U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR A5(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (no fee required)
Commission file number 0-23544
HUMAN PHEROMONE SCIENCES, INC.
(Name of small business issuer in its charter)
California 94-3107202
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
4034 Clipper Court, Fremont, California 94538
(Address of principal executive offices) (Zip code)
Issuer's telephone number: (510) 226-6874
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
[ ]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 10,289,488 shares of Common
Stock as of August 5, 1998.
Total Pages: 15
<PAGE>
HUMAN PHEROMONE SCIENCES, INC.
INDEX
Page
----
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets (Unaudited) as of June 30, 1998
and December 31, 1997..............................................2
Statements of Operations (Unaudited) for the Three Months and
Six Months Ended June 30, 1998 and 1997............................3
Condensed Statements of Cash Flows (Unaudited) for the Six
Months Ended June 30, 1998 and 1997...............................4
Notes to Condensed Financial Statements (Unaudited)...............5
Item 2. Management's Discussion and Analysis
Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................7
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................11
SIGNATURES...................................................................12
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
<TABLE>
HUMAN PHEROMONE SCIENCES, INC.
Balance Sheets
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 70,452 $ 248,617
Accounts receivable, net of allowances of $598,456 854,436 3,084,784
and $822,813 in 1998 and 1997, respectively
Inventory 3,230,320 3,421,298
Other current assets 106,984 128,817
------------ ------------
Total current assets 4,262,192 6,883,516
Property and equipment, net 82,336 99,491
------------ ------------
$ 4,344,528 $ 6,983,007
============ ============
Liabilities and shareholders' equity
Loan payable, bank $ 209,296 $ 548,000
Accounts payable 822,799 800,648
Other accrued expenses 1,052,084 1,205,069
------------ ------------
Total current liabilities 2,084,179 2,553,717
Commitments -- --
Shareholders' equity:
Convertible preferred stock, issuable in series, no par value, 10,000,000
shares authorized, 1,433,333 shares issued and outstanding at June 30, 1998
and December 31, 1997, respectively 2,145,535 2,145,535
Common stock, no par value, 40,000,000 shares authorized, 10,289,488 shares
issued and outstanding at June 30, 1998 and December 31, 1997, respectively 17,667,024 17,667,024
Accumulated deficit (17,552,210) (15,383,269)
------------ ------------
Total shareholders' equity 2,260,349 4,429,290
------------ ------------
$ 4,344,528 $ 6,983,007
============ ============
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
HUMAN PHEROMONE SCIENCES, INC.
Statements of Operations
<CAPTION>
Three months ended June 30, Six months ended June 30
------------------------------- -------------------------------
------------ ------------ ------------ ------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 1,905,257 $ 3,817,542 $ 5,268,418 $ 8,913,831
Cost of goods sold 627,074 981,957 1,671,273 1,889,643
------------ ------------ ------------ ------------
Gross profit 1,278,183 2,835,585 3,597,145 7,024,188
Expenses:
Research and development 100,316 73,086 182,448 164,856
Selling, general and administrative 2,560,547 6,677,523 5,560,142 10,584,801
------------ ------------ ------------ ------------
Total expenses 2,660,863 6,750,609 5,742,590 10,749,657
------------ ------------ ------------ ------------
Loss from operations (1,382,680) (3,915,024) (2,145,445) (3,725,469)
Interest income 106 491 162 12,471
Interest (expense) (10,514) (34,285) (21,469) (36,828)
Other (expense) (2,783) 918 (2,189) 2,392
------------ ------------ ------------ ------------
Loss before income taxes (1,395,871) (3,947,900) (2,168,941) (3,747,434)
Income taxes -- (9,983) -- 800
------------ ------------ ------------ ------------
Net loss $ (1,395,871) $ (3,937,917) $ (2,168,941) $ (3,748,234)
============ ============ ============ ============
Net loss per common share-basic $ (.14) $ (.38) $ (.21) $ (.37)
============ ============ ============ ============
Net loss per common share-
assuming dilution $ (.14) $ (.38) $ (.21) $ (.37)
============ ============ ============ ============
Weighted average shares used in calculation
of net loss per share 10,289,488 10,284,323 10,289,488 10,252,966
============ ============ ============ ============
Weighted average shares and equivalents,
if dilutive, used in calculation of net loss
per common share 10,289,488 10,284,323 10,289,488 10,252,966
============ ============ ============ ============
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
HUMAN PHEROMONE SCIENCES, INC.
Statements of Cash Flows
<CAPTION>
Six Months ended June 30,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net loss $(2,168,941) $(3,748,234)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 29,612 31,695
Changes in operating assets and liabilities:
Accounts receivable 2,230,348 1,433,515
Inventory 190,978 (1,899,981)
Other current assets 21,833 (19,839)
Accounts payable and accrued liabilities (130,834) 507,579
----------- -----------
Net cash generated by (used in) operating activities 172,996 (3,695,265)
Cash flows from investing activities
Purchase of property and equipment (12,457) (91,928)
----------- -----------
Net cash used in investing activities (12,457) (91,928)
Cash flows from financing activities
Proceeds from (repayments of) bank borrowings (338,704) 292,289
Proceeds from issuance of common stock -- 1,443,706
----------- -----------
Net cash provided by financing activities (338,704) 1,735,995
Net decrease in cash and cash equivalents (178,165) (2,051,198)
Cash and cash equivalents at beginning of the year 248,617 2,059,084
----------- -----------
Cash and cash equivalents at end of the period $ 70,452 $ 7,886
=========== ===========
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Human Pheromone Sciences, Inc.
Notes to Condensed Financial Statements
(unaudited)
June 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months and six months ended June
30, 1998 are not necessarily indicative of the results that may be expected for
the calendar year ending December 31, 1998. For further information, refer to
the financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1997.
Inventory
Inventories are stated at the lower of cost (first in - first out
method) or market. The inventory at June 30, 1998 consists of finished goods
inventory valued at $1,220,587, work in process of $259,848 and raw materials of
$1,749,885. At December 31, 1997, these balances were $1,665,393, $151,143 and
$1,604,762, respectively.
Net (Loss) Income Per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), Earnings per Share. Statement
128 replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Diluted earnings per share is similar to
the previously reported fully diluted earnings per share. All per share amounts
for all periods have been presented, and where necessary, restated to conform to
Statement 128 requirements.
<TABLE>
Basic net (loss) income per share is computed using the
weighted-average number of common shares outstanding. Diluted net income per
share is computed using the weighted-average number of common shares and
dilutive common equivalent shares outstanding during the period. Dilutive common
share equivalents consist of employee stock options using the treasury stock
method and dilutive convertible securities using the if-converted method.
Diluted loss per share is computed using the weighted-average number of common
shares outstanding during the period. Common stock equivalents are excluded from
the diluted loss per share computation as their effect is antidilutive. The
following table sets forth the computation for basic and diluted (loss) income
per share:
<CAPTION>
Three months ended Six months ended
------------------------------- -------------------------------
June 30, June 30,
------------------------------- -------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Numerator:
Net loss from operations $ (1,395,871) $ (3,937,917) $ (2,168,941) $ (3,748,234)
Denominator:
Denominator for basic earnings per-share-data 10,289,488 10,284,323 10,289,488 10,252,966
Denominator for diluted earnings per-share data 10,289,488 10,284,323 10,289,488 10,252,966
Basic net loss per share (.14) (.38) (.21) (.37)
Diluted net loss per share (.14) (.38) (.21) (.37)
</TABLE>
<PAGE>
Human Pheromone Sciences, Inc.
Notes to Condensed Financial Statements
(unaudited)
June 30, 1998
2. LOAN PAYABLE, BANK
At June 30, 1998, the Company was not in compliance with certain
balance sheet ratio covenants of its line of credit bank loan with Mid-Peninsula
Bank. The bank has waived compliance with these covenants for the period ended
June 30, 1998.
Item 2. Management's Discussion and Analysis
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Except for the historical
information contained in this discussion and analysis of financial condition and
results of operations, the matters discussed herein are forward looking
statements. These forward looking statements include but are not limited to the
Company's plans for sales growth and expansion into new channels of trade,
expectations of gross margin, expenses, new product introduction, and the
Company's liquidity and capital needs. These matters involve risks and
uncertainties that could cause actual results to differ materially from the
statements made. In addition to the risks and uncertainties described in "Risk
Factors", below, these risks and uncertainties may include consumer trends,
business cycles, scientific developments, changes in governmental policy and
regulation, currency fluctuations, economic trends in the United States and
inflation. These and other factors may cause actual results to differ materially
from those anticipated in forward-looking statements. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date hereof.
Risk Factors
The Company's future results may be affected to a greater or lesser
degree by the following factors among others:
Competition: The prestige fragrance market is volatile and extremely
competitive. Consumer preferences and demands can shift dramatically reflecting
changes in fashion and current fads. There are numerous fragrance products that
are better known than the products marketed by the Company. There are also many
companies which have substantially greater resources than Human Pheromone
Sciences, and which have the ability to invest heavily in new product
development and introduction. The Company can expect that its competitors will
attempt to compete with the Company through the introduction of new products and
promotion of existing products.
In addition, the product life cycle of fragrances is shortening.
Traditional fragrance companies now introduce a new fragrance every one to two
years compared to every four to five years as in the past. This increase in
competing fragrances makes it difficult for any one fragrance to hold the
consumer's attention on a long-term basis. Although the Company believes the
inclusion of human pheromones as a component clearly differentiates its
products, other fragrances are competing for space with the Company's products
at both the store level and in print and media advertising.
Marketing: The failure to establish and maintain the necessary sales or
distribution channels could have a material adverse effect on the Company's
business. Although the Company believes its marketing strategy is the most
cost-effective way to introduce its products, there can be no assurance that
broader-scale retail launches will be successful. The Company cannot guarantee
that retail outlets or catalogs will continue to carry Human Pheromone Science
products. If the current strategy is unsuccessful, marketing of the Company's
products would require a new strategy and may require a significantly more
expensive sales effort for which the Company may not have sufficient funds.
Retail environment: Continued consolidation in the retail trade has led
to the emergence of four major retail players who control the major share of the
market. Federated Department Stores, The May Company,
<PAGE>
Dayton Hudson/Marshall Fields and Dillard Department Stores now comprise the
majority of US upper end department stores. This consolidation could lead to
price and promotional pressure and increased credit risk for the Company.
The retail environment in better department stores is increasingly
challenging. Retailers have aggressively cut inventories across the board.
Promotional support in the form of co-op advertising dollars is being cut back
and retailers are feeling pressure to become more promotional in order to
compete with price conscious chains appealing to bargain hunters. Fragrances and
cosmetics are increasingly being sold in secondary markets such as discount
perfumeries, drug chains and lower priced department stores. It is not
anticipated that the department store class of trade in the U.S. will become
more profitable in the near future.
Seasonality: Sales in the fragrance industry are generally seasonal,
with generally higher sales in the second half of the calendar year as a result
of increased demand for fragrance products in anticipation of and during the
Christmas holiday season. The anticipated seasonality of the Company's sales
could cause a significant variation in its quarterly operating results.
Patent protection: The Company's ability to compete successfully in the
consumer market place and to attract licensing partners will depend, in part, on
its ability to protect its proprietary technology. There can be no assurance
that any patent or patent application owned or controlled by the Company will
not be challenged, invalidated or circumvented or continue to provide
commercially significant protection of the Company's technology or ensure that
the Company may not be determined to infringe valid patents of others. In
addition, the laws of certain foreign countries may not protect the Company's
proprietary rights to the same extent as do the laws of the United States. No
assurance can be given that others will not independently develop substantially
equivalent proprietary information or otherwise gain access to the Company's
trade secrets or that the Company can meaningfully protect its technology,
proprietary information or trade secrets.
Although the Company does not believe that its products infringe the
proprietary rights of any third parties, there can be no assurance that
infringement or invalidity claims (or claims for indemnification resulting from
infringement claims) will not be asserted against the Company or that any such
assertions will not materially adversely affect the Company's business,
financial condition or results of operations. Irrespective of the validity or
the successful assertion of such claims, the Company could incur significant
costs with respect to the defense thereof which could have a material adverse
effect on the Company's business, financial condition or results of operations.
Attraction and retention of key employees: The success of the Company's
future operations depends in large part on the Company's ability to recruit and
retain key employees and consultants with research, product development and
marketing experience, as well as other professionals who are in considerable
demand. There can be no assurance that the Company will be successful in
retaining or recruiting such key personnel.
Dependence on third parties for manufacturing: The Company does not
have facilities to manufacture its products and relies on Pherin to manufacture
its pheromones and third parties to supply components and to blend, fill and
package its fragrance products. The Company believes that such manufacturing
services are the most effective method of producing its products. The majority
of the fragrance industry uses contract fillers, and the Company has no current
plans to set up its own filling facilities. However, as with any business that
is not vertically integrated, if the Company is unable to obtain or retain
fragrance suppliers, component manufacturers or third party manufacturing on
acceptable terms, it may not be able to obtain commercial quantities of its
products, which would adversely affect results.
Results of Operations
Three Months ended June 30, 1998 as compared to the Three Months ended June 30,
1997
Net sales for the second quarter of 1998 were $1,905,257 representing a
decrease of 50% from sales of $3,817,542 for the prior year's quarter. The
Company attributes the sales decrease to a sharp decline in department store
orders for inner REALM(R). During the second quarter of 1997, inner REALM
accounted for 28% of the Company's gross sales volume compared to 10% for the
same period in 1998. In addition to the decline in department store inner REALM
orders, the Company has accepted returns of inner REALM from certain
<PAGE>
retailers in order to bring store inventories into balance with retailer
forecasts. Of the $1.9 million year-to-year decrease in sales, the Company
attributes 50% to gross sales decreases in inner REALM, 27% to decreases in
REALM Men(R) and 23% to decreases in REALM Women(R). Sales of REALM Men were
lower in the 1998 quarter due to lower sales of promotional sets to Department
store customers. The Company has decreased the overall offerings and number of
available promotional sets to Department stores in order to increase gross
margins and encourage sales of regularly priced products. The decline in sales
of REALM Women due to decreased set offerings was partially offset by increased
volumes of sales in regularly priced, in-line products.
Sales volume comparisons were also affected by shifts in ordering from
alternative classes of trade. During the second quarter of 1997, the Company
made initial shipments to distributors for sales to secondary markets. These
initial launch order volumes were not repeated in the second quarter of 1998;
however, reorder volumes have been consistent with expectations, and distributor
sales continue to expand. Also in 1998, international shipments increased with
expansion into selected European markets for both retail and direct marketing.
The Company plans to aggressively pursue these outlets as they offer a
cost-effective method of distribution. Net sales for the quarters ended June 30,
1998 and 1997 were as follows:
- --------------------------------------------------------------------------------
Markets 1998 1997
- --------------------------------------------------------------------------------
U.S. Markets $1,580,844 $3,499,259
International Markets 324,413 318,283
---------- ----------
Net Sales $1,905,257 $3,817,542
Gross margin declined in 1998 due to the decrease in inner REALM
shipments and due to the change in the overall makeup of the Company's sales
from a heavy reliance on department store sales to an increased presence with
distributor sales. In the second quarter of 1998, the Company reduced its
reliance on Department stores by 9% of total net sales. The Company feels this
shift will be beneficial to the Company in the long run as the cost of doing
business with Department stores continues to escalate, and by selling through
distributors the Company can concentrate on developing overall marketing and
consumer awareness programs that benefit both sales of existing products and
increase consumer knowledge and desire for products containing synthesized human
pheromones.
Research and Development expenses for the first quarters of 1998 and
1997 were $100,316 and $73,086, respectively. These costs principally reflect
payments and costs under the Company's contract with Pherin Corporation.
Operating expenses decreased $4,116,976 to $2,560,547 in the second
quarter of 1998 from $6,677,523 in the second quarter of 1997. During the 1997
quarter, the Company incurred advertising and promotional costs to support the
launch of inner REALM. Due to the fact that the majority of these expenditures
were for print advertising vehicles committed to months in advance, the Company
was unable to change or alter these programs in the short term when sales did
not materialize to support these levels of expenditure. Additionally, the
Company subsequently received unanticipated chargebacks against accounts
receivable payments from many of its department store customers that were not
authorized within Company established procedures. The Company increased its
controls on cooperative advertising expense authorization and communicated these
tightened policies to all employees, customers and suppliers. Headcount in the
sales area decreased due to attrition and the restructuring of the field sales
force. The Company used this opportunity to change its focus to emphasizing
"selling-through" at the retail level from "selling-into" Department stores. The
Company replaced regional managers primarily responsible for making headquarters
calls with field selling staff responsible for in-store activities geared toward
selling directly to the retail consumer. The Company anticipates this change in
selling strategy will increase retail turns and lead to higher volume sales to
its department store customers. Distribution and general and administrative
costs decreased as well as selling and marketing in the second quarter of 1998.
MIS consulting costs were lower in the 1998 quarter due to the 1997 completion
of automated warehousing and EDI systems installation.
Interest income was $106 and $491 for the second quarters of 1998 and
1997, respectively. The Company paid $10,514 in interest expense in the second
quarter of 1998 on balances on its revolving bank line of credit. This compares
to $34,285 interest expense in the second quarter of 1997.
<PAGE>
Six Months ended June 30, 1998 as compared to the Six Months ended June 30, 1997
Net sales for the six months ended June 30, 1998 were $5,268,418. This
was a 41% decrease from net sales of $8,913,831 for the first half of 1997. The
Company attributes the decrease entirely to declines in re-order levels for
inner REALM. Initial launch quantities shipped in the first half of 1997 were
not duplicated by reorders in the first half of 1998. The Company's first
fragrance offerings: Realm Women and Realm Men have shown modest declines in
reorder quantities between the two years. During the first six months of 1997,
the Company made its first shipments to a distributor servicing alternative
distribution channels. Sales to this class of trade continued to expand in the
first half of 1998. During the first six months of 1998, foreign sales and sales
to alternative classes of trade increased 25% from the prior year and
constituted and as a percentage of total net sales increased by 16%.
- --------------------------------------------------------------------------------
Class of Trade 1998 1997
- --------------------------------------------------------------------------------
U.S. Markets $4,533,071 $8,251,360
International Markets 735,347 662,471
---------- ----------
Net Sales $5,268,418 $8,913,831
Gross margin for the first half of 1998 was 68% compared to 79% for the
same period in 1997. This decrease is the result of decreases in sales of the
Company's inner REALM products to the department store class of trade. The
Company conceived inner REALM as a higher gross margin product than its original
Realm Women and Realm Men's lines in order to increase overall gross margin. The
lower sales of inner REALM to department stores in the first half of 1998 has
had a negative impact on gross margin for the period when compared against the
same period in the prior year.
Research and Development expenses for the first half of 1998 and 1997
were $182,448 and $164,856, respectively and are principally comprised of
payments under the Company's contract with Pherin Corporation.
Selling and marketing expenses decreased to $4,239,700 in the six
months ended June 30, 1998 from $9,290,583 in the period ended June 30, 1997. In
1997, the Company incurred expenses to launch its second women's fragrance:
inner REALM. In 1998, the Company carefully evaluated advertising plans to suit
specific regional and consumer preferences. The Company continues to evaluate
advertising spending and the effectiveness of co-operative advertising programs
and in-store support personnel. Future cost reductions in this area will result
from the shift in the Company's overall business focus from one of developing
and distributing products to developing and licensing products to serve the
needs of partners with established distribution networks. In 1998, the Company's
general and administrative expenses decreased 13% over the prior year period due
to decreases in headcount and spending controls.
Interest income was $162 and $12,471 for the first half of 1998 and
1997, respectively. In 1998, the Company paid $21,469 in interest expense
related to advances under its bank line of credit. During the first half of
1997, the Company had interest expense of $36,828. This higher expense in 1997
was due to larger bank borrowing balances incurred during the launch of inner
REALM.
LIQUIDITY
At June 30, 1998, the Company had borrowed $209,296 against its
$3,000,000 line of credit. Working capital was $2,178,013. At June 30, 1997, the
Company had net borrowings of $1,943,706 and working capital of $1,741,911. For
the first six months of 1998, operating activities generated net cash of
$172,996. During the first six months of 1997, net cash used in operating
activities was $3,695,265. Assuming the Company's activities proceed
substantially as planned, the Company's line of credit and anticipated revenues
from product sales should be adequate to meet its working capital needs over the
next twelve months. Working capital requirements will primarily be for the
supply of inventory and accounts receivable financing.
<PAGE>
Additional working capital may be required should the Company's
continued operations fail to generate anticipated consumer response levels.
Furthermore, additional working capital may be required should the Company
experience a greater than planned success with its product and retail expansion.
Funds would be needed for inventory build, accounts receivable financing and
staffing purposes. If the Company fails to achieve significant revenues from its
1998 marketing efforts, or if retail expansion proves to be more capital
intensive than planned, the Company may require additional funding.
On April 1, 1998, the Company signed a renegotiated loan agreement with
Mid-Peninsula Bank of Palo Alto, California (the "Bank") providing for a
continued line of credit. The Company may borrow up to $3,000,000 at an interest
rate equal to the Bank's prime rate plus .75% with borrowings secured primarily
by the Company's trade receivables and inventory. The agreement, which expires
in April, 1999, contains certain debt-to-equity and working capital covenants.
There are no charges for any unused portions of the line.
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
Registrant held its annual meeting of shareholders (the "Annual
Meeting") on May 20, 1998. At the Annual Meeting, the shareholders voted on two
proposals and elected six directors, Bernard I. Grosser, MD, William P. Horgan,
Michael D. Kaufman, Helen C. Leong, Robert Marx and Michael V. Stern to serve
until the next annual meeting and their successors are elected. In addition, the
shareholders approved an amendment to the Company's Articles of Incorporation to
change the name of the Company from Erox Corporation to Human Pheromone
Sciences, Inc. and an amendment to the Non-Employee Directors Stock Option Plan
to increase the number of shares available for issuance by 200,000 shares.
The number of votes cast for, against or withheld as well as the number
of abstention and broker non-votes as to each director and with respect to the
name change and stock option plan proposals are set forth below:
Director: For Withheld
- --------- --- --------
Bernard I. Grosser, MD 9,028,636 51,440
William P. Horgan 9,028,335 51,741
Michael D. Kaufman 9,028,636 51,440
Helen C. Leong 9,028,636 51,440
Robert Marx 9,028,636 51,440
Michael V. Stern 9,028,636 51,440
<TABLE>
<CAPTION>
Proposal: For Against Abstained Broker
- --------- --- ------- --------- ------
Non-Votes
---------
<S> <C> <C> <C> <C>
Amend the Company's Articles of
Incorporation to change the name from
Erox Corporation to Human Pheromone 9,030,669 21,271 28,136 0
Sciences, Inc.
Proposal: For Against Abstained Broker
- --------- --- ------- --------- ------
Non-Votes
Amend the Company's Non-Employee
Directors' Stock Option Plan to
increase the number of shares 5,182,320 182,454 60,600 3,654,702
available for issuance by 200,000
shares.
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27.01-Financial Data Schedule..........................E-13
(b) During the three months ended June 30, 1998, the Company filed Form
8-K on June 6, 1998 reporting the Amendment to the Company's Articles of
Incorporation changing the name of the corporation to Human Pheromone Sciences,
Inc. from Erox Corporation.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant had duly caused this Report to be signed on behalf by the
undersigned thereunto duly authorized.
Human Pheromone Sciences, Inc.
Registrant
Date: August 13, 1998 /s/ William P. Horgan
------------------------------------
William P. Horgan
Chairman and Chief Executive Officer
Date: August 13, 1998 /s/ Maxine C. Harmatta
------------------------------------
Maxine C. Harmatta
Vice President, Finance and
Administration
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule Contains Summary Financial Information Extracted From Balance
Sheets and Statements of Income
</LEGEND>
<CIK> 0000878616
<NAME> Human Pheromone Sciences, Inc.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
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