<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
Commission file No: 1-12836
PHARMA PATCH PUBLIC LIMITED COMPANY
-----------------------------------------------------------------
(Exact Name of small business issuer as Specified in its Charter)
Ireland Not Applicable
------------------------------ ------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation) Identification No.)
15/16 Fitzwilliam Place, Dublin, Ireland
--------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
011-353-1-668-7144
------------------
Issuer's Telephone Number, Including Area Code
Indicate by check mark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past twelve months
(or for such shorter periods that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past
ninety days.
Yes X No
----- -----
The number of ordinary shares of Registrant outstanding as of January 15, 1997
was 17,149,375 shares.
<PAGE> 2
PHARMA PATCH PUBLIC LIMITED COMPANY
INDEX
PART 1 -- FINANCIAL INFORMATION
Page No.
--------
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets -- February 29, 1996,
November 30, 1996 and November 30, 1995 . . . . . . . . . . . . . . . 1
Unaudited Consolidated Statements of Operations -- Year
ended February 29, 1996, three months ended November 30, 1996 and
1995 and nine months ended November 30, 1996 and November 30, 1995 . . 2
Unaudited Consolidated Statements of Cash Flows --Year Ended
February 29, 1996, and nine months ended November 30, 1996
and November 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Statement of Changes in Stockholders Equity --
Nine months ended November 30, 1996 and November 30, 1995 . . . . . . 4
Unaudited Notes to Consolidated Financial Statements . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . 9
PART 2 -- OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE> 3
PHARMA PATCH PLC
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
Unaudited
November 30,
February 29, ------------------------------------
1996 1996 1995
---- ---- ----
<S> <C> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 668,822 $ 45,621 $ 180,788
Accounts receivable 22,690 -- 197,054
Due from Vista 251,500 -- --
Investment in TCPI - available for sale at 16,805,320 3,479,980 11,919,000
market price
Prepaid expenses and other assets -- -- 37,733
-------------- -------------- --------------
Total current assets 17,748,332 3,525,601 12,334,575
-------------- -------------- --------------
Fixed assets -- 6,849 --
Investments in and advances to affiliate -- 7,142,764 --
Promissory note -- 100,000 741,250
-------------- -------------- --------------
Total Assets 17,748,332 10,775,214 13,075,825
============== ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable 683,269 871,416 605,414
Accrued expenses 773,553 522,549 362,872
Deferred revenue -- -- 100,000
Deferred tax liability 1,710,212 -- --
-------------- -------------- --------------
Total Liabilities 3,167,034 1,393,965 1,068,286
============== ============== ==============
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Authorized - 52,046,576 Ordinary Shares
(Ordinary Shares issued and outstanding:
17,149,375 at November 30, 1996;
11,410,633 at February 29, 1996 and
9,430,466 at November 30, 1995)
Ordinary Shares, at par value 2,256,756 2,347,186 2,240,781
Premium in excess of par value 15,404,580 18,060,829 14,509,111
Cumulative translation adjustment (6,518) (6,518) --
Deficit (6,249,628) (8,796,824) (4,742,353)
Unrealized gain (loss) on securities for sale 3,176,108 (2,223,424) --
(net of deferred taxes of $1,710,212 at
February 29, 1996
-------------- -------------- --------------
Total shareholders' equity 14,581,298 9,381,249 12,007,539
-------------- -------------- --------------
$ 17,748,332 $ 10,775,214 $ 13,075,825
============== ============== ==============
</TABLE>
See the accompanying unaudited notes to the consolidated financial statements.
1
<PAGE> 4
PHARMA PATCH PLC
CONSOLIDATED STATEMENT OF OPERATIONS
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
Unaudited Unaudited
For the Year For the Three Months Ended For the Nine Months Ended
Ended November 30, November 30,
February 29, ----------------------------- ----------------------------
1996 1996 1995 1996 1995
------------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ 482,732 $ --
------------- ------------ ------------ ----------- ------------
EXPENSES
Administration 1,798,524 476,052 306,735 1,565,507 919,584
Depreciation and amortization -- 656 1,100 151,689 1,100
Foreign exchange loss (gain) -- 1,264 (13,755) 1,194 1,852
Interest expense (income) 2,285 (21,335) (912) (33,948) (10,264)
------------- ------------ ------------ ----------- ------------
1,800,809 456,637 293,168 1,684,442 912,272
------------- ------------ ------------ ----------- ------------
Loss from operations (1,800,809) (456,637) (293,168) (1,201,710) (912,272)
------------- ------------ ------------ ----------- ------------
Loss on sale of investment -- -- -- 254,903 --
Equity investee loss -- 765,402 -- 1,159,017 --
Minority interest loss for period -- -- -- (68,434) --
Other income (72,126) -- (64,322) -- (64,322)
------------- ------------ ------------ ----------- ------------
Loss from discontinued operations (1,728,683) (1,222,039) (228,846) (2,547,196) (847,950)
------------- ------------ ------------ ----------- ------------
Discontinued operations
Loss from discontinued operations (2,593,468) -- (848,431) -- (1,966,726)
Gain on sale of business segment 16,412,627 -- 16,412,627 -- 16,412,627
------------- ------------ ------------ ----------- ------------
Gain on discontinued operations 13,819,159 -- 15,564,196 -- 14,445,901
------------- ------------ ------------ ----------- ------------
Net earnings (loss) for the period 12,090,476 (1,222,039) 15,335,350 (2,547,196) 13,597,951
Deficit beginning of period (18,340,304) (7,574,785) (20,077,703) (6,249,628) (18,340,304)
------------- ------------ ------------ ----------- ------------
Deficit, end of period (6,249,828) (8,796,824) (4,742,353) (8,796,824) (4,742,353)
============= ============ ============ =========== ============
Earnings (loss) per Ordinary Share
Loss from continuing operations -- (0.07) (0.03) (0.15) (0.11)
Discontinued operations 0.70 na 1.98 na 1.83
Net earnings (loss) 0.70 (0.07) 1.95 (0.15) 1.72
------------- ------------ ------------ ----------- ------------
Number of Ordinary Shares
outstanding used for Earnings
per Share Purposes (1) 19,677,650 17,017,313 7,905,493 16,508,104 7,905,493
============= ============ ============ =========== ============
</TABLE>
(1) The modified treasury stock method was used for the year ended
February 29, 1996 to calculate earnings per share due to the dillutive
effect of outstanding warrants. The weighted average method was used
for all other periods.
See the accompanying unaudited notes to the consolidated financial statements.
2
<PAGE> 5
PHARMA PATCH PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESS IN U.S. DOLLARS)
<TABLE>
<CAPTION>
Unaudited
For the Year For the Nine Months Ended
Ended November 30,
February 29, -----------------------------------
1996 1996 1995
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Earnings (loss) $ 12,090,676 $(2,547,196) $ 13,597,951
Add non-cash items
Depreciation and amortization 253,958 151,689 253,958
Write down of fixed assets 9,900 -- --
Gain on sale of business (16,412,827) -- (16,302,923)
Non-cash payment of expenses 1,842,478 219,785 1,024,157
Loss on sale of investment -- 254,903 --
Minority interest gain for period -- (68,434) --
Interest on long term debt -- -- 87,667
Equity investee loss -- 1,159,017 --
Net change in non-cash working capital items 361,272 (61,341) (480,833)
------------ ----------- ------------
(1,854,543) (891,577) (1,820,023)
------------ ----------- ------------
INVESTING ACTIVITIES
Purchase of fixed assets (50,658) 8,750 (50,658)
Net proceeds on sale of investment -- 2,928,696 --
Investment in and advances to affiliate (251,500) (2,852,352) --
Promissory Note -- (100,000) --
------------ ----------- ------------
(302,158) (14,906) (50,658)
------------ ----------- ------------
FINANCING ACTIVITIES
Issue of shares, net 2,186,778 276,894 1,412,724
Other -- 6,388 --
------------ ----------- ------------
2,186,778 283,282 1,412,724
------------ ----------- ------------
Net increase (decrease) in cash and cash 30,077 (623,201) (457,957)
equivalents for the period
Cash and cash equivalents, beginning of period 638,745 668,822 638,745
------------ ----------- ------------
Cash and cash equivalents, end of period 668,822 45,621 180,788
============ =========== ============
</TABLE>
See the accompanying unaudited notes to the consolidated financial statements.
3
<PAGE> 6
PHARMA PATCH PLC
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Nine Month Period Ended November 30, 1995 and 1996
(EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
Unrealized Total
Premium in Cumulative Gain (loss) hareholders'
Number of Excess Accumulated Translation on Equity Equity
Shares Par value Par value Deficit Adjustment Securities (Deficiency)
---------- ---------- ----------- ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $
Balance on February 28, 1995 5,740,253 $2,183,643 $11,448,439 $(18,340,304) -- -- $(4,708,222)
---------- ---------- ----------- ------------ ------- ------------- ------------
Issuance of Stock ( unaudited)
Payment of professional fees 535,500 8,428 512,402 -- -- -- 520,830
Payment of accrued salaries 563,738 8,680 360,273 -- -- -- 368,953
Private placement 1,664,412 25,390 1,600,159 -- -- -- 1,625,549
Share issuance costs -- -- (138,772) -- -- -- (138,772)
Officers and directors 926,563 14,640 726,610 -- -- -- 741,250
Net income (loss) Nov 30, 1995
(unaudited) -- -- -- 13,597,951 -- -- 13,597,951
---------- ---------- ----------- ------------ ------- ------------- ------------
Balance November 30, 1995 9,430,466 2,240,781 14,509,111 (4,742,353) -- -- 12,007,539
========== ========== =========== ============ ======= ============= ============
Balance on February 29, 1996 11,410,633 2,256,756 15,404,580 (6,249,628) (6,518) 3,176,108 14,581,298
Issuance of Stock ( unaudited)
Payment of professional fees 638,742 9,858 313,527 -- -- -- 323,385
Shares issued to acquire
900,000 of Vista's outstanding 4,500,000 71,100 2,178,900 -- -- -- 2,250,000
common stock
Private placement 600,000 9,472 290,528 -- -- -- 300,000
Share issuance costs -- -- (126,706) -- -- -- (126,706)
Unrealized gain (loss) on
equity securities for the -- -- -- -- -- (5,399,532) (5,399,532)
period (unaudited)
Net loss Nov 30, 1996
(unaudited) -- -- -- (2,547,196) -- -- (2,547,196)
---------- ---------- ----------- ------------ ------- ------------- ------------
Balance November 30, 1996 17,149,375 2,347,186 18,060,829 (8,796,824) (6,518) (2,223,424) 9,381,249
========== ========== =========== ============ ======= ============= ============
</TABLE>
See the accompanying unaudited notes to the consolidated financial statements.
4
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
Unaudited
All information should be read in conjunction with the Management's Discussion
and Analysis of Financial Condition, Results of Operations and Financial
Statements and Notes to Financial Statements included in the Company's Annual
Report on Form 10KSB for the year ended February 29, 1996. Operating results
for the nine month period ending November 30, 1996 are not necessarily
indicative of the results that may be obtained for the entire year.
1. ORGANIZATION
Pharma Patch Plc ("Pharma Patch") or ("the Company") is currently engaged,
through its affiliate Vista Technologies, Inc.("Vista"), in providing
photorefractive keratectomy ("PRK") and other laser vision correction ("LVC")
facilities and services to the health care industry. Pharma Patch was
incorporated under the laws of the Republic of Ireland in January, 1992. Prior
to July, 1993, Pharma Patch had no significant assets or operations.
On November 15, 1995, the Company sold substantially all of the operating
assets to Technical Chemicals and Products, Inc. (TCPI) for a gain of
approximately $16.4 million. These assets included eleven United States
patents relating to transdermal drug delivery and skin permeation technology,
license rights to skin penetration enhancers and electronically assisted drug
delivery, proprietary information and trade secrets related thereto, certain
licensing and product feasibility agreements entered into by the Company and
one of its subsidiaries. In consideration for the purchased assets, TCPI
issued an aggregate of 786,214 shares of its common stock with a fair value of
$11,919,000 at November 15, 1995 and satisfied the $5,000,000 promissory note
previously issued by the Company to Flora, Inc. (Flora). As a result of this
transaction, the Company owned 9.9% of TCPI's outstanding common shares.
On January 16, 1996, the Company entered into a supplemental agreement with
TCPI which amended certain provisions of the November 1995 asset purchase
agreement. TCPI has filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission with respect to the sale of 1,800,000 TCPI
common shares (Offering). Pursuant to the terms of the supplemental agreement,
the Company executed a lock-up letter with the representative of the TCPI
Underwriters providing that it would not sell or otherwise dispose of any of
its shares of common stock for a period to expire 180 days following the
closing date of the Offering (April 30, 1996) without their prior consent. As
consideration for the execution of the lock-up agreement, TCPI (i) terminated
an existing lock-up agreement covering TCPI common stock owned by the Company,
executed in connection with the asset purchase agreement; (ii) effective as of
closing date of the Offering, terminated the voting trust agreements,
shareholders' agreement and irrevocable proxy, executed in connection with the
asset purchase agreement which, among other things, limited the Company's
ability to vote or dispose of its shares of common stock; (iii) allowed the
Company to offer for sale 100,000 shares of this common stock in the Offering
(plus up to an additional 110,000 if the Underwriters over-allotment option is
exercised); (iv) effective as of the closing date of the Offering, issued to
the Company a two-year
5
<PAGE> 8
warrant to purchase 100,000 shares of common stock at an exercise price equal
to the per share Offering price; and (v) file a Registration Statement on Form
S-3 to register all of the remaining shares of common stock owned by the
Company after the Offering. On April 30, 1996, TCPI completed the offering
whereby Pharma Patch sold 210,000 of its TCPI stock for net proceeds of
approximately $2.9 million.
On March 21, 1996, the Company completed the acquisition of 61.3% of the voting
interest of Vista. Vista provides PRK and other LVC facilities and services to
the health care industry.
The Company acquited its position in Vista by executing a stock purchase
agreement for 200,000 newly issued shares of Vista common stock for a cash
price of $500,000. The Company and Vista executed an additional agreement
under which Vista provided 2,060,000 newly issued shares of its common stock to
the Company plus 500,000 Vista Class C common stock purchase warrants. In
exchange, Vista received a $750,000 interest-free note due six months after the
transaction date and 200,000 restricted shares of TCPI common stock previously
held by the Company with a fair value on the date of the transaction of
$3,550,000 (original cost basis to the Company of $3,032,000). The Company
repaid the $750,000 note in full during the first quarter of fiscal 1997. The
Company also received an option to acquire 250,000 Vista shares at $2.50 per
share. In a separate transaction, the Company agreed to provide 4,500,000
newly issued Ordinary Shares in exchange for a total of 900,000 shares of
Vista's outstanding common stock owned by three shareholders. A summary of the
consideration for both components of the Vista transaction include the
following:
<TABLE>
<S> <C>
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000
Note payable . . . . . . . . . . . . . . . . . . . . . . 750,000
TCPI investment (200,000 shares) . . . . . . . . . . . . 3,032,000
----------
Sub-total . . . . . . . . . . . . . . . . . . . . . . . 4,282,000
Pharma Patch plc common stock (4,500,000 shares) . . . . 2,250,000
----------
$6,532,000
</TABLE>
The cost in excess of net assets acquired of approximately $4.5 million was
calculated utilizing the original carrying value of the TCPI investment ($15.16
per share). The Company amortized such cost in excess of net assets acquired
over a 15 year period from March 21, 1996 to May 31, 1996. After May 31, 1996
the Company changed its reporting for its investment in Vista from
Consolidation Accounting to the Equity Method of accounting.
Since March 21, 1996, Pharma Patch's interest in Vista has been diluted by the
issuance of Vista stock to Vista's Regional affiliates. At November 30, 1996,
Pharma Patch owned 49.2% of the issued and outstanding shares of Vista.
6
<PAGE> 9
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include all adjustments
(consisting of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the consolidated results of
operations and financial position for the interim periods presented. The
consolidated financial statements have been prepared in accordance with the
requirements for Form 10-Q and, therefore, do not include all disclosures of
financial information required by generally accepted accounting principles.
These consolidated financial statements should be read in conjunction with the
Company's February 29, 1996 consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K and the Management,
Discussion and Analysis included herewith.
The results of operations for the interim period ended November 30, 1996 are
not necessarily indicative of the operating results for the full year.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Pharma Patch and
its wholly-owned subsidiaries. The Company owned 49.2% of Vista's issued and
outstanding common shares on November 30, 1996. Vista's accounts are included in
the consolidated financial statements from March 21, 1996 to May 31, 1996. For
the period June 1, 1996 to November 30, 1996, the Company's investment in Vista
has been recorded under the equity method of accounting due to the reduction of
Pharma Patch's ownership interest. All significant intercompany balances and
transactions have been eliminated on consolidation.
FIXED ASSETS
Fixed Assets are recorded at acquisition cost. The Company provides
depreciation and amortization at rates which are expected to charge operations
with the cost of the assets over their estimated useful lives ranging from 3 to
10 years.
7
<PAGE> 10
REVENUE RECOGNITION
Revenues, for the period March 21, 1996 to May 31, 1996 when the Company
consolidated Vista's results, were recognized when photorefractive keratectomy
related facility and service fees are earned. Product development fees in the
prior year are included in discontinued operations and represent charges to
third parties for research and development work performed by the Company and
are recorded in the period the fees are earned.
RESEARCH AND DEVELOPMENT EXPENDITURES
Research and development expenditures included in discontinued operations are
charged to expense as incurred.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities stated in functional currencies other than the U.S.
dollar are translated at the year-end exchange rate and revenues and expenses
at the average rate of exchange for the year. Foreign exchange gains and
losses from transactions in currencies other than the applicable functional
currency are reflected in income during the year. Gains or losses arising on
the translation of financial statements give rise to a cumulative translation
adjustment which is included as a component of shareholders' deficiency.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
INVESTMENT SECURITIES AVAILABLE FOR SALE
Equity securities that are purchased which might be sold in order to support
the Company's investment strategies and liquidity needs are classified as
investment securities available for sale and are carried at fair market value.
Unrealized holding gains and losses are excluded from earnings and reported as
a net amount in a separate component of stockholders equity. At November 30,
1996 Investment Securities available for sale consist of 376,214 shares of
common stock in TCPI.
8
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
GENERAL
The operations of the Company for the nine months ended November 30, 1996
consisted primarily of providing photorefractive keratectomy (PRK) and other
laser vision correction (LVC) facilities to the healthcare industry through its
subsidiary Vista since the acquisition in March 1996. Vista's results are
consolidated with those of the Company's from March 21, 1996 to May 31, 1996.
From June 1, 1996 to November 30, 1996, the Company has reflected Vista's
results utilizing the equity method of accounting. The operations of the
Company for fiscal 1996 consisted primarily of the research and development of
drug delivery through the Company's wholly owned subsidiary PP Holdings Inc.
On November 15, 1995 the Company sold substantially all of its assets to
Technical Chemicals and Products, Inc. (TCPI) for 786,214 shares of TCPI common
stock. Operating results related to this business have been treated as
discontinued operations in the consolidated financial statements. Accordingly,
the financial statements for fiscal 1996 include a loss from the discontinued
operations of approximately $2,600,000 and a gain on the sale of approximately
$16,400,000. The consolidated financial statements have been prepared in
accordance with US GAAP. Additionally, the Company completed the balance of a
Private Placement financing in April 1996 contributing net proceeds of
approximately $276,000 during the nine month period ended November 30, 1996.
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 1996
Revenues were nil for the three months ended November 30, 1996 and for the
comparable prior year period.
Expenses for the three month period ended November 30, 1996 totalled $456,637.
The increase of $163,469 from the three months ended November 30, 1995 is
primarily attributable to the costs associated with the Company's proposed Plan
of Reorganization.
For the three months ended November 30, 1996, the Company reported equity
investee (Vista) losses of $765,402 versus nil for the comparable prior year
period. Vista's losses are primarily attributable to expenses associated with
the development of LVC centers across North America, marketing and travel
related expenses.
Pharma Patch's loss from discontinued operations for the three month period
ended November 30, 1995 was $848,431 and the Company recorded a gain on the
sale of its discontinued business segment of $16,412,627 during the three month
period ended November 30, 1995.
The Company's net loss of $1,222,039 for the three months ended November 30,
1996 is primarily attributable to the Company's expenses for the three month
period ($456,637) and equity investee losses ($765,402) as described above.
The Company reported net earnings of $15,335,350 for the three months ended
November 30, 1995 are primarily due to a gain on the sale of a discontinued
9
<PAGE> 12
business segment ($16,412,627) partially offset by the loss from operations
($293,168) and the loss from discontinued operations ($848,431).
NINE MONTHS ENDED NOVEMBER 30, 1996
Revenues for the nine months ended November 30, 1996 of $482,732, versus nil
for the nine months ended November 30, 1995 were generated from photo
refractive keratectomy and other laser vision correction facility and service
fees earned by European operations of the Company's subsidiary Vista during the
period in which the Company consolidated Vista's results.
Expenses for the nine months ended November 30, 1996 and 1995 were $168,442 and
$912,272 respectively. The increase of $772,170 is primarily attributable to
the inclusion of Vista operations from March 21, 1996 to May 31, 1996, when the
Company consolidated its interest in Vista and costs associated with the
Company's proposed Plan of Reorganization.
During the nine month period ended November 30, 1996, the Company sold 210,000
shares of Technical Chemicals and Products, Inc. resulting in a loss on sale of
investment of $254,903.
The Company recorded equity investee losses of $1,159,017 during the nine
months ended November 30, 1996 relating to Vista. The increases in Vista's
losses are primarily attributable to expenses associated with the development
of LVC centers across North America, marketing and travel related expenses.
The minority interest ownership of Vista (for the period ended May 31, 1996)
resulted in minority interest gain of $68,434.
Pharma Patch recorded a loss from discontinued operations of $1,966,726 for the
nine months ended November 30, 1995. Pharma Patch sold all its assets related
to drug delivery to TCPI in November 1995 and reported a gain on the sale of
its discontinued business segment of $16,412,627 for the nine month period
ended November 30, 1995.
The net loss for the nine month period ending November 30, 1996 was $2,547,196
or $0.15 versus a net gain of $13,597,951 or $1.72 for the nine months ended
November 30, 1995.
10
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has relied upon private and public equity
financing and internally generated cash flows to finance its operations.
The decrease in cash of $623,201 from February 29, 1996 to November 30, 1996
represents the net proceeds from the issuance of shares for net cash proceeds
of $276,894 and the net proceeds from the sale of 210,000 TCPI shares of
$2,928,696 offset primarily by the investment in and advances to Vista of
$2,852,352, the purchase of fixed assets of $8,750 and other on going working
capital requirements. The Company has 376,214 shares of TCPI, and as of
January 15, 1997 the TCPI shares had a market value of $9.50 per share.
The net loss for the nine month period ended November 30, 1996 of $2,547,196
included depreciation and amortization of $151,689, non-cash payment of
expenses of $219,785, loss on sale of investment (TCPI) of $254,903, minority
interest gain of $68,434 and equity investee (Vista) loss of $1,159,017. Net
change in non-cash working capital for the nine months ended November 30, 1996
was $61,341.
The Company has had limited operating revenues and has accumulated a deficit of
$8,796,824. The Company expects to continue to incur operating losses until
such time, if ever, that it generates sufficient revenues. There is no
assurance that the Company will ever operate profitably.
11
<PAGE> 14
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
A. Exhibits
Financial Data Schedule
B. Reports on Form 8-K
None
12
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PHARMA PATCH PUBLIC LIMITED COMPANY
-----------------------------------
Registrant
Date: January 17, 1997
By: /s/ MURRAY D. WATSON
-----------------------------
Murray D. Watson
Chairman & Chief Executive Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 45,621
<SECURITIES> 3,479,980
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,525,601
<PP&E> 8,750
<DEPRECIATION> 1,901
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0
0
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</TABLE>
