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 SEPTEMBER 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
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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 October 31, 2000
----- ----------------------------------
Common 6,143,781
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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HYMEDIX, INC. AND SUBSIDIARY
INDEX
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<TABLE>
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Page No.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999 3
Consolidated Statements of Operations for the Three
and Nine Months Ended September 30, 2000 and
September 30, 1999 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 and September 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>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
------
September 30, December 31,
2000 1999
--------------- ----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 106,718 $ 356,003
Accounts receivable 45,260 87,035
Note receivable from related party 49,000 203,600
Inventories, net 88,851 70,921
Receivable from Net Operating Loss sale 0 317,482
Other current assets 75,623 73,393
--------------- ----------------
Total current assets 365,452 1,108,434
PROPERTY AND EQUIPMENT, NET 63,021 896
PATENTS, NET 7,057 30,637
SECURITY DEPOSIT 59,040 59,040
--------------- ----------------
Total assets $ 494,570 $ 1,199,007
=============== ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Notes payable $ 3,946,979 $ 3,946,979
Accounts payable and accrued expenses 3,240,652 3,108,276
Accrued legal judgment and settlement 75,000 275,000
Deferred revenue 6,250 43,600
Customer deposits 1,208,000 1,208,000
--------------- ----------------
Total current liabilities 8,476,881 8,581,855
--------------- ----------------
ACCRUED LEGAL JUDGMENT AND SETTLEMENT 152,500 212,500
COMMITMENTS AND CONTINGENCIES
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 (22,321,870) (21,782,407)
Subscription receivable (1,500,000) (1,500,000)
--------------- ----------------
Total stockholders' deficit (8,134,811) (7,595,348)
--------------- ----------------
Total liabilities and stockholders' deficit $ 494,570 $ 1,199,007
=============== ================
</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 Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ -----------------------------
2000 1999 2000 1999
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Net product sales $ 172,091 $ 61,595 $ 539,478 $ 578,092
License, royalty & distribution fees 34,489 67,313 37,614 203,267
Research and development contracts 12,250 36,250 79,750 108,750
------------- -------------- ------------- -------------
Total revenues 218,830 165,158 656,842 890,109
------------- -------------- ------------- -------------
COSTS AND EXPENSES:
Cost of sales 34,388 3,383 121,824 152,965
Selling, general and administrative 204,579 468,774 714,168 997,427
Research and development 79,419 139,916 298,687 360,608
------------- -------------- ------------- -------------
Total costs and expenses 318,386 612,073 1,134,679 1,511,000
------------- -------------- ------------- -------------
Loss from operations (99,556) (446,915) (477,837) (620,891)
------------- -------------- ------------- -------------
OTHER (EXPENSE) INCOME:
Loss on sale of assets 0 0 (12,460) 0
Interest expense (70,958) (74,655) (214,566) (224,549)
Gain on settlement 0 950,000 0 950,000
Other income 0 1,289 165,400 285,649
------------- -------------- ------------- -------------
Total other (expense) income, net (70,958) 876,634 (61,626) 1,011,100
------------- -------------- ------------- -------------
Net (loss) income $ (170,514) $ 429,719 $ (539,463) $ 390,209
============= ============== ============= =============
BASIC (LOSS) INCOME PER
COMMON SHARE: $ (0.03) $ 0.06 $ (0.10) $ 0.05
============= ============== ============= =============
DILUTED (LOSS) INCOME PER
COMMON SHARE: $ (0.03) $ 0.06 $ (0.10) $ 0.05
============= ============== ============= =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,143,781 6,143,548 6,143,781 6,001,774
============= ============== ============= =============
DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 6,143,781 6,143,548 6,143,781 6,001,774
============= ============== ============= =============
</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 Statements Of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------------
2000 1999
--------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (539,463) $ 390,209
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
Depreciation and amortization 27,349 27,848
Loss on sale of assets 12,460 0
(Increase) decrease in:
Accounts receivable 41,775 (13,332)
License, royalty and distribution receivable 0 40,000
Note receivable from related party 154,600 (40,649)
Inventories, net (17,930) (30,958)
Receivable from net operating loss sale 317,482 0
Other current assets (2,230) (21,054)
Increase (decrease) in:
Accounts payable and accrued expenses 132,376 (759,751)
Accrued legal judgement (260,000) 0
Deferred revenue (37,350) 40,430
Customer deposits 0 874,000
--------------- ----------------
Total adjustments 368,532 116,534
--------------- ----------------
Net cash (used in) provided by
operating activities (170,931) 506,743
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (83,369) 0
Proceeds from sale of equipment 5,015 0
--------------- ----------------
Net cash used in investing activities (78,354) 0
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants 0 4,300
Increase in restricted cash 0 (139,447)
Principal repayment of notes payable 0 (100,000)
--------------- ----------------
Net cash used in financing activities 0 (235,147)
--------------- ----------------
Net (decrease) increase in cash and cash equivalents (249,285) 271,596
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 356,003 25,336
--------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 106,718 $ 296,932
=============== ================
</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
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 September 30, 2000 and
December 31, 1999 and the results of operations and cash flows for the
nine months ended September 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.
4. GOING CONCERN
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company incurred a
loss from operations in each of the last three years, has a working
capital deficit, has a net capital deficiency and is not in compliance
with certain loan provisions at September 30, 2000. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. 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 2001, there is no assurance that other sources of funds
will be available to the Company. The consolidated financial statements do
not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification
of liabilities that might result should the Company be unable to continue
as a going concern.
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5. 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 Nine Months Ended
September 30, September 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 $102,580 and $103,084
for the nine month periods ended
September 30, 2000 and September 30, 1999
respectively $ (204,707) $ 395,358 $ (642,043) $ 287,125
------------- ------------- ------------- -------------
Denominator:
Weighted average common
shares outstanding 6,143,781 6,143,548 6,143,781 6,001,774
------------- ------------- ------------- -------------
BASIC (LOSS) INCOME PER
COMMON SHARE $ (0.03) $ 0.06 $ (0.10) $ 0.05
============= ============= ============= =============
Numerator:
Net (loss) income less preferred dividends
of $34,193 and $34,361 for the three
month periods and $102,580 and $103,084
for the nine month periods ended
September 30, 2000 and September 30, 1999
respectively $ (204,707) $ 395,358 $ (642,043) $ 287,125
------------- ------------- ------------- -------------
Interest on Convertible Bonds for the
period (A) (A) (A) (A) (A)
------------- ------------- ------------- -------------
Subtotal $ (204,707) $ 395,358 $ (642,043) $ 287,125
------------- ------------- ------------- -------------
Denominator:
Weighted average common
shares outstanding 6,143,781 6,143,548 6,143,781 6,001,774
------------- ------------- ------------- -------------
Common shares that would be issued
in exchange for the Convertible Bonds
assuming conversion at the beginning
of the period (A) (A) (A) (A)
------------- ------------- ------------- -------------
Subtotal 6,143,781 6,143,548 6,143,781 6,001,774
------------- ------------- ------------- -------------
DILUTED (LOSS) INCOME PER
COMMON SHARE $ (0.03) $ 0.06 $ (0.10) $ 0.05
============= ============= ============= =============
</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 nine months ended September 30, 2000 and September 30, 1999.
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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.
RESULTS OF OPERATIONS
Revenues
The Company's total revenues for the three months and nine months ended
September 30, 2000 were $218,830 and $656,842, respectively, versus $165,158 and
$890,109 for the same periods in 1999; an increase of 32.5% and a decrease of
26.2%, respectively. The revenue increase in net product sales resulted from a
$126,578 increase in net sales of hydrogels, offset by a $4,059 decrease in
BIONIQ domestic sales, and a $12,023 decrease in BIONIQ export sales during the
three months ended September 30, 2000 compared to the same period of 1999. The
decrease in net product sales of $38,614 for the nine months ended September 30,
2000 compared to the same period of the previous year was due to a decrease of
$63,142 in BIONIQ export sales (primarily occurring in the first three months of
the period), a $3,611 decrease in domestic sales of BIONIQ products, offset by a
$28,139 increase in sales of hydrogels.
Revenue from license royalty and research and development contracts
decreased $56,824 during the three months ended September 30, 2000, compared to
the prior year period, primarily as the result of a decrease of $57,824 in
royalties due to the Company not satisfying all its obligations under the
agreement with a major customer and a $24,000 decrease in development
agreements, offset by a $25,000 increase in license fee received from a new
customer. Royalty and research and development revenues decreased $194,653 for
the nine months ended September 30, 2000 from the same period of 1999 primarily
the result of a decrease in royalties mentioned above.
Costs and Expenses
Cost of sales for the three months and nine months ended September 30,
2000 were $34,388 and $121,824, respectively, versus $3,383 and $152,965 for the
same periods in 1999, an increase of 916.5% and a decrease of
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20.4%, respectively. The increase for the three months ended September 30, 2000
was in proportion to the 179.4% increase in net product sales higher margin and
settlement of a disputed invoice with one of the Company's manufacturer in 1999
whereas the decrease for the nine months ended September 30, 2000 from the same
period of the prior year was attributable to the 6.7% decrease in net product
sales, higher margin, and product mix. Selling, general and administrative
expenses decreased 56.4% and 28.4% to $204,579 and $714,168 respectively, for
the three months and nine months ended September 30, 2000 from the same period
of 1999. The decrease was principally due to lower legal fees and employee
related expenses. The research and development costs for the three months and
nine months ended September 30, 2000 were $79,419 and $298,687, respectively, as
compared to $139,916 and $360,608 for the same periods in 1999, a decrease of
43.2% and 17.2%, respectively, resulting from decreased costs of the research
and development staff.
Other (Expense) Income
Total other (expense) income, for the three months and nine months ended
September 30, 2000 was an expense of $70,958 and $61,626, respectively, versus
an income of $876,634 and $1,011,100 for the same periods in 1999, decrease of
$947,592 and $1,072,726, respectively. The decrease in income for the three
months ended September 30, 2000 was mainly due to gain on the settlement
recorded in 1999 for prior rent that has been forgiven by the Company's
ex-landlord. The decrease for the nine months ended September 30, 2000 was
mainly attributable to the gain on settlement described above, a decrease of
$120,249 in collection of a receivable previously written off by the Company in
a prior year, and a loss of $12,460 on sales of equipment offset by a $9,983
decrease in interest expense from the previous year, which primarily resulted
from the payment of a legal judgment and settlement.
As a result of the decreased other income and expenses and increased
revenue described above for the three months ended September 30, 2000 as
compared to the same period of the prior year, the Company incurred a net loss
of $170,514 for the three months ended September 30, 2000, versus a net income
of $429,719 for the same period of 1999. As a result of the decreased revenues
and other income described above, decreased costs and expenses for the nine
months ended September 30, 2000 as compared to the same period of the prior
year, the Company incurred a net loss of $539,463 for the nine months ended
September 30, 2000 as compared to the net income of $390,209 for the same period
in 1999.
LIQUIDITY, CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION
The Company had $106,718 in cash and cash equivalents on hand on September
30, 2000 versus $356,003 on December 31, 1999. The working capital deficit of
$(8,111,429) on September 30, 2000 represents an increase of $638,008 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 nine-month
period ended September 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.
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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 September 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 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 September 30, 2000, $140,000 has
been 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 2001, 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
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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 had a loss of $539,463 for the nine months ended
September 30, 2000 and had a net working deficit at September 30, 2000 of
$8,111,429. 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 2001, there can be no
assurance that other sources of funds will be available to the Company.
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 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.
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. There can be no assurance that the Company will be able to
successfully develop and commercialize any new products or technologies.
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 manner; 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
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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.
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.
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<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: November 14, 2000 By: /s/ CHARLES K. KLIMENT
---------------------------------------
Charles K. Kliment
President (Principal Executive Officer)
Date: November 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
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