FORM 10-Q SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 33-20897-D
HELIX BIOMEDIX, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 84-1080717
_______________________________ __________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2151 E. Lakeshore Drive, Baton Rouge, LA 70808
_______________________________________________________________________
(Address of principal executive offices) (Zip Code)
(504)-387-1112
_______________________________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
_______________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
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
___ ___
Indicate the number of shares outstanding of each of the issuer's
classes of stock, as of the latest practicable date.
Class of Securities Shares Outstanding
at October 1, 1997
___________________ ___________________
Common Stock, no par value 1,270,620
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-
6.
1
<PAGE>
INDEX
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 the Report:
Accountants' Disclaimer of Opinion .......................F-1
Balance Sheet ............................................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, 1996. Those statements
are incorporated herein by reference as part of Exhibit 99-a.
ITEM 2. Management's 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, 1996. (Exhibit 99-a). That Report was dated April 9,
1997, and, except for the financial statements, the information therein
is current and fully applicable to this Report.
During the first quarter of 1997 continuing disputes between the
Registrant and Louisiana State University ("LSU") resulted in each
party placing the other in default of the agreements between the two.
During the second quarter LSU formally terminated the Company's license
of certain LSU patents relating to the lytic peptide technology. This
termination of license and resolution of the alleged defaults of the
parties are all subject to arbitration. The arbitration procedures were
invoked, and the Company has notified LSU of the Company's intent
to seek further relief in an appropriate court of law.
The actions of LSU in terminating the license are unwarranted in the
opinion of management and corporate counsel. Registrant's ongoing
initiatives to raise capital and to confect strategic alliances are
effectively delayed until the conflict with LSU is settled or
otherwise resolved. Management believes LSU's liabilities for
damages are substantial and will continue to increase until matters
are resolved.
During the third quarter the Company and LSU made substantial progress
in good faith negotiations to settle all disputes. Continued progress
in negotiations in October and November 1997 prompted the parties to
place the arbitration proceedings in abeyance. The Company will also
hold in abeyance its contemplated legal actions until December 31, 1997
pending final outcome of the on-going negotiations.
2
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 3, 1995 the Company entered into a Loan Agreement
with International Biochemicals Group, Inc. ("IBG") whereby IBG
advanced $25,000 to the Company and made a commitment for
further lending. On November 3, 1995 the Company issued to IBG
a promissory note for $25,000 due and payable May 3, 1996. The
Company has not made payment on the note and advised IBG if its
breach of various provisions of the lending agreement. From
time to time the due date of the note was extended, and the
Company agreed to pay the note in full promptly following
resolution of its disputes with LSU, in consideration of which
the Company had offered to withdraw its allegations of IBG's
default on the Loan Agreement. The protracted nature of the
disputes between LSU and the Company and the termination of the
Company's license by LSU prompted IBG to take legal action to
collect on the above referenced note.
On September 16, 1997 IBG filed a petition in the Nineteenth
Judicial District Court of Louisiana seeking judgment on the
note. The Company has timely responded to the petition and
authorized corporate counsel to file an reconventional demand
in support of its allegations of IBG's breach of the Loan
Agreement.
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 Form 10-KSB for the fiscal
year ended December 31, 1996. Incorporated by reference
to Form 10-KSB for 1996 filed by Registrant with the SEC
(File No. 33-20897-D) on April 14, 1997.
(b) Reports on Form 8-K
None
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused the Report to be signed on its behalf by
the undersigned thereunto duly authorized.
HELIX BIOMEDIX, INC. DATE: November 13, 1997
By:/s/ Keith P. Lanneau
----------------
Keith P. Lanneau, President, Principal Financial and Accounting
Officer.
<PAGE>
HELIX BIOMEDIX, INC.
(A Development Stage Company)
September 30, 1997
(Unaudited)
<PAGE>
CONTENTS
Page
ACCOUNTANTS' REPORT F-1
BALANCE SHEET F-2
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT F-3
STATEMENTS OF CASH FLOWS F-4
NOTES TO FINANCIAL STATEMENTS F-5-6
<PAGE>
The Board of Directors
Helix BioMedix, Inc.
The accompanying balance sheet of Helix BioMedix, Inc. (a
development stage company) as of September 30, 1997 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
November 12, 1997
COMISKEY & COMPANY
PROFESSIONAL CORPORATION
F-1
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
BALANCE SHEET
September 30, 1997
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 4,534
Note receivable - TPI 25,000
----------
Total current assets 29,534
OTHER ASSETS
Antimicrobial technology (net) 135,309
Patents pending and approved (net) 321,599
Accrued interest receivable 3,152
----------
Total other assets 460,060
----------
TOTAL ASSETS $ 489,594
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 11,219
Notes payable 65,000
Notes payable - related parties 268,945
Accrued interest payable 11,646
----------
Total current liabilities 356,810
LONG-TERM LIABILITIES
Notes payable to shareholders 746,823
----------
Total liabilities 1,103,633
STOCKHOLDERS' DEFICIT
Common stock, no par value, 2,000,000 shares
authorized, 1,270,620 shares issued and outstanding 2,001,580
Additional paid-in-capital 137,400
Deficit accumulated during the
development stage (2,753,019)
----------
Total stockholders' deficit (614,039)
----------
Total liabilities and stockholders' deficit $ 489,594
==========
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (November 7, 1988) to September 30, 1997
(unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Inception to For the quarter ended For the nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1997 1996 1997 1996
------------ --------- --------- ---------- --------
REVENUE 18,476 $ - $ - $ 10,000 $ -
EXPENSES
Research &
development 1,420,319 12,000 43,500 58,500 90,000
Amortization 105,291 4,373 4,373 13,119 13,119
Accounting & legal 107,854 585 395 3,758 3,622
Advertising 13,488 - - - -
Compensation cost 137,400 - - - -
Consulting fees 475,158 8,950 12,000 25,450 56,550
Office expense 144,747 6,035 8,083 16,492 20,832
Other general &
administrative costs 11,115 240 264 668 746
------------ -------- -------- ---------- --------
TOTAL OPERATING
EXPENSES 2,415,372 32,183 68,615 117,987 184,869
------------ -------- -------- ---------- --------
NET LOSS FROM
OPERATIONS (2,396,896) (32,183) (68,615) (107,987) (184,869)
OTHER (INCOME) EXPENSE
Gain on settlement
of lawsuit (48,574) - - - (48,574)
Interest income (3,676) (438) (438) (1,314) (1,400)
Interest expense 408,373 20,277 17,690 58,350 50,904
------------ -------- ------- --------- -------
356,123 19,839 17,252 57,036 930
------------ -------- ------- --------- -------
NET LOSS $ (2,753,019) $ (52,022) $ (85,867) $ (165,023) $(185,799)
============ ========= ========== ========== =========
NET LOSS PER SHARE ($2.98) ($0.04) ($0.07) ($0.13) ($0.16)
============ ========= ========== ========== =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 925,205 1,270,620 1,159,644 1,270,620 1,159,644
============ ========= ========== ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period from inception (November 7, 1988) to September 30, 1997
(unaudited)
Inception to For the nine months end
Sept. 30, Sept. 30,
1997 1997 1996
------------ ----------- ----------
NET CASH USED IN OPERATIONS $ (1,014,754) $ (15,441) $ (89,274)
CASH FLOWS FROM INVESTING ACTIVITIES
Patents (199,189) (7,494) (6,651)
------------ ----------- ----------
NET CASH PROVIDED (USED) IN
INVESTING ACTIVITIES (199,189) (7,494) (6,651)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of stock for services 73,539 - -
Issuance of stock for cash 52,000 - -
Note receivable (25,000) - -
Cash received in reverse
acquisition 634,497 - -
Notes payable 84,494 37,100 -
Related party notes payable(net) 398,947 (11,000) 55,351
------------ ----------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1,218,477 26,100 55,351
------------ ----------- ----------
NET INCREASE (DECREASE) IN CASH 4,534 3,165 (40,574)
CASH, BEGINNING OF PERIOD - 1,369 40,884
------------ ----------- ----------
CASH, END OF PERIOD $ 4,534 $ 4,534 $ 310
============ =========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
AND OTHER CASH INFORMATION
Stock issued to acquire patents 66,486 - -
Debt issued to acquire technology 200,000 - -
Bridge loans outstanding at
acquisition 200,000 - -
Patent costs included in
accounts payable 81,531 7,494 4,988
Accounts payable converted to notes 710,217 22,953 18,000
Accrued interest rolled into note 307,140 56,248 13,815
Notes converted to equity 867,023 - -
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(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 operations. All such
adjustments are of a normal and recurring nature. These
financial statements should be read in conjunction with the
audited financial statements at December 31, 1996.
2. Notes Payable
The long-term related party note to Helix International
Corporation was extended in during the nine months ended September
30, 1996. The note is now due September 30, 1998. This note is
convertible into shares at $2.50 per share. During the nine
months ended September 30, 1997, a shareholder note payable in the
amount of $25,000 was issued. This note is convertible into
shares at $1.50 per share. In addition, in consideration for cash
advanced as well as outstanding accounts payable, a two year
promissory note was issued to a director of the company. The
note, in the amount of $13,588, bears interest at 10%, is due
September 30, 1999, and is convertible into shares of the
Company's common stock at $1.00 per share.
3. Agreements in Default
During the first quarter of 1997 continuing disputes between the
Registrant and Louisiana State University ("LSU") resulted in each
party placing the other in default of the agreements between the
two. During the second quarter LSU formally terminated the
Company's license of certain LSU patents relating, to the lytic
peptide technology. This termination of license and resolution of
the alleged defaults of the parties are all subject to
arbitration. The arbitration procedures were invoked, and the
Company has notified LSU of the Company's intent to seek further
relief in an appropriate court of law.
At the present time, the Registrant and LSU are in involved in
good faith negotiations which may lead to an amicable resolution
of the various disputes between the parties. The actions of LSU
in terminating the license agreement with the Registrant is
unwarranted in the opinion of management and corporate counsel.
The Company's ongoing initiatives to raise capital and to confect
strategic alliances to commercialize the lytic peptide technology
are effectively delayed until the conflict with LSU is either
settled or otherwise resolved. In the opinion of management LSU's
liabilities to the Company for damages are substantial and will
continue to increase until the disputes are resolved.
F-5
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(unaudited)
3. Agreements in Default (continued)
Continued progress in negotiations in October and November 1997
prompted the parties to place the arbitration proceedings in
abeyance. The Company will also hold in abeyance its contemplated
legal actions until December 31, 1997 pending final outcome of the
on-going negotiations.
4. Legal Proceedings
On November 3, 1995, the Company entered into a Loan Agreement with
International Biochemicals Group, Inc. ("IBG") whereby IBG advanced
$25,000 to the Company and made a commitment for further lending.
The Company issued to IBG a promissory note for $25,000 due and
payable May 3, 1996. The Company has not made payment on this
note, and has advised IBG of IBG's breach of various provisions of
the lending agreement. From time to time the due date for this
note has been extended, and the Company has agreed to pay the note
in full promptly upon resolution of its disputes with LSU. The
protracted nature of the disputes between LSU and the Company, and
the termination of the Company's license by LSU prompted IBG to
take legal action to collect the balance of the note.
On September 16, 1997, IBG filed a petition in the Nineteenth
Judicial District Court of Louisiana seeking judgment on the note.
The Company has timely responded to the petition and authorized
corporate counsel to file a reconventional demand in support of its
allegations of IBG's breach of the loan agreement.
F-6
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENTS OF LOSS AND ACCUMULATED DEFICIT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10QSB FOR THE QUARTER
ENDED SEPTEMBER 30, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4534
<SECURITIES> 0
<RECEIVABLES> 25000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29534
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 489594
<CURRENT-LIABILITIES> 356810
<BONDS> 0
0
0
<COMMON> 2001580
<OTHER-SE> (2615619)
<TOTAL-LIABILITY-AND-EQUITY> 489594
<SALES> 0
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<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20277
<INCOME-PRETAX> (52022)
<INCOME-TAX> 0
<INCOME-CONTINUING> (52022)
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<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
