-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JLbTnjdTugkr8VIMNnOuz9cgUHIOhZPao6q4TqHh1jjONTG2IYfcAqUsRnx5TTqF TZIl6ZT7lQO6lmJqQiOBXw== 0000831749-96-000004.txt : 19960518 0000831749-96-000004.hdr.sgml : 19960518 ACCESSION NUMBER: 0000831749-96-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960516 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HELIX BIOMEDIX INC CENTRAL INDEX KEY: 0000831749 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 841080717 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-20897 FILM NUMBER: 96568653 BUSINESS ADDRESS: STREET 1: 2151 EAST LAKESHORE DR CITY: BATON ROUGE STATE: LA ZIP: 70808 BUSINESS PHONE: 5043871112 MAIL ADDRESS: STREET 1: 2151 EAST LAKESHORE DRIVE CITY: BATON ROUGE STATE: LA ZIP: 70808 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from to COMMISSION FILE NO. 33-20897-D HELIX BIOMEDIX, INC. COLORADO 84-1080717 2151 E. LAKESHORE DR., BATON ROUGE, LA 70808 (504)387-1112 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: NONE Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act 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 [ ] The number of shares outstanding of Registrant's common stock, no par value at March 31, 1996 was 1,159,644 shares. DOCUMENTS INCORPORATED BY REFERENCE : YES, SEE INDEX ON PAGE 3. EXHIBITS: Indexed at Page 3. PAGES: This form 10-QSB consists of 4 pages, plus pages F-1 through F-5, and pages F-10 through F-13 of Exhibit No. 99-b. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL INFORMATION Please see Pages F-1 through F-5. The following financial statements are filed as part of this report: Page Accountants' Report F-1 Balance Sheet as of March 31, 1996 F-2 Statements of Operations F-3 Statements of Cash Flows F-4 Notes to Financial Statements F-5 These financial statements should be read in conjunction with the audited financial statements at December 31, 1995. Those statements are incorporated herein by reference as part of Exhibit No. 99-a. Exhibit No. 99-b, filed herewith, includes revised footnotes to the audited financial statements at December 31, 1995. Minor revisions to language of the footnotes were made by the Auditors shortly after Registrant filed the 10-KSB report referenced in Exhibit No. 99-b. ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This item is incorporated by reference to Item 6-Part II of Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1995. (Exhibit No. 99-a). That Report was dated April 12, 1996 and, except for the financial statements, the information therein is current and fully applicable to this Report. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None in the period covered by this Report. See Item 3-Part I of Exhibit No. 99-a incorporated herein by reference. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description and Location 99-a Registrant's Annual Report on From 10-KSB for the fiscal year ended December 31, 1995. Incorporated by reference to Form 10-KSB for 1995 filed by Registrant with the SEC (File No. 33-20897-D) on April 12, 1996. 99-b Revised Footnotes to Registrant's Audited Financial Statements for the fiscal year ended December 31, 1995. Filed herewith on pages F-10, F-11, F-12, and F-13 (ex 99-b) (b) Reports on Form 8-K None SIGNATURE Pursuant to 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. HELIX BIOMEDIX, INC. DATE: May 16, 1996 BY:/a/ Keith P. Lanneau Keith P. Lanneau, President, Principal Financial and Accounting Officer. The Board of Directors Helix BioMedix, Inc. The accompanying balance sheet of Helix BioMedix, Inc. (a developmental stage company) as of March 31, 1996 and the related statements of loss and accumulated deficit and cash flows for the period then ended were not audited by us, and accordingly, we do not express an opinion on them. Aurora, Colorado May 10, 1995 COMISKEY & COMPANY PROFESSIONAL CORPORATION Helix BioMedix, Inc. (A Development Stage Company) BALANCE SHEET March 31, 1996 (unaudited) ASSETS CURRENT ASSETS Cash $ 267 Note Receivable - TPI 25,000 Accrued interest receivable 524 ----------- Total current assets 25,791 OTHER ASSETS Accounts receivable - affiliate 30,778 Antimicrobial technology (net) 152,187 Patents pending 314,764 ----------- Total other assets 497,729 TOTAL ASSETS $ 523,520 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable - trade $ 31,359 Notes payable 44,131 Notes payable on demand - related parties 151,947 Accrued interest payable 7,221 ----------- Total current liabilities 234,658 LONG-TERM LIABILITIES Notes payable to shareholders 633,445 ----------- Total liabilities 868,103 STOCKHOLDERS' DEFICIT Common stock, no par value, 2,000,000 shares authorized, 1,159,644 shares issued and outstanding 1,890,604 Additional paid in capital - warrant issuance 137,400 Deficit accumulated during the development stage (2,372,587) ----------- Total stockholders' deficit (344,583) ----------- Total liabilities and stockholders' deficit 523,520 $ =========== Helix BioMedix, Inc. (A Development Stage Company) STATEMENTS OF LOSS AND ACCUMULATED DEFICIT For the period from inception (November 7, 1988) to March 31, 1996 (unaudited) For the quarter ended Inception to March 31, March 31, 1996 1995 1996 ----------- ----------- ----------- REVENUE $ 0 $ 0 $ 3,000 EXPENSES Research & development 28,000 0 1,256,319 Amortization 4,373 2,520 79,053 Accounting & legal 850 215 100,662 Advertising 0 0 13,488 Compensation cost 0 0 137,400 Consulting fees 12,000 15,000 376,271 Office expense 5,080 4,703 106,921 Other general & administrative 242 218 10,004 --------- --------- ---------- TOTAL OPERATING EXPENSES 50,545 22,656 2,080,118 --------- --------- ---------- NET LOSS FROM OPERATIONS (50,545) (22,656) (2,077,118) OTHER (INCOME) EXPENSE Interest income (524) 0 (524) Interest expense 16,122 17,113 295,993 -------- --------- ---------- NET LOSS $ (66,143)$ (39,769)$ (2,373,111) ======== ========= =========== NET LOSS PER SHARE ($0.06) ($0.04) ($2.74) ========== ========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,159,644 1,008,381 866,319 ========= ========= =========== Helix BioMedix, Inc. (A Development Stage Company) STATEMENTS OF CASH FLOWS For the period from inception (November 7, 1988) to March 31, 1996 (unaudited) For the quarter ended Inception to March 31, March 31, 1996 1995 1996 ---------- ---------- --------- NET CASH USED IN OPERATIONS $ (39,960) $ (13,862) $ (892,249) CASH FLOWS FROM INVESTING ACTIVITIES Notes Receivable (25,000) Patents 0 0 (178,006) ---------- ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES 0 0 (203,006) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of stock for cash 0 0 52,000 Cash received in reverse acquisition 0 0 634,497 Notes payable 0 0 51,525 Related party notes payable (net) 37,000 0 357,500 ---------- ---------- ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES 37,000 0 1,095,522 ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH (2,960) (13,862) 267 ASH, BEGINNING OF PERIOD 3,227 15,003 0 ---------- ---------- ---------- CASH, END OF PERIOD $ 267 $ 1,141 $ 267 ========== ========== ========== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES AND OTHER CASH INFORMATION Stock issued to acquire patents 0 0 66,486 Debt issued to acquire tachnology 0 0 200,000 Bridge loans outstanding at acquisition 0 0 200,000 Patent costs included in accounts payab 4,988 4,157 77,324 Accounts payable converted to notes 18,000 15,000 742,701 Accrued interest rolled into note 16,686 17,113 218,354 Notes converted to equity 0 0 794,102 Helix BioMedix, Inc. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 1996 (unaudited) 1. Management's representation of interim financial information. The accompanying financial statements have been prepared by Helix BioMedix, Inc. without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments which, in the opinion of management, are necessary to a fair presentation of financial position and results of operation. All such adjustments are of a normal and recurring nature. Certain reclassifications have been made to prior periods to conform to current period presentation. These financial statements should be read in conjunction with the audited financial statements at December 31, 1995. 2. Interim financing ----------------- During the first quarter of 1996, the Company received $37,000 in debt financing as follows: $25,000 in the form of a 10% convertible promissory note to a shareholder and director, and $12,000 in the form of additional demand notes to a related party. EXHIBIT 99-B Revised Footnotes to Registrant's Audited Financial Statements for the fiscal year ended December 31, 1995. Filed herewith on pages F-10, F-11, F-12, and F-13 (ex 99-b) HELIX BIOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS For the period from inception (November 7, 1988) to December 31, 1995 (REVISED) 1. Summary of Significant Accounting Policies (continued) Development Stage Activities (continued) In July 1992, de-facto control of the Company was returned to Helix International, and the Company, with the assistance of both URM and Helix International, began a series of negotiations with LSU which culminated in the February 1993 Agreement of Settlement, Compromise, and Release. This settlement agreement essentially released LSU, the Company, Helix International, URM, and Helix Phytonetix, a related company, from defaults under their original respective agreements. The settlement renewed the Company's exclusive license in five lytic peptide patents currently under development. Excluding research and development costs expensed to operations as incurred, the Company's investment in these patents was $311,336 at December 31, 1995. As part of the settlement, the Company executed a sublicense agreement with URM for the development and marketing of a portion of the patented technology. In 1993, the Company entered into an agreement with the Louisiana Partnership for Technology and Innovation to obtain assistance in the implementation of a financial and managerial restructuring plan for theCompany, and in the development and implementation of licensing programs for the technology. In consideration for these services, the Companyissued 8,000 shares of its common stock to the Partnership in May 1993. In late 1993, the Company entered into negotiations with Therapeutic Peptides, Inc. ("TPI"), the objective of which was to bring about a merger of TPI into Helix BioMedix, contingent upon the successful completion of the Company's financing plan. Since 1993, TPI has continued to conduct lytic peptide research on behalf of the Company. In November 1995, the Company, in lieu of the proposed merger with TPI, entered in to a cooperative endeavor agreement with Therapeutic Peptides, Inc. Upon consummation of the agreement, Therapeutic Peptides, Inc. received 10,000 shares of stock in Helix BioMedix, Inc., and shall henceforth share in the royalties received by Helix BioMedix, Inc. with respect to the derivative peptides. Due to the fact that the Company's research and development activities have begun, but there has been no significant revenue therefrom, the Company is in the development stage as defined in Statement of Financial Accounting Standards #7. Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The company, which is in the development stage, has incurred substantial losses since its inception, and has no current assets with which to repay obligations as they come due. Management plans to raise money in equity markets to finance further patent prosecution and ongoing research and development activities. However, there is no assurance that management will be successful in obtaining additional financing. These conditions give rise to substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments which may be necessary if the Company is unable to continue. Intangibles Patent costs, consisting primarily of legal and filing fees, are capitalized. Amortization will be taken on the straight-line method over the estimated useful life of the patent, not to exceed 17 years, starting on the date the patent was issued. Antimicrobial technology which was purchased in conjunction with the patents, has been capitalized at the basis of the debt issued for it. This technology is being amortized ratably over twenty years. Organization costs were amortized ratably over 60 months. F-10 Helix BioMedix, Inc. Notes to Financial Statements For the period from inception (November 7, 1988) to December 31, 1995 (REVISED) 1. Summary of Significant Accounting Policies (continued) Significant Accounting Policies (continued) Research and Development Research and development costs are expensed as incurred. Statement of Cash Flows For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Loss per Share Loss per share has been computed using the weighted average number of shares outstanding during the period. Fully diluted earnings per share have not been presented as their effect is estimated to be antidilutive. Income Taxes For all periods presented, the Company has computed its income tax benefit under FASB 109 - Accounting for Income Taxes. Because of the Company's creation of a full valuation allowance for the tax benefit of net operating loss carryforwards and R & D credit carryforwards, there is no material difference in the financial statements between income tax calculated under FASB 109 and income tax calculated under APB 11. 2. Notes Payable The Company is obligated under the following notes at December 31, 1995: 8% convertible promissory note payable to shareholder, principal and interest originally payable in March 1990, extended until August 1991, now due September 1997. $ 603,377 8% convertible promissory note, principal and interest due June 1996 8,131 12% promissory note, principal and interest due November 1989. 2,000 Two 8% convertible promissory notes payable to shareholders, due on demand 87,329 Three 12% promissory notes due December 1996, each note convertible into 400 shares of common stock at the option of the holder 9,000 10.25% promissory note, principal and interest due May 1996 25,000 10% convertible promissory note, payable to a shareholder and director, principal and interest due December 1997 25,000 ------- Total notes outstanding 759,837 Less amount classified as current 131,460 ------- $ 628,377 ======= F-11 Helix BioMedix, Inc. Notes to Financial Statements For the period from inception (November 7, 1988) to December 31, 1995 (REVISED) 2. Notes Payable (continued) The shareholder note for $603,377 is secured by a first security interest in technology and intellectual property rights of the Company. Interest is payable quarterly in cash or common shares of the Company at the rate of $2.50 per share, or may be converted to principal. Form of payment of quarterly interest is at the discretion of the note holder. The note plus accrued interest is convertible in whole or in part at any time prior to maturity into shares of the Company's common stock. Stock conversion will be made at $2.50 per share. The shareholder notes for $87,329 are secured by a first security interest in technology and intellectual property rights of the Company. Interest is payable quarterly in cash or common shares of the Company at the rate of $1.00 per share, or may be converted to principal. Form of payment of quarterly interest is at the discretion of the note holder. The note plus accrued interest is convertible in whole or in part at any time prior to maturity into shares of the Company's common stock at $1.00 per share. The 8% note for $8,131 is convertible into shares of the Company's common stock at $2.50 per share. The 10% convertible promissory note is payable to Thomas L. Fraser, shareholder and director, and is convertible to shares of the Company's common stock at $1.00 per share. Debt maturities over the next five years are as follows: due in 1996, $131,460; due in 1997, $628,377; and, due thereafter $0. 3. Stockholders' Equity The Company has 1,159,644 outstanding common shares and no outstanding preferred shares. The Company is authorized to issue 2,000,000 common and 400,000 preferred shares. The Company's president, Keith P. Lanneau, holds a total of 640,000 shares beneficially as shareholder in Helix International, which holds 540,000 of the Company's shares, and as beneficial owner of Arrowhead Technology Associates, which holds 20,000 of the Company's shares and an additional 80,000 shares from the conversion of debt owed to equity. On December 29, 1993, the Company underwent a 1 for 500 reverse stock split. All share and per share amounts in these financial statements have been retroactively restated to reflect this reverse split. At December 31, 1995, the Company had outstanding stock options to purchase 91,400 shares of the Company's common stock at prices ranging from $0.50 to $1.00 per share. The options become exercisable upon issuance and expire at various dates through 1998. Compensation expenses charged to operations in 1995 was $137,400. 4. Income Taxes At December 31, 1995, the Company has approximately $2,134,000 in net operating loss carryforwards and approximately $35,000 in Federal Research and Development tax credit carryforwards available to offset future taxable income and related income tax. The operating loss carryforwards expire between 2003 and 2010. The tax benefit of these carryforwards has been offset by a full allowance for realization. F-12 Helix BioMedix, Inc. Notes to Financial Statements For the period from inception (November 7, 1988) to December 31,1995 (REVISED) 5. Related Party Transactions From March 1989 to March 1990, the Company contracted with Helix International, Inc., a principal shareholder, to conduct lytic peptide research on a contract basis for the account of the Company. The Company incurred a total of $655,321 in research costs paid or payable to Helix International during this period. At December 31, 1995, a promissory note for $603,377 was outstanding, consisting of unpaid research costs, accrued interest, and patent pass through costs. In addition, $50,000 in debt payable to Helix International had been converted to equity in 1992. The Company maintains its corporate offices in the offices of its president. From inception to December 31, 1995, the Company has incurred $101,841 in rental and general office expense reimbursements which have been paid or are payable to an affiliated company. The President of the Company is also a principal shareholder in Helix Phytonetix, Inc. ("Phytonetix"). Phytonetix is a party to the LSU settlement agreement described in Note 1, and is a licensee of lytic peptide technology as it relates to applications in plants. Phytonetix owes the Company $30,124 in patent costs which were paid by the Company during 1995. As part of the LSU settlement described in Note 1, the Company entered into a sublicense agreement with URM, a shareholder, for the development and marketing of a portion of the patented technology, specifically the use of the technology in food preservation and purification of drinking water. A $66,000 consulting fee has accrued to Helix International for the year ended December 31, 1995. F-13 -----END PRIVACY-ENHANCED MESSAGE-----