<PAGE>
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 March 31, 1999 .
--------------------------------
|_| 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
-------
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 April 30, 1999
----- --------------------------------
Common 5,713,500
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998. 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and March 31, 1998. 4
Consolidated Statements of Stockholders' Equity for the
Three Months Ended March 31, 1999. 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and March 31, 1998. 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 14
SIGNATURES 15
- 2 -
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 23,799 $ 25,336
Accounts receivable 213,756 217
Inventories, net 164,226 162,546
Other current assets 116,682 103,454
------------ ------------
Total current assets 518,463 291,553
PROPERTY AND EQUIPMENT, NET 1,838 5,255
PATENTS, NET 54,217 62,077
SECURITY DEPOSIT 59,040 59,040
------------ ------------
Total assets $ 633,558 $ 417,925
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable $ 4,046,979 $ 4,067,979
Accounts payable and accrued expenses 3,855,167 3,656,599
Accrued legal judgment and settlement 384,167 367,500
Deferred revenue 93,750 0
------------- ------------
Total current liabilities 8,380,063 8,071,078
------------- ------------
ACCRUED LEGAL SETTLEMENT 183,333 200,000
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 15,646,474 15,646,474
Accumulated deficit (22,112,597) (22,035,912)
Subscription receivable (1,500,000) (1,500,000)
-------------- --------------
Total stockholders' deficit (7,929,838) (7,853,153)
-------------- --------------
Total liabilities and stockholders' deficit $ 633,558 $ 417,925
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to interim consolidated financial statements
are an integral part of these consolidated balance sheets.
- 3 -
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1999 1998
---------- ----------
<S> <C> <C>
REVENUES:
Net product sales $ 247,862 $ 369,048
License, royalty and distribution fees 65,954 54,050
Research and development contracts 41,250 93,750
---------- ----------
Total revenues 355,066 516,848
---------- ----------
COSTS AND EXPENSES:
Cost of sales 86,616 174,114
Selling, general and administrative 282,156 261,265
Research and development 112,490 121,330
Reversal of legal judgment 0 (438,464)
---------- ----------
Total costs and expenses 481,262 118,245
---------- ----------
(loss) Income from operations (126,196) 398,603
---------- ----------
OTHER (EXPENSE) INCOME
Interest expense (74,849) (19,575)
Interest income 0 10
Other income 124,360 0
---------- ----------
Total other income (expense) 49,511 (19,565)
---------- ----------
Net income (loss) $ (76,685) $ 379,038
---------- ----------
BASIC (LOSS) INCOME PER COMMON SHARE $ (0.02) $ 0.06
---------- ----------
---------- ----------
DILUTED (LOSS) INCOME PER COMMON SHARE (0.02) $ 0.05
---------- ----------
---------- ----------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 5,713,500 5,713,500
---------- ----------
---------- ----------
DILUTED AVERAGE COMMON
SHARES OUTSTANDING 5,713,500 6,731,384
---------- ----------
---------- ----------
</TABLE>
The accompanying notes to interim consolidated financial statements
are an integral part of these consolidated balance sheets.
- 4 -
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Deficit
For The Three Months Ended March 31, 1999
(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, 1998 $30,750 $2 $5,713 $15,646,474
Comprehensive loss:
First Quarter 1999:
Net loss $(76,685)
--------
Comprehensive loss $(76,685)
========
------- -- ------ -----------
BALANCE AT MARCH 31, 1999 $30,750 $2 $5,713 $15,646,474
======= == ====== ===========
</TABLE>
<TABLE>
<CAPTION>
Total
Stock-
Accumulated Subscription holders'
Deficit Receivable Deficit
----------- ------------ -----------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 $(22,035,912) $(1,500,000) $(7,853,153)
Comprehensive loss:
First Quarter 1999:
Net loss (76,685) (76,685)
Comprehensive loss
----------- ---------- ----------
BALANCE AT MARCH 31, 1999 ($22,112,597) ($1,500,000) ($7,929,838)
=========== ========== ==========
</TABLE>
The accompanying notes to interim consolidated financial statements
are an integral part of these consolidated balance sheets.
- 5 -
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (76,685) $ 379,038
--------- ---------
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
Depreciation and amortization 11,277 14,267
(Increase) decrease in:
Accounts receivable (213,539) 22,858
Inventories, net (1,680) 80,499
Other current assets (13,228) (1,441)
Increase (decrease) in:
Accounts payable and accrued expenses 198,568 (96,451)
Accrued legal judgment 0 (438,464)
Deferred revenue 93,750 93,750
--------- ---------
Total adjustments 75,148 (324,982)
--------- ---------
Net cash (used in) provided by
operating activities (1,537) 54,056
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of notes payable 0 (20,617)
--------- ---------
Net cash (used in) financing activities 0 (20,617)
--------- ---------
Net (decrease) increase in cash and cash equivalents (1,537) 33,439
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,336 51,381
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 23,799 $ 84,820
========= =========
</TABLE>
The accompanying notes to interim consolidated financial statements
are an integral part of these consolidated balance sheets.
- 6 -
<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 consolidated 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 March 31, 1999 and December 31, 1998
and the results of operations and cash flows for the three months ended
March 31, 1999 and 1998. 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. There were no
items affecting comprehensive for the three months ended March 31, 1999.
- 7 -
<PAGE>
4. EARNINGS (LOSS) 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
March 31,
--------- ----------
1998 1997
--------- ----------
<S> <C> <C>
Numerator:
Net (loss) income less preferred dividends
of $34,361 for the period $ (111,046) $ 344,677
Denominator:
Weighted average common shares outstanding 5,713,500 5,713,500
---------- ---------
BASIC (LOSS) INCOME PER COMMON SHARE $(0.02) $0.06
---------- ---------
---------- ---------
Numerator:
Net (loss) income less preferred dividends
of $34,361 for the three month periods (111,046) 344,677
Interest on Convertible Bonds for the period (A) 17,509
---------- ---------
Subtotal (111,046) 362,246
---------- ---------
Denominator:
Weighted average common shares outstanding 5,713,50 5,713,500
Common shares that would be issued in exchange
for the Convertible Bonds assuming conversion
at the beginning of the period (A) 1,017,884
---------- ---------
Subtotal 5,713,500 6,731,384
---------- ---------
DILUTED (LOSS) INCOME PER COMMON SHARE $(0.02) $0.05
---------- ---------
---------- ---------
</TABLE>
(A) 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 the three
months ended March 31, 1999.
- 8 -
<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 ended March 31,
1999 were $355,066, versus $516,848 for the same period in 1998, a decrease
of $161,782 or 31.3%. This decrease in revenues resulted mainly from (1)
decreased sales of $194,512 in net sales of hydrogels; (2) a decrease of
$52,500 in research and development contract revenues, offset by (3) an
increase of $11,904 in license, royalty and distribution fees, and (4)
increased sales of $73,326 in domestic and international sales of skin care
products. The decrease in net sales of hydrogels is primarily attributable to
an overstock in inventory by one of the Company's large customers at the end
of 1998.
COSTS AND EXPENSES
Cost of sales for the three months ended March 31, 1999 was $86,616,
versus $174,114 for the same period in 1998, a decrease of $87,498 or 50.3%.
This decrease in cost of sale was attributable to the 32.8% decrease in net
product sales offset by the lower costs due to product mix. Selling, general
and administrative expenses increased by $20,891 or 8.0% to $282,156 for the
three months ended March 31, 1999 from $261,265 for the same period of 1998.
The increase was primarily due to higher employee related and premises
expenses. The research and development costs for the three months ended March
31, 1999 were $112,490 as compared to $121,330 for the same period in 1998, a
decrease of $8,840 or 7.3%, mainly due to lower outside consulting costs and
a decrease in license maintenance fees.
- 9 -
<PAGE>
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, NET
Total other (expense) income, increased by $69,076 to $49,511 for
the three month period ended March 31, 1999, versus an expense of $14,565 for
the same period in 1998 mainly attributable to a $124,360 collection of a
receivable previously written off by the Company in a prior year, offset by a
$55,274 increase in interest expense from the previous year, which primarily
resulted from the reversal of approximately $48,000 of interest accrued
related to the legal judgment in the first quarter of 1998.
As a result of the reversal of the legal judgment in the previous
year, the decreased revenues described above for the three months ended March
31, 1999 as compared to the same period of the prior year and the increased
expenses described above for the same period of 1999 versus the prior year,
the Company incurred a net loss of $76,685 for the three months ended March
31, 1999, as compared to the net income of $379,038 for the same period in
1998.
LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION
The Company had $23,799 in cash on hand on March 31, 1999 versus
$25,336 on December 31, 1998. The working capital deficit of $(7,861,600) on
March 31, 1999 represents an increase of $82,075 from the 1998 year-end
deficit level of $(7,779,525). The increase in working capital deficit was
primarily attributable to the net loss incurred in the three-month period
ended March 31, 1999.
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
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 of 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.
- 10 -
<PAGE>
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 hereinafter 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 March 31, 1999, 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.
Management believes that the Company will have adequate resources to
finance its operations in 1999. 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 1999, there is no assurance that other sources of funds will be
available to the Company.
YEAR 2000 COMPLIANCE
The Company's current information and computer systems will be
affected by the Year 2000 issue ("Y2K"), which refers to the inability of
computerized systems to process dates beyond December 31, 1999. The Company
is formulating a Y2K Plan to address the Company's Y2K issues. Based on its
current assessments from the Y2K Plan, the Company does not expect at present
that it will experience a disruption of its operations as a result of the
change to the new millennium.
Based upon a preliminary review of systems, the Company estimates
that the total cost of achieving Y2K readiness for the Company's internal
systems and equipment will be less than $10,000. Since no significant issues
have arisen based on the Company's preliminary assessments, the Company has
not yet developed a contingency plan to address any material Y2K issues. A
contingency plan, if required, will be developed immediately upon completion
of the Company's assessment.
- 11 -
<PAGE>
The Company is assessing the state of readiness of its major
suppliers and customers through written inquiry and evaluation of responses.
The Company intends to follow up with those suppliers or customers that
indicate material problems. Alternate suppliers or service providers will be
identified for those whose responses indicate an unusually high risk of a Y2K
problem. The Company's evaluation of business processes that are not related
to information systems, and the development of contingency plans where such
evaluation identifies a high risk of a Y2K problem should be completed by the
third quarter of 1999. The main risks associated with the Y2K problem are the
uncertainties as to whether the Company's suppliers can continue to perform
their services for the Company uninterrupted by the Y2K event, and whether
the Company's non-retail customers can continue to operate their business
uninterrupted by the Y2K event. Although the state of readiness of the
Company's suppliers and customers will be monitored and evaluated, and
contingency plans will be developed, no assurances can be given as to the
eventual state of readiness of the Company's suppliers and/or customers. Nor
can any assurances be given as to eventual effectiveness of the Company's
contingency plans.
While the Company continues to believe that the Y2K matters
discussed above will not have a materially adverse impact on the Company's
business, financial condition or results of operations, it is not possible to
determine with certainty whether or to what extent the Company may be
affected. The Company has not developed a reasonably likely worst case
scenario with respect to Y2K problems the company may encounter.
The preceding discussion contains forward-looking information within
the meaning of Section 21E of the Exchange Act. This disclosure is also
subject to protection under the Year 2000 Information and Readiness
Disclosure Act of 1998, Public Law 105-271, as a "Year 2000 Statement" and
"Year 2000 Readiness Disclosure" as defined therein. Actual results may
differ materially from such projected information due to changes in the
underlying assumptions.
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 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.
- 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.
- 12 -
<PAGE>
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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.
- 13 -
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
Exhibit 27 Financial Date Schedules.
(b) REPORTS ON FORM 8-K.
None.
- 14 -
<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: May 14, 1999 By: /s/ Charles K. Kliment
-----------------------------------------
Charles K. Kliment
President (Principal Executive Officer)
Date: May 14, 1999 By: /s/ William G. Gridley, Jr.
-----------------------------------------
William G. Gridley, Jr.
Chairman, Chief Financial Officer,
(Secretary, Treasurer, Principal
Financial Officer and Principal
Accounting Officer), Director
- 15 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 23,799
<SECURITIES> 0
<RECEIVABLES> 213,756
<ALLOWANCES> 0
<INVENTORY> 164,226
<CURRENT-ASSETS> 518,463
<PP&E> 736,696
<DEPRECIATION> 734,858
<TOTAL-ASSETS> 633,558
<CURRENT-LIABILITIES> 8,380,063
<BONDS> 1,015,136
0
30,572
<COMMON> 5,713
<OTHER-SE> (7,966,123)
<TOTAL-LIABILITY-AND-EQUITY> 633,558
<SALES> 247,862
<TOTAL-REVENUES> 355,066
<CGS> 86,616
<TOTAL-COSTS> 481,262
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,849
<INCOME-PRETAX> (76,685)
<INCOME-TAX> 0
<INCOME-CONTINUING> (76,685)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (76,685)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
