U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998 .
--------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-19827
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HYMEDIX, INC.
(Exact name of registrant, as specified in its charter)
Delaware 22-3279252
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2245 Route 130, Dayton, New Jersey 08810
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (732) 274-2288
----------------
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
----- -----
State the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of July 31, 1998
----- -------------------------------
Common 5,713,500
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
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HYMEDIX, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1998 (Unaudited)
and December 31, 1997. 3
Consolidated Statements of Operations for the Three and Six
Months Ended June 30, 1998 and June 30, 1997 (Unaudited). 4
Consolidated Statements of Stockholders' Deficit for the
Six Months Ended June 30, 1998 5
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1998 and June 30, 1997 (Unaudited). 6
Notes to Interim Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
------
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 77,852 $ 51,381
Accounts receivable 98,178 226,649
Inventories, net 196,987 235,746
Other current assets 40,214 54,992
----------- -----------
Total current assets 413,231 568,768
INVESTMENTS 81,200 105,469
PROPERTY AND EQUIPMENT, NET 16,785 28,290
PATENTS, NET 77,797 93,517
----------- -----------
Total assets $ 589,013 $ 796,044
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Notes payable $ 4,046,979 $ 4,067,596
Accounts payable and accrued expenses 3,268,709 3,341,269
Accrued legal judgment 367,500 805,964
Deferred revenue 62,500 0
Liabilities related to discontinued
line of business 59,222 59,222
----------- -----------
Total current liabilities 7,804,910 8,274,051
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
8% Senior Convertible Preferred Stock,
$3.00 par value, 800,000 shares
authorized, 10,190 shares issued and
outstanding 30,570 30,570
Preferred Stock, $.01 par value, 3,000 shares
authorized, 150 shares issued and outstanding 2 2
Common Stock, $.001 par value, 20,000,000 shares
authorized, 5,713,500 shares issued and
outstanding 5,713 5,713
Additional paid-in capital 15,642,174 15,642,174
Unrealized gain (loss) from available for
sale investments 6,200 (53,531)
Accumulated deficit (21,400,556) (21,602,935)
Subscription receivable (1,500,000) (1,500,000)
----------- -----------
Total stockholders' deficit (7,215,897) (7,478,007)
----------- -----------
Total liabilities and stockholders' deficit $ 589,013 $ 796,044
=========== ===========
</TABLE>
The accompanying notes to interim consolidated financial statements are an
integral part of these consolidated balance sheets.
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HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Net product sales $ 243,175 $ 220,266 $ 612,223 $ 319,299
License, royalty & distribution fees 58,095 12,500 112,145 175,000
Research and development contracts 58,750 131,250 152,500 162,500
--------- ---------- --------- ---------
Total revenues 360,020 364,016 876,868 656,799
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 49,399 142,959 223,513 183,918
Selling, general and administrative 276,550 300,156 537,815 713,560
Research and development 113,212 115,159 234,542 276,272
Reversal of legal judgement 0 0 (438,464) 0
--------- ----------- --------- ---------
Total costs and expenses 439,161 558,274 557,406 1,173,750
--------- ----------- --------- ---------
Income (loss) from operations (79,141) (194,258) 319,462 (516,951)
--------- ----------- --------- ---------
OTHER (EXPENSE) INCOME:
Realized loss on sale of investments (23,369) (23,369)
Interest expense (74,242) (97,592) (93,817) (166,882)
Interest income 93 4 103 599
--------- --------- --------- ---------
Total other expense, net (97,518) (97,588) (117,083) (166,283)
--------- --------- --------- ---------
Net income (loss) $(176,659) $(291,846) $ 202,379 $(683,234)
========= ========= ========= =========
BASIC INCOME (LOSS) PER
COMMON SHARE: $ (0.04) $ (0.06) $ 0.02 $ (0.13)
========= ========= ========= =========
DILUTED INCOME (LOSS) PER
COMMON SHARE: $ (0.04) $ (0.06) $ 0.02 $ (0.13)
========= ========= ========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 5,713,500 5,713,500 5,713,500 5,713,500
========= ========= ========= =========
DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 5,713,500 5,713,500 5,713,500 5,713,500
========= ========= ========= =========
</TABLE>
The accompanying notes to interim consolidated financial statements are an
integral part of these consolidated financial statements.
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HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Deficit
For The Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
8% Senior
Convertible Additional
Comprehen- Preferred Preferred Common Paid-in
sive Income Stock Stock Stock Capital
----------- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 $30,570 $2 $5,713 $15,642,174
Comprehensive income:
Net income $202,379
Unrealized gain on available
for sale investments 59,731
--------
Comprehensive income $262,110
========
------- -- ------ -----------
BALANCE AT JUNE 30, 1998 $30,570 $2 $5,713 $15,642,174
======= == ====== ===========
<CAPTION>
Unrealized
Gain/(Loss)
From Total
Available Stock-
Accumulated Subscription For Sale holders'
Deficit Receivable Investments Deficit
------- ---------- ----------- -------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 $(21,602,935) $(1,500,000) $ (53,531) $(7,478,007)
Comprehensive income:
Net income 202,379 202,379
Unrealized gain on available
for sale investments 59,731 59,731
Comprehensive income
------------ ----------- ---------- -----------
BALANCE AT JUNE 30, 1998 $(21,400,566) $(1,500,000) $ 6,200 $(7,215,897)
============ =========== ============ ============
</TABLE>
The accompanying notes to interim consolidated financial statements are an
integral part of this consolidated financial statement.
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<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements Of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 202,379 $ (683,234)
---------- -----------
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 27,225 59,166
Realized loss on sale of investments 23,369 0
(Increase) decrease in:
Accounts receivable 128,471 (115,876)
Inventories, net 38,759 41,500
Other current assets 14,778 6,906
Increase (decrease) in:
Accounts payable and accrued expenses (72,560) 314,982
Accrued legal judgement (438,464) 0
Deferred revenue 62,500 62,500
---------- -----------
Total adjustments (215,922) 369,178
---------- -----------
Net cash used in operating
activities (13,543) (314,056)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments 60,631 0
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 0 100,570
Restricted cash 0 225,600
Principal repayment of notes payable (20,617) 0
---------- -----------
Net cash (used in) provided by
financing activities (20,617) 326,170
---------- -----------
Net increase in cash and cash equivalents 26,471 12,114
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 51,381 42,562
---------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 77,852 $ 54,676
========== ===========
</TABLE>
The accompanying notes to interim consolidated financial statements are an
integral part of these consolidated financial statements.
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<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Notes to Interim Consolidated Financial Statements
1. MERGER AND REINCORPORATION
HYMEDIX, Inc. (the "Company") was incorporated in Delaware on
December 20, 1993, as a wholly-owned subsidiary of Servtex International
Inc. (the "Predecessor"). On February 23, 1994, the Predecessor merged
with and into HYMEDIX, Inc., and, concurrently, a wholly-owned
subsidiary of the Predecessor was merged with and into HYMEDIX
International, Inc. ("HYMEDIX International"), a privately-held Delaware
corporation, which resulted in HYMEDIX International becoming a
wholly-owned subsidiary of HYMEDIX, Inc. HYMEDIX International was
incorporated in October, 1985 under the name Kingston Technologies, Inc.
The unaudited consolidated financial statements have been prepared
based upon financial statements of HYMEDIX, Inc. and its wholly owned
subsidiary, HYMEDIX International, Inc.
2. INTERIM FINANCIAL STATEMENTS
In the opinion of management, the accompanying financial
statements of the Company reflect all adjustments, consisting of normal
recurring accruals, necessary to present fairly, in all material
respects, the Company's financial position as of June 30, 1998 and
December 31, 1997 and the results of operations and cash flows for the
six months ended June 30, 1998 and 1997. The results of operations for
interim periods are not necessarily indicative of the results to be
expected for an entire fiscal year.
3. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
requires the display of comprehensive income and its components in the
financial statements. The Company adopted SFAS 130 on January 1, 1998.
Comprehensive income includes net income and unrealized gain (loss) on
available for sale investments for the periods ended June 30, 1998 as
follows:
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
------------- -------------
Net income (loss) $ (176,659) $ 202,379
Unrealized gain (loss) on
available for sale investments (3,550) 59,731
------------ ------------
Comprehensive Income (loss) $ (180,209) $ 262,110
============ ============
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4. EARNINGS PER SHARE
In the fourth quarter of 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share," (SFAS 128), which
requires presentation in the consolidated statements of operations of both
basic and diluted earnings per share. The computation of both basic and
diluted earnings per share were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) less preferred dividends
of $34,361 for the three month periods
and $68,723 for the six month periods $ (211,020) $ (326,207) $ 133,656 $ (751,957)
------------ ---------- ---------- ----------
Denominator:
Weighted average common
shares outstanding 5,713,500 5,713,500 5,713,500 5,713,500
------------ ---------- ---------- ----------
BASIC INCOME (LOSS) PER
COMMON SHARE $ (0.04) $ (0.06) $ 0.02 $ (0.13)
============ ========== ========== ==========
Numerator:
Net income (loss) less preferred dividends
of $34,361 for the three month periods
and $68,723 for the six month periods $ (211,020) $ (326,207) $ 133,656 $ (751,957)
------------ --------- ---------- ----------
Denominator:
Weighted average common
shares outstanding 5,713,500 5,713,500 5,713,500 5,713,500
------------ ---------- ---------- ----------
DILUTED INCOME (LOSS) PER
COMMON SHARE $ (0.04) $ (0.06) $ 0.02 $ (0.13)
============ ========== ========== ==========
</TABLE>
None of the common shares issuable under the Company's stock option plan,
upon conversion of the preferred stock and convertible bonds or through the
outstanding warrants were included in the above earnings per share calculations
because their inclusion would be anti dilutive for both the six months and the
three months ended June 30, 1998 and 1997, respectively.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors set
forth below. The industry in which the Company competes is characterized by
rapid changes in technology and frequent new product introductions. The Company
believes that its long-term growth depends largely on its ability to continue to
enhance existing products and to introduce new products and technologies that
meet the continually changing requirements of customers. While the Company has
devoted significant resources to the development of new products and
technologies, there can be no assurance that it can continue to introduce new
products and technologies on a timely basis or that certain of its products and
technologies will not be rendered noncompetitive or obsolete by its competitors.
Overview
HYMEDIX, Inc. ("HYMEDIX") was incorporated in Delaware on December 20, 1993
as a wholly-owned subsidiary of Servtex International Inc. (the "Predecessor").
On February 23, 1994, the Predecessor merged with and into HYMEDIX, Inc. and,
concurrently, a wholly-owned subsidiary of the Predecessor was merged with and
into HYMEDIX International, Inc. ("HYMEDIX International") which resulted in
HYMEDIX International becoming a wholly-owned subsidiary of HYMEDIX. As used in
this Form 10-QSB, unless the context otherwise requires, the term "Company"
collectively means HYMEDIX, HYMEDIX International and their respective
predecessors. HYMEDIX International was incorporated in October, 1985 under the
name Kingston Technologies, Inc.
Results of Operations
Revenues
The Company's total revenues for the three months and six months ended June
30, 1998 were $360,020 and $876,868, respectively, versus $364,016 and $656,799
for the same periods in 1997; a decrease of 1.1% and an increase of 33.5%,
respectively. The revenue increase in net product sales resulted from a $21,091
increase in net sales of hydrogels and a $5,006 increase in BIONIQ export sales,
offset by a $3,012 decrease in BIONIQ domestic sales and a $176 decrease in
wound gels sales to the medical market during the three months ended June 30,
1998 compared to the same period of 1997. The increase in net product sales of
$292,924 for the six months ended June 30, 1998 compared to the same period of
the previous year was due to a $297,976 increase in sales of hydrogels
(primarily occurring in the first three months of the period) and a $21,028
increase in sales of skin care products to overseas customers, offset by a
$25,904 decrease in domestic sales of BIONIQ products and a $176 in reduced
sales of wound gels.
Revenue from royalty and research and development contracts decreased
$26,905 during the three months ended June 30, 1998 from the prior year period,
primarily the result of $45,595 increase in royalties contributed by a major
pharmaceutical company and a $72,500 decrease in development agreements. Royalty
and research and development revenues decreased $72,855 for the six months ended
June 30, 1998 from the same period of 1997 primarily the result of a $150,000
milestone payment that was received in January 1997 under a licensing agreement
which was later terminated at the end of 1997.
Costs and Expenses
Cost of sales for the three months and six months ended June 30, 1998 were
$49,399 and $223,513, respectively, versus $142,959 and $183,918 for the same
periods in 1997, a decrease of 65.4% and an increase of
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21.5%, respectively. The decrease for the three months ended June 30, 1998 was
attributable to product mix and lower costs due to revisions in the standard
costs of certain products whereas the increase for the six months ended June 30,
1998 from the same period of the prior year was in proportion to the 91.7%
increase in net product sales offset by the lower costs due to revisions in the
standard costs of certain products and product mix. Selling, general and
administrative expenses decreased 7.9% and 24.6% to $276,550 and $537,815
respectively, for the three months and six months ended June 30, 1998 from the
same period of 1997. The decrease was principally due to a reduction in premises
and staff expenses. The research and development costs for the three months and
six months ended June 30, 1998 were $113,212 and $234,542, respectively, as
compared to $115,159 and $276,272 for the same periods in 1997, a decrease of
1.7% and 15.1%, respectively, resulting from decreased costs of the research and
development staff.
Legal Judgment
During the first quarter of 1998, a legal judgment that was previously
accrued for was partially reversed on appeal. Based upon the appeal, the Company
reversed $438,464 of the accrued legal judgment along with the related accrued
interest charges.
Other (Expense) Income
Total other expense, net for the three months and six months ended June 30,
1998 was $97,518 and $117,083, respectively, versus $97,588 and $166,283 for the
same periods in 1997, decrease of $70 and $49,200, respectively. The decrease
for the six months ended June 30, 1998 was mainly attributable to the reversal
of interest accrued on a legal judgment reversed during the first quarter of
1998, and a decrease in debt principal outstanding, offset by the realized loss
on sales of investments resulting from the decrease value of certain common
stock that the company acquired through a manufacturing and distribution rights
agreement.
As a result of the decreased costs and expenses described above for the
three months ended June 30, 1998 as compared to the same period of the prior
year, the Company incurred a lower net loss of $176,659 for the three months
ended June 30, 1998, than the net loss of $291,846 for the same period of 1997,
and as a result of the reversal of the legal judgment during the first quarter
of 1998, decreased costs and expenses for the six months ended June 30, 1998 as
compared to the same period of the prior year and the increased revenues for the
six months ended June 30, 1998 versus the prior year, the Company recorded a net
income of $202,379 for the six months ended June 30, 1998 as compared to the net
loss of $683,234 for the same period in 1997.
Liquidity, Capital Resources and Changes in Financial Condition
The Company had $77,852 in cash and cash equivalents on hand on June 30,
1998 versus $51,381 on December 31, 1997. The working capital deficit of
$(7,391,679) on June 30, 1998 represents a decrease of $313,604 from the
previous year-end deficit level of $(7,705,283). The decrease in working capital
deficit was primarily attributable to the net income recorded in the six-month
period ended June 30, 1998, as a result of the reversal of a legal judgment
during the first quarter of 1998.
The Company's two term loans, advanced to the Company by licensees pursuant
to license agreements, in the principal amounts of $1,500,000 and $1,000,000,
respectively, each have been classified as current liabilities as they are in
technical default as a result of certain interest payments that have not been
made.
During the first quarter of 1996, the Company issued a convertible bond in
the principal amount of $150,000 (the "September Bond") pursuant to a
Convertible Bond Purchase Agreement effective March 5, 1996, by and among the
Company, HYMEDIX International and Su Chen Huang. The September Bond bears
interest at a rate of 7% per annum and matured (after being extended) on March
31, 1998. The Company is negotiating to extend the due date of the bond. The
September Bond is convertible in whole at any time prior to payment or
prepayment into one hundred fifty thousand (150,000) shares of common stock of
the Company. Interest on the September Bond is payable at maturity or upon
prepayment or conversion thereof.
In April of 1996, the Company issued convertible bonds in the aggregate
principal amount of approximately $981,000 (the "June Bonds") pursuant to a
Convertible Bond Purchase Agreement effective February 27, 1996, by and among
the Company, HYMEDIX International, First Taiwan Investment and Development,
Inc. and the Purchasers (as defined therein). The June Bonds bear interest at a
rate of 7% per annum and matured (after being
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extended) on March 31, 1998. The Company is negotiating to extend the due date
of the bond. The June Bonds are convertible in whole or in part at any time
prior to payment or prepayment into one thousand (1,000) shares of common stock
for the Company for each one thousand dollars ($1,000) of principal amount
outstanding. Interest on the June Bonds is payable at maturity or upon
prepayment or conversion thereof.
Both the June Bonds and the September Bond are structured in such a way as
to permit the Company, subject to certain terms and conditions, including
approval of the Bondholders (as thereinafter defined), to make withdrawals from
a special account (the "Special Account") up to the principal amount of the
bonds on a periodic basis and to require the Company to reduce the amount
withdrawn with respect to the Special Account by making payments into the
Special Account. As of June 30, 1998, the Company had made various withdrawals
from and repayments to the Special Account.
Pursuant to a Security Agreement dated as of August 8, 1996, by and among
the Company and the Bondholder Representative (as defined therein), in order to
induce the Purchasers and Su Chen Huang (collectively, the "Bondholders") to
approve future withdrawals by the Company from the special account, the Company
granted to the Bondholder Representative, for the ratable benefit of the
Bondholders, a security interest in all of the Company's assets and properties.
In June of 1997, the Company received a payment of a $100,000 refundable
deposit from a potential distributor with whom the Company has reached an
agreement in principle regarding certain aspects of the Company's consumer skin
care business. The Company has agreed to grant the distributor an option to
negotiate an agreement with the Company with respect to the Company's skin care
product in certain territories or to match the terms of any such agreement that
the Company may negotiate with a third party, on a right-of-first refusal basis.
This option expires on the earlier of June 30, 2001 or the date on which the
Company reaches any such third party agreement. The $100,000 deposit would be
refundable to the distributor in the event any such third party agreement is
consummated or creditable against amounts payable under any definitive agreement
between the Company and this distributor. This option is subject to negotiation
and execution of a definitive agreement regarding this matter.
The Company is currently in discussions with potential investors to receive
additional financing; however, there is no assurance that such financing will be
consummated. Management believes that the Company will have adequate resources
to finance its operations in 1998. On April 29, 1998 the appellate court
reversed $438,464 of the legal judgment against the Company but affirmed the
remaining $367,500 against the Company. If the Plaintiff moves to collect on the
judgment, the Company must attempt to finance both its operations and
satisfaction of the judgment. Management believes this will be difficult. In
addition, the Company's secured convertible bonds are both past due, and while
the Company is managing to make some payments on past due interest and
principal, there is no assurance that sufficient funds will be available to the
Company to service these debts and to continue its operations. Management plans
to continue to seek and evaluate financing alternatives for the Company. In the
event that cash flow from operations and the anticipated proceeds from the
financing, if any, are not sufficient to fund the Company's operations in 1998,
there is no assurance that other sources of funds will be available to the
Company.
Year 2000 Compliance
As of June 30, 1998, the Company has not assessed whether or not the systems
that are currently in place are Year 2000 compliant. However, management
believes that the cost and time to install a new system would not be
substantial.
Risk Factors and Cautionary Statements
When used in this Form 10-QSB and in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases and in oral
statements made with the approval of an authorized executive officer, the words
or phrases "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "project", or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and
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<PAGE>
uncertainties, including those discussed under this caption "Risk Factors and
Cautionary Statements," that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. The
Company wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and wishes to
advise readers that the factors listed below could cause the Company's actual
results for future periods to differ materially from any opinions or statements
expressed with respect to future periods in any current statements.
The Company will NOT undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
o The Company's revenues and income are derived primarily from the
development and commercialization of medical and skin care products. The medical
and skin care products industries is highly competitive. Such competition could
negatively impact the Company's market share and therefore reduce the Company's
revenues and income.
o Competition may also result in a reduction of average unit prices paid for
the Company's products. This, in turn, could reduce the percentage of profit
margin available to the Company for its product sales.
o The Company's future operating results are dependent on its ability to
develop, produce and market new and innovative products and technologies, and to
successfully enter into favorable licensing and distribution relationships.
There are numerous risks inherent in this complex process, including rapid
technological change and the requirement that the Company develop procedures to
bring to market in a timely fashion new products and services that meet
customers' needs.
o Historically, the Company's operating results have varied from fiscal
period to fiscal period; accordingly, the Company's financial results in any
particular fiscal period are not necessarily indicative of results for future
periods.
o The Company may offer a broad variety of products and technologies to
customers around the world. Changes in the mix of products and technologies
comprising revenues could cause actual operating results to vary from those
expected.
o The Company's success is partly dependent on its ability to successfully
predict and adjust production capacity to meet demand, which is partly dependent
upon the ability of external suppliers to deliver components and materials at
reasonable prices and in a timely matter; capacity or supply constraints, as
well as purchase commitments, could adversely affect future operating results.
o The Company offers its products and technologies directly and through
indirect distribution channels. Changes in the financial condition of, or the
Company's relationship with, distributors, licensees and other indirect channel
partners, could cause actual operating results to vary from those expected.
o The Company does business and continues to seek to develop business on a
worldwide basis. Global and/or regional economic factors and potential changes
in laws and regulations affecting the Company's business, including without
limitation, currency exchange rate fluctuations, changes in monetary policy and
tariffs, and federal, state and international laws regulating its products,
could impact the Company's financial condition or future results of operations.
o The market price of the Company's securities could be subject to
fluctuations in response to quarter to quarter variations in operating results,
market conditions in the medical and skin care products industry, as well as
general economic conditions and other factors external to the Company.
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PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.
The information regarding the default of certain senior securities of
the Company is stated in Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources and is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None
(b) Reports on Form 8-K.
None.
-13-
<PAGE>
SIGNATURES
In accordance with 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.
HYMEDIX, INC.
(Registrant)
Date: August 13, 1998 By: /s/ Charles K. Kliment
---------------------------------------
Charles K. Kliment
President (Principal Executive Officer)
Date: August 13, 1998 By: /s/ William G. Gridley, Jr.
---------------------------------------
William G. Gridley, Jr.
Chairman, Chief Financial Officer,
(Secretary, Treasurer, Principal
Financial Officer and Principal
Accounting Officer), Director
-14-
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