<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000.
-------------
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 JULY 31, 2000
----- -------------------------------
Common 6,143,781
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999 3
Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 2000 and June 30, 1999 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2000 and June 30, 1999 5
Notes to Interim Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HYMEDIX, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 79,630 $ 356,003
Accounts receivable 79,202 87,035
Note receivable from related party 169,000 203,600
Inventories, net 78,791 70,921
Receivable from Net Operating Loss sale - 317,482
Other current assets 65,153 73,393
--------------- ----------------
Total current assets 471,776 1,108,434
PROPERTY AND EQUIPMENT, NET 13,518 896
PATENTS, NET 14,917 30,637
SECURITY DEPOSIT 59,040 59,040
--------------- ----------------
Total assets $ 559,251 $ 1,199,007
=============== ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable $ 3,946,979$ $ 3,946,979
Accounts payable and accrued expenses 3,113,569 3,108,276
Accrued legal judgment and settlement 75,000 275,000
Deferred revenue 12,500 43,600
Customer deposits 1,208,000 1,208,000
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Total current liabilities 8,356,048 8,581,855
--------------- ----------------
ACCRUED LEGAL JUDGMENT AND SETTLEMENT
COMMITMENTS AND CONTINGENCIES $ 167,500 $ 212,500
STOCKHOLDERS' DEFICIT:
8% Senior Convertible Preferred Stock, $3.00 par value, 800,000 shares
authorized, 7,390 shares issued and
outstanding 22,170 22,170
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, 6,143,781 shares issued and outstanding 6,144 6,144
Additional paid-in capital 15,658,743 15,658,743
Accumulated deficit (22,151,356) (21,782,407)
Subscription receivable (1,500,000) (1,500,000)
--------------- ----------------
Total stockholders' deficit (7,964,297) (7,595,348)
--------------- ----------------
Total liabilities and stockholders' deficit $ 559,251 $ 1,199,007
=============== ================
</TABLE>
The accompanying notes to interim consolidated financial statements are an
integral part of these consolidated financial statements.
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------------- ---------------
2000 1999 2000 1999
--------------- ------------------------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Net product sales $ 213,664 $ 268,635 $ 367,387 $ 516,497
License, royalty & distribution fees 834 70,000 3,125 135,954
Research and development contracts 16,250 31,250 67,500 72,500
------------- -------------- ------------- -------------
Total revenues 230,748 369,885 438,012 724,951
------------- -------------- ------------- -------------
COSTS AND EXPENSES:
Cost of sales 47,168 62,966 87,436 149,582
Selling, general and administrative 239,123 246,497 509,589 528,653
Research and development 104,859 108,202 219,268 220,692
------------- -------------- ------------- -------------
Total costs and expenses 391,150 417,665 816,293 898,927
------------- -------------- ------------- -------------
Loss from operations (160,402) (47,780) (378,281) (173,976)
------------- -------------- ------------- -------------
OTHER (EXPENSE) INCOME:
Loss on sale of assets (12,460) 0 (12,460) 0
Interest expense (71,044) (75,045) (143,608) (149,894)
Other income 164,000 160,000 165,400 284,360
------------- -------------- ------------- -------------
Total other (expense) income, net 80,496 84,955 9,332 134,466
------------- -------------- ------------- -------------
Net (loss) income $ (79,906) $ 37,175 $ (368,949) $ (39,510)
============= ============== ============= =============
BASIC INCOME (LOSS) PER
COMMON SHARE: $ (0.02) $ 0.00 $ (0.07) $ (0.02)
============= ============== ============= =============
DILUTED INCOME (LOSS) PER
COMMON SHARE: $ (0.02) $ 0.00 $ (0.07) $ (0.02)
============= ============== ============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,143,781 6,143,548 6,143,781 5,928,524
============= ============== ============= =============
DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 6,143,781 6,143,548 6,143,781 5,928,524
============= ============== ============= =============
</TABLE>
The accompanying notes to interim consolidated financial statements are an
integral part of these consolidated financial statements.
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements Of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (368,949) $ (39,510)
--------------- ----------------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 16,992 19,763
Loss on sale of assets 12,460 --
(Increase) decrease in:
Accounts receivable 7,833 (69,248)
License, royalty and distribution
receivable -- (70,000)
Note receivable from related party 34,600 (39,360)
Inventories, net (7,870) (7,197)
Receivable from net operating loss sale 317,482 --
Other current assets 8,240 (3,771)
Increase (decrease) in:
Accounts payable and accrued expenses 5,293 270,235
Accrued legal judgement (245,000) --
Deferred revenue (31,100) 83,100
--------------- ----------------
Total adjustments 118,930 183,522
--------------- ----------------
Net cash (used in) provided by
operating activities (250,019) 144,012
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (31,369) --
Proceeds from sale of equipment 5,015 --
--------------- ----------------
Net cash (used in) provided by
investing activities (26,354) --
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants -- 4,300
Increase in restricted cash -- (139,521)
--------------- -----------------
Net cash provided by (used in) financing activities -- (135,221)
--------------- ------------------
Net (decrease) increase in cash and cash equivalents (276,373) 8,791
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 356,003 25,336
--------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 79,630 $ 34,127
=============== ================
</TABLE>
The accompanying notes to interim consolidated financial statements are an
integral part of these consolidated financial statements.
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Notes to Interim Consolidated Financial Statements
1. INTERIM FINANCIAL STATEMENTS
The unaudited consolidated financial statements have been prepared based
upon financial statements of HYMEDIX, Inc. and its wholly owned subsidiary,
HYMEDIX International, Inc., collectively the "Company".
In the opinion of management, the accompanying interim 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 June 30, 2000 and December 31,
1999 and the results of operations and cash flows for the six months ended June
30, 2000 and 1999. The results of operations for interim periods are not
necessarily indicative of the results to be expected for an entire fiscal year.
2. OTHER INCOME
Substantially all of the other income recorded in 2000 and 1999 related to
the collection of a receivable previously written off by the Company in a prior
year.
3. CUSTOMER DEPOSITS
During the third quarter of 1999, an agreement was signed between the
Company and one of the Company's major customers to assign all patent rights of
the Company with respect to intraocular lenses to the customer. A large portion
of the proceeds received were deferred due to the Company's failure to obtain a
release of such patent rights from the secured bondholders.
<PAGE>
4. LOSS PER SHARE
The Company has 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,
----------------------------------------------------------------
2000 1999 2000 1999
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Numerator:
Net (loss) income less preferred dividends
of $34,193 and $34,361 for the three month
periods and $68,386 and $68,723 for the
six month periods ended June 30, 2000
and June 30, 1999 respectively $ (114,099) $ 2,814 $ (437,335) $ (108,233)
------------- ------------- ------------- -------------
Denominator:
Weighted average common
shares outstanding 6,143,781 6,143,548 6,143,781 5,928,524
------------- ------------- ------------- -------------
BASIC LOSS PER COMMON SHARE $ (0.02) $ -- $ (0.07) $ (0.02)
============== ============= ============= =============
Numerator:
Net (loss) income less preferred dividends
of $34,193 and $34,361 for the three month
periods and $68,386 and $68,723 for the
six month periods ended June 30, 2000
and June 30, 1999 respectively $ (114,099) $ 2,814 $ (437,335) $ (108,233)
------------- ------------- ------------- -------------
Interest on Convertible Bonds for the
period (A)
Subtotal $ (114,099) $ 2,814 $ (437,335) $ (108,233)
------------- ------------- ------------- -------------
Denominator:
Weighted average common
shares outstanding 6,143,781 6,143,548 6,143,781 5,928,524
------------- ------------- ------------- -------------
Common shares that would be issued
in exchange for the Convertible Bonds
assuming conversion at the beginning
of the period
Subtotal 6,143,781 6,143,548 6,143,781 5,928,524
------------- ------------- ------------- -------------
DILUTED LOSS PER COMMON SHARE $ (0.02) $ -- $ (0.07) $ (0.02)
============== ============= ============= =============
</TABLE>
(A) None of the common shares issuable under the Company's stock option plan of
292,705 outstanding share or common shares issuable upon conversion of the
preferred stock and convertible bonds were included in the above earnings per
share calculations because their inclusion would be anti-dilutive for both the
three and six months ended June 30, 2000 and June 30, 1999.
<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.
RESULTS OF OPERATIONS
REVENUES
The Company's total revenues for the three months and six months ended
June 30, 2000 were $230,748 and $438,012, respectively, versus $369,885 and
$724,951 for the same periods in 1999; a decrease of 37.6% and 39.6%,
respectively. The revenue decrease in net product sales resulted from a $99,602
decrease in net sales of hydrogels and a $48 decrease in BIONIQ domestic sales,
offset by a $44,679 increase in BIONIQ export sales during the three months
ended June 30, 2000 compared to the same period of 1999. The decrease in net
product sales of $149,110 for the six months ended June 30, 2000 compared to the
same period of the previous year was due to a decrease of $98,439 in sales of
hydrogels (primarily occurring in the last three months of the period), a
$51,119 decrease in BIONIQ export sales, offset by a $448 increase in domestic
sales of BIONIQ products.
Revenue from royalty and research and development contracts decreased
$84,166 during the three months ended June 30, 2000, compared to the prior year
period, primarily as the result of a decrease of $69,166 in royalties due to the
Company not satisfying all its obligations under the agreement with a major
customer and a $15,000 decrease in development agreements. Royalty and research
and development revenues decreased $137,829 for the six months ended June 30,
2000 from the same period of 1999 primarily the result of a decrease of $132,829
in royalties mentioned above and a decrease of $5,000 in development agreements.
COSTS AND EXPENSES
Cost of sales for the three months and six months ended June 30, 2000 were
$47,168 and $87,436, respectively, versus $62,966 and $149,582 for the same
periods in 1999, a decrease of 25.1% and 41.5%, respectively. The decrease for
the three months ended June 30, 2000 was in proportion to the 20.5% decrease in
net product sales and product mix whereas the decrease for the six months ended
June 30, 2000 from the same period of the prior year was attributable to the
28.9% decrease in net product sales and product mix. Selling, general and
administrative expenses decreased 3.0% and 3.6% to $239,123 and $509,589
respectively, for the three months and six months ended June 30, 2000 from the
same period of 1999. The decrease was principally due to lower employee related
expenses. The research and development costs for the three months and six months
ended June 30, 2000 were $104,859 and $219,268, respectively, as compared to
$108,202 and $220,692 for the same periods in 1999, a decrease of 3.1% and 0.6%,
respectively, resulting from decreased costs of the research and development
staff.
<PAGE>
OTHER (EXPENSE) INCOME
Total other (expense) income, for the three months and six months ended
June 30, 2000 was an income of $80,496 and $9,332, respectively, versus an
income of $84,955 and $134,466 for the same periods in 1999, decrease of $4,459
and $125,134, respectively. The decrease in other income for the six months
ended June 30, 2000 was mainly attributable to a decrease of $118,960 collection
of a receivable previously written off by the Company in a prior year, a loss of
$12,460 on sales of equipment, offset by a $6,286 decrease in interest expense
from the previous year, which primarily resulted from the payment of legal
judgment and settlement.
As a result of the decreased revenues and expenses described above for the
three months ended June 30, 2000 as compared to the same period of the prior
year, the Company incurred a net loss of $79,906 for the three months ended June
30, 2000, versus a net income of $37,175 for the same period of 1999. As a
result of the decreased revenues and other income described above, decreased
costs and expenses for the six months ended June 30, 2000 as compared to the
same period of the prior year, the Company incurred a net loss of $368,949 for
the six months ended June 30, 2000 as compared to the net loss of $39,510 for
the same period in 1999.
LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION
The Company had $79,630 in cash and cash equivalents on hand on June 30,
2000 versus $356,003 on December 31, 1999. The working capital deficit of
$(7,884,272) on June 30, 2000 represents an increase of $410,851 from the
previous year-end deficit level of $(7,473,421). The increase in working capital
deficit was primarily attributable to the net loss incurred in the six-month
period ended June 30, 2000.
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
$900,000, 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 currently in default and there is no change in the
status 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 currently in default and there is no change in the status of the
bonds. 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, 2000, 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
<PAGE>
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.
A judgement in the amount of $367,500 has been rendered against the
Company. In July 1999, the Company reached an agreement to make monthly
installments over the next four years. As of June 30, 2000, $125,000 was paid.
The Company also entered an agreement to settle certain litigation against the
Company for $200,000 plus interest to be paid over thirty-six months beginning
on January 1, 2000. In January 2000, the full amount of $200,000 was paid.
Financing the judgement as well as the Company's operations will be difficult.
Management believes that the Company will have adequate resources to finance its
operations in 2000. 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 and obligations in 2000, there is no assurance that
other sources of funds will be available to the Company.
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, 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 had a loss of $368,949 for the six months ended June 30,
2000 and had a net working deficit at June 30, 2000 of $7,884,272. The Company
has experienced ongoing losses from operations. The Company has a limited cash
balance and is in technical default on it's loans. There can be no assurance
that the Company's revenues will grow sufficiently to fund its operations and
achieve profitability. 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 a financing, if any, are not
sufficient to fund the Company's operations in 2000, there can be no assurance
that other sources of funds will be available to the Company.
- 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 industry is highly competitive. Such competition could
negatively impact the Company's market share and therefore reduce the Company's
revenues and income. 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.
<PAGE>
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. There can be no assurance that the Company will be able to
successfully develop and commercialize any new products or technologies.
- 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 manner; 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.
Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS.
Exhibit 27 Financial Data Schedules.
(b) REPORTS ON FORM 8-K.
None.
<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 14, 2000 By: /s/ Charles K. Kliment
----------------------
Charles K. Kliment
President (Principal Executive Officer)
Date: August 14, 2000 By: /s/ William G. Gridley, Jr.
-----------------------------
William G. Gridley, jr.
Chairman, Chief Financial Officer,
(Secretary, Treasurer, Principal
Financial Officer and Principal
Accounting Officer), Director
