) on April
12, 1996.
99-b Revised Footnotes to Registrant's Audited Financial
Statements for the fiscal year ended December 31, 1995.
Filed herewith on pages F-10, F-11, F-12, and F-13
(ex 99-b)
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
HELIX BIOMEDIX, INC. DATE: May 16, 1996
BY:/a/ Keith P. Lanneau
Keith P. Lanneau, President, Principal Financial and Accounting Officer.
<PAGE>
The Board of Directors
Helix BioMedix, Inc.
The accompanying balance sheet of Helix BioMedix, Inc.
(a developmental stage company) as of March 31, 1996 and
the related statements of loss and accumulated deficit and
cash flows for the period then ended were not audited by us,
and accordingly, we do not express an opinion on them.
Aurora, Colorado
May 10, 1995
COMISKEY & COMPANY
PROFESSIONAL CORPORATION
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
BALANCE SHEET
March 31, 1996
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 267
Note Receivable - TPI 25,000
Accrued interest receivable 524
-----------
Total current assets 25,791
OTHER ASSETS
Accounts receivable - affiliate 30,778
Antimicrobial technology (net) 152,187
Patents pending 314,764
-----------
Total other assets 497,729
TOTAL ASSETS $ 523,520
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 31,359
Notes payable 44,131
Notes payable on demand - related parties 151,947
Accrued interest payable 7,221
-----------
Total current liabilities 234,658
LONG-TERM LIABILITIES
Notes payable to shareholders 633,445
-----------
Total liabilities 868,103
STOCKHOLDERS' DEFICIT
Common stock, no par value, 2,000,000
shares authorized, 1,159,644 shares
issued and outstanding 1,890,604
Additional paid in capital - warrant issuance 137,400
Deficit accumulated during the
development stage (2,372,587)
-----------
Total stockholders' deficit (344,583)
-----------
Total liabilities and stockholders' deficit 523,520
$ ===========
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (November 7, 1988) to March 31, 1996
(unaudited)
For the quarter ended Inception to
March 31, March 31,
1996 1995 1996
----------- ----------- -----------
REVENUE $ 0 $ 0 $ 3,000
EXPENSES
Research & development 28,000 0 1,256,319
Amortization 4,373 2,520 79,053
Accounting & legal 850 215 100,662
Advertising 0 0 13,488
Compensation cost 0 0 137,400
Consulting fees 12,000 15,000 376,271
Office expense 5,080 4,703 106,921
Other general & administrative 242 218 10,004
--------- --------- ----------
TOTAL OPERATING EXPENSES 50,545 22,656 2,080,118
--------- --------- ----------
NET LOSS FROM OPERATIONS (50,545) (22,656) (2,077,118)
OTHER (INCOME) EXPENSE
Interest income (524) 0 (524)
Interest expense 16,122 17,113 295,993
-------- --------- ----------
NET LOSS $ (66,143)$ (39,769)$ (2,373,111)
======== ========= ===========
NET LOSS PER SHARE ($0.06) ($0.04) ($2.74)
========== ========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 1,159,644 1,008,381 866,319
========= ========= ===========
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period from inception (November 7, 1988) to March 31, 1996
(unaudited)
For the quarter ended Inception to
March 31, March 31,
1996 1995 1996
---------- ---------- ---------
NET CASH USED IN OPERATIONS $ (39,960) $ (13,862) $ (892,249)
CASH FLOWS FROM INVESTING ACTIVITIES
Notes Receivable (25,000)
Patents 0 0 (178,006)
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES 0 0 (203,006)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of stock for cash 0 0 52,000
Cash received in reverse acquisition 0 0 634,497
Notes payable 0 0 51,525
Related party notes payable (net) 37,000 0 357,500
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 37,000 0 1,095,522
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (2,960) (13,862) 267
ASH, BEGINNING OF PERIOD 3,227 15,003 0
---------- ---------- ----------
CASH, END OF PERIOD $ 267 $ 1,141 $ 267
========== ========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
AND OTHER CASH INFORMATION
Stock issued to acquire patents 0 0 66,486
Debt issued to acquire tachnology 0 0 200,000
Bridge loans outstanding at acquisition 0 0 200,000
Patent costs included in accounts payab 4,988 4,157 77,324
Accounts payable converted to notes 18,000 15,000 742,701
Accrued interest rolled into note 16,686 17,113 218,354
Notes converted to equity 0 0 794,102
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(unaudited)
1. Management's representation of interim financial information.
The accompanying financial statements have been prepared by Helix
BioMedix, Inc. without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted as allowed by such rules and
regulations, and management believes that the disclosures are
adequate to make the information presented not misleading. These
financial statements include all of the adjustments which, in the
opinion of management, are necessary to a fair presentation of
financial position and results of operation. All such adjustments
are of a normal and recurring nature. Certain reclassifications
have been made to prior periods to conform to current period
presentation. These financial statements should be read in
conjunction with the audited financial statements at December 31,
1995.
2. Interim financing
-----------------
During the first quarter of 1996, the Company received $37,000
in debt financing as follows: $25,000 in the form of a 10%
convertible promissory note to a shareholder and director, and
$12,000 in the form of additional demand notes to a related party.
<PAGE>
EXHIBIT 99-B
Revised Footnotes to Registrant's Audited Financial
Statements for the fiscal year ended December 31, 1995.
Filed herewith on pages F-10, F-11, F-12, and F-13
(ex 99-b)
<PAGE>
HELIX BIOMEDIX, INC.
NOTES TO FINANCIAL STATEMENTS
For the period from inception (November 7, 1988) to December 31, 1995
(REVISED)
1. Summary of Significant Accounting Policies (continued)
Development Stage Activities (continued)
In July 1992, de-facto control of the Company was returned to Helix
International, and the Company, with the assistance of both URM
and Helix International, began a series of negotiations with LSU which
culminated in the February 1993 Agreement of Settlement, Compromise,
and Release. This settlement agreement essentially released LSU, the
Company, Helix International, URM, and Helix Phytonetix, a related
company, from defaults under their original respective agreements.
The settlement renewed the Company's exclusive license in five lytic
peptide patents currently under development. Excluding research and
development costs expensed to operations as incurred, the Company's
investment in these patents was $311,336 at December 31, 1995. As
part of the settlement, the Company executed a sublicense agreement
with URM for the development and marketing of a portion of the patented
technology.
In 1993, the Company entered into an agreement with the Louisiana
Partnership for Technology and Innovation to obtain assistance in the
implementation of a financial and managerial restructuring plan for
theCompany, and in the development and implementation of licensing
programs for the technology. In consideration for these services, the
Companyissued 8,000 shares of its common stock to the Partnership in May
1993.
In late 1993, the Company entered into negotiations with Therapeutic
Peptides, Inc. ("TPI"), the objective of which was to bring about a
merger of TPI into Helix BioMedix, contingent upon the successful
completion of the Company's financing plan. Since 1993, TPI has
continued to conduct lytic peptide research on behalf of the Company.
In November 1995, the Company, in lieu of the proposed merger with
TPI, entered in to a cooperative endeavor agreement with Therapeutic
Peptides, Inc. Upon consummation of the agreement, Therapeutic Peptides,
Inc. received 10,000 shares of stock in Helix BioMedix, Inc., and shall
henceforth share in the royalties received by Helix BioMedix, Inc. with respect
to the derivative peptides.
Due to the fact that the Company's research and development activities
have begun, but there has been no significant revenue therefrom, the
Company is in the development stage as defined in Statement of Financial
Accounting Standards #7.
Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The company, which is in the
development stage, has incurred substantial losses since its inception, and
has no current assets with which to repay obligations as they come due.
Management plans to raise money in equity markets to finance further
patent prosecution and ongoing research and development activities. However,
there is no assurance that management will be successful in obtaining
additional financing. These conditions give rise to substantial doubt
about the Company's ability to continue as a going concern. These
financial statements do not include any adjustments which may be
necessary if the Company is unable to continue.
Intangibles
Patent costs, consisting primarily of legal and filing fees, are
capitalized. Amortization will be taken on the straight-line method
over the estimated useful life of the patent, not to exceed 17 years,
starting on the date the patent was issued. Antimicrobial technology
which was purchased in conjunction with the patents, has been capitalized
at the basis of the debt issued for it. This technology is being amortized
ratably over twenty years. Organization costs were amortized ratably over
60 months.
F-10
<PAGE>
Helix BioMedix, Inc.
Notes to Financial Statements
For the period from inception (November 7, 1988) to December 31, 1995
(REVISED)
1. Summary of Significant Accounting Policies (continued)
Significant Accounting Policies (continued)
Research and Development
Research and development costs are expensed as incurred.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
Loss per Share
Loss per share has been computed using the weighted average number of
shares outstanding during the period. Fully diluted earnings per
share have not been presented as their effect is estimated to be
antidilutive.
Income Taxes
For all periods presented, the Company has computed its income tax
benefit under FASB 109 - Accounting for Income Taxes. Because of the
Company's creation of a full valuation allowance for the tax benefit of net
operating loss carryforwards and R & D credit carryforwards, there is
no material difference in the financial statements between income tax
calculated under FASB 109 and income tax calculated under APB 11.
2. Notes Payable
The Company is obligated under the following notes at December 31,
1995:
8% convertible promissory note payable to shareholder, principal
and interest originally payable in March 1990, extended until
August 1991, now due September 1997. $ 603,377
8% convertible promissory note, principal and interest due June 1996 8,131
12% promissory note, principal and interest due November 1989. 2,000
Two 8% convertible promissory notes payable to shareholders, due on
demand 87,329
Three 12% promissory notes due December 1996, each note convertible
into 400 shares of common stock at the option of the holder 9,000
10.25% promissory note, principal and interest due May 1996 25,000
10% convertible promissory note, payable to a shareholder and director,
principal and interest due December 1997 25,000
-------
Total notes outstanding 759,837
Less amount classified as current 131,460
-------
$ 628,377
=======
F-11
<PAGE>
Helix BioMedix, Inc.
Notes to Financial Statements
For the period from inception (November 7, 1988) to December 31, 1995
(REVISED)
2. Notes Payable (continued)
The shareholder note for $603,377 is secured by a first security
interest in technology and intellectual property rights of the Company.
Interest is payable quarterly in cash or common shares of the Company
at the rate of $2.50 per share, or may be converted to principal. Form of
payment of quarterly interest is at the discretion of the note holder.
The note plus accrued interest is convertible in whole or in part at any
time prior to maturity into shares of the Company's common stock. Stock
conversion will be made at $2.50 per share.
The shareholder notes for $87,329 are secured by a first security
interest in technology and intellectual property rights of the
Company. Interest is payable quarterly in cash or common shares of
the Company at the rate of $1.00 per share, or may be converted to
principal. Form of payment of quarterly interest is at the discretion of
the note holder. The note plus accrued interest is convertible in whole
or in part at any time prior to maturity into shares of the Company's
common stock at $1.00 per share.
The 8% note for $8,131 is convertible into shares of the Company's
common stock at $2.50 per share.
The 10% convertible promissory note is payable to Thomas L. Fraser,
shareholder and director, and is convertible to shares of the Company's
common stock at $1.00 per share.
Debt maturities over the next five years are as follows: due in 1996,
$131,460; due in 1997, $628,377; and, due thereafter $0.
3. Stockholders' Equity
The Company has 1,159,644 outstanding common shares and no outstanding
preferred shares. The Company is authorized to issue 2,000,000 common
and 400,000 preferred shares. The Company's president, Keith P. Lanneau,
holds a total of 640,000 shares beneficially as shareholder in Helix
International, which holds 540,000 of the Company's shares, and as beneficial
owner of Arrowhead Technology Associates, which holds 20,000 of the Company's
shares and an additional 80,000 shares from the conversion of debt owed to
equity.
On December 29, 1993, the Company underwent a 1 for 500 reverse stock
split. All share and per share amounts in these financial statements have
been retroactively restated to reflect this reverse split.
At December 31, 1995, the Company had outstanding stock options to
purchase 91,400 shares of the Company's common stock at prices ranging from
$0.50 to $1.00 per share. The options become exercisable upon issuance and
expire at various dates through 1998. Compensation expenses charged to
operations in 1995 was $137,400.
4. Income Taxes
At December 31, 1995, the Company has approximately $2,134,000 in net
operating loss carryforwards and approximately $35,000 in Federal
Research and Development tax credit carryforwards available to offset
future taxable income and related income tax. The operating loss
carryforwards expire between 2003 and 2010. The tax benefit of these
carryforwards has been offset by a full allowance for realization.
F-12
<PAGE>
Helix BioMedix, Inc.
Notes to Financial Statements
For the period from inception (November 7, 1988) to December 31,1995
(REVISED)
5. Related Party Transactions
From March 1989 to March 1990, the Company contracted with Helix International,
Inc., a principal shareholder, to conduct lytic peptide research on a
contract basis for the account of the Company. The Company incurred a total of
$655,321 in research costs paid or payable to Helix International during this
period. At December 31, 1995, a promissory note for $603,377 was
outstanding, consisting of unpaid research costs, accrued interest, and
patent pass through costs. In addition, $50,000 in debt payable to Helix
International had been converted to equity in 1992.
The Company maintains its corporate offices in the offices of its
president. From inception to December 31, 1995, the Company has incurred
$101,841 in rental and general office expense reimbursements which have
been paid or are payable to an affiliated company.
The President of the Company is also a principal shareholder in Helix
Phytonetix, Inc. ("Phytonetix"). Phytonetix is a party to the LSU
settlement agreement described in Note 1, and is a licensee of lytic
peptide technology as it relates to applications in plants. Phytonetix
owes the Company $30,124 in patent costs which were paid by the Company
during 1995.
As part of the LSU settlement described in Note 1, the Company entered
into a sublicense agreement with URM, a shareholder, for the
development and marketing of a portion of the patented technology,
specifically the use of the technology in food preservation and
purification of drinking water.
A $66,000 consulting fee has accrued to Helix International for the
year ended December 31, 1995.
F-13
