-----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, RjdSwWbeJSfPHvte02BPM6w2q7xytOq+R+dDPojvtMo70Anai7By54XXps0QPnOY +FFJgTD0EndviLnBKi98xw== 0001013993-01-500036.txt : 20010814 0001013993-01-500036.hdr.sgml : 20010814 ACCESSION NUMBER: 0001013993-01-500036 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 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: 1706241 BUSINESS ADDRESS: STREET 1: 2151 EAST LAKESHORE DR CITY: BATON ROUGE STATE: LA ZIP: 70808 BUSINESS PHONE: 2253871112 MAIL ADDRESS: STREET 1: 2151 EAST LAKESHORE DRIVE CITY: BATON ROUGE STATE: LA ZIP: 70808 FORMER COMPANY: FORMER CONFORMED NAME: CARIBBEAN ACQUISTIONS INC DATE OF NAME CHANGE: 19880725 FORMER COMPANY: FORMER CONFORMED NAME: CARTEL ACQUISITIONS INC DATE OF NAME CHANGE: 19890718 10QSB 1 hel0601qsb.txt UNITED STATES 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 June 30, 2001 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. Delaware 91-2099117 (State or other Jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 210 Baronne St., Suite 1004 New Orleans, LA 70112 (504) 525-2090 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, par value $0.001 per share at June 30, 2001 was 5,022,196 shares. DOCUMENTS INCORPORATED BY REFERENCE: Yes. See Index on page 5. EXHIBITS: Indexed at Page 5. PAGES: This Form 10-QSB consists of 6 pages, plus pages F-1 through F-4. 10QSB OTHER DOC TABLE OF CONTENTS Page PART I FINANCIAL INFORMATION........................................2 Item 1. Financial Information........................................2 Item 2. Management's Discussion and Analysis or Plan of Operation....2 PART II OTHER INFORMATION............................................5 Item 1. Legal Proceedings............................................5 Item 2. Changes in Securities........................................5 Item 3. Defaults Upon Senior Securities..............................5 Item 4. Submission of Matters to a Vote of Security Holders..........5 Item 5. Other Information............................................5 Item 6. Exhibits and Reports on Form 8-K.............................5 Balance Sheet..........................................................F-1 Statements of Operations...............................................F-2 Statements of Cash Flows...............................................F-3 Notes to Financial Statements..........................................F-4 1 PART I - FINANCIAL INFORMATION Item 1. Financial Information Please see Pages F-1 through F-4. The following financial statements are filed as part of this Report: Page Balance Sheet as at June 30,2001................ F-1 Statements of Operations........................ F-2 Statements of Cash Flows........................ F-3 Notes to Financial Statements................... F-4 These financial statements should be read in conjunction with the audited financial statements at December 31, 2000. Those statements are incorporated herein by reference as part of Exhibit No. 99-a. Item 2. Management's Discussion and Analysis or Plan of Operation This item incorporates by reference Items 1 and 2 of Part I and Item 6 of Part II of Registrant's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000 as amended on May 18, 2001 (Exhibit No. 99-a). (A) Plan of Operation The Company's general plan of operation is outlined in detail in Item 1 and Item 6 of Exhibit 99-a. The Company maintained operations from 1990 until October 1999 primarily with limited capital provided by investments and loans from key shareholders. A major financial and managerial corporate restructuring initiative was undertaken in 1999. During late 1999 and throughout 2000, the Company began implementation of a new, short-term Strategic Plan of operation. As set forth in Exhibit 99-a, during the year 2000 the Company made progress toward achieving major goals of the new operating plan. These efforts have continued throughout the second quarter of 2001. This operating plan contemplates revenues from licensing and strategic alliances for long-term development of prescription pharmaceutical products as well as introduction within the near-term of products subject to fewer regulatory restraints. Competition and the Company's Proprietary Position The Company believes it is establishing a strong patent position with respect to proprietary compositions of matter and use of proprietary and or other lytic peptides. There is increasing interest in the biopharmaceutical industry in the potential for such antimicrobial peptides as therapeutic drug agents. To the best of the Company's knowledge there are five or six other U.S. or Canadian biotechnology companies actively working in the field. Although they have had greater financial resources available to them, the Company believes the early priority dates on its patents and patent applications are a competitive asset, as is the proprietary technical and product know-how which it has gained over a period of 14 years. The Company further believes that the activity of a few competitors, who have all entered the antimicrobial peptide technology field after the Company, is helping to accelerate the advance of this basic technology to the commercial stage. The Company's basic business plan embraces a concept of (i) long-term strategic partnering for the development of pharmaceutical products and (ii) introduction of near term proprietary non-drug products (e.g. topical antiseptics and industrial disinfectants and biocides) to niche markets where regulatory constraints are less of an obstacle. Company management believes its business plans take full cognizance of the emerging presence of several well financed competitors in the general field of endeavor. 2 In 1999 the Company (i) attained many objectives of its short-term Strategic Plan for financial and managerial restructuring, (ii) successfully completed a major recapitalization through a private offering of its securities, (iii) executed a number of important agreements with related parties on September 30, 1999 pursuant to the terms of its private offering, and (iv) increased the tempo of Company operations with the availability of adequate operating capital and a strengthened management organization. Accordingly, during 2000, operating losses sharply increased to an average of approximately $296,000 per quarter from an average quarterly level of $162,000 in 1999. During the period ending June 30, 2001, this operating loss continued due to (i) substantial cost increases in legal, accounting, and other professional services associated with the restructuring initiatives including the reincorporation of the Company in Delaware, (ii) continued preparation and prosecution of new patent applications for the "third generation" Cytoporins (iii) higher administrative expenses associated with the addition of key personnel to the staff and Scientific Advisory Board (SAB) and (iv) ongoing efforts to present technical information to prospective strategic alliance partners in the pharmaceutical community. The Company further enhanced its patent estate when it was awarded a third US patent in early July, 2001 allowing the uses of a broad class of Helix proprietary synthetic compounds as well as synthetic compounds as agents for therapeutic treatment in the anti-infective, anti-cancer and wound healing arenas. The SAB was formally constituted during the second quarter and is anticipated to assist the Company and its Chief Scientific Officer, Dr. Timothy J. Falla, in the application and commercialization of selected Cytoporin lead compounds to specific disease states or targeted commercial non-pharmaceutical development. With the expanded operations of the Company in year 2000 and continued efforts into 2001, net losses for the three month period ending June 30, 2001 increased to a level of $886,495 compared with $296,716 from the comparative period of the previous year. The accumulated losses since inception (November 7, 1988) through June 30, 2001 have increased to a level of $6,706,655. As noted in the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000 (Exhibit No. 99-a) the losses accumulated since inception through 12/31/00 amounted to $5,820,160. The financial statements presented herein show (see statements of Cash Flows F-3) that for the first six months of the year 2001 the Company has an average monthly cash outflow of $104,120 to cover the costs of operations and investments in patents. As a result of the declining liquidity evidenced as of December 31, 2000, it was clear to management that the Company would immediately require additional funding from (i) licensing activities, (ii) outside research support, or (iii) additional capital raised from private and/or public financing. Pursuant to the private placement of 6% promissory notes, the Company raised $350,000 during the second quarter. This is reflected on the Balance Sheet (page F-1). Following the close of the second quarter, prior to the date of this report, the Company has raised an additional $565,000. It is the plan of management to terminate this private placement initiative when an aggregate of 2 million dollars has been raised. Management projects that currently available cash on hand as of the date of this report is adequate to fund planned operations for the next three months. Management is considering a number of alternatives for longer term funding. As described in previous reports, the Company has implemented many of the key activities described in Exhibit 99a to advance its commercial prospects. On June 15, 2001, Timothy J. Falla, Ph.D., joined the management team as Chief Scientific Officer. He is responsible for the development and implementation of the Company's ongoing scientific research and commercialization efforts in consultation with a recently formed Scientific Advisory Board (SAB). Members of the SAB are prominent scientists, who collectively, provide to the Company a broad spectrum of expertise from academia, medicine, and the biotechnology/pharmaceutical industry. As of the date hereof, news releases detailing the backgrounds of Dr. Falla and the four members of the SAB are reported on the Company's internet website (www.helixbiomedix.com). Through the efforts of its combined scientific resources, the Company will endeavor to promote its proprietary technologies, further refine its understanding of the mechanisms of those technologies, and develop commercially viable avenues for the utilization of those technologies. The Company plans in the third quarter of 2001 to relocate Company headquarters to the Seattle area and to expand operations with the creation of in-house laboratory facilities. Management believes these moves will facilitate constructive interaction between and among Company management, its scientists, and members of the SAB. The Company plans to continue to strengthen corporate governance through attracting qualified individuals to serve on the Board of Directors. 3 The Company anticipates that it will continue its program of in-vitro research and development and move vigorously into in-vivo testing to establish lead compounds for selected applications with apparent commercial promise. This research will emphasize those properties of the Company's Cytoporin technologies that demonstrate promise in commercially viable applications. In particular, the Company will emphasize areas of research that appear to show promise for the formulation and delivery of prescription pharmaceuticals to treat specific, targeted disease states. Such formulations and delivery mechanisms are expected to include compounds designed to enhance the efficacy of traditional antibiotics, adjuvant cancer therapies and wound healing applications. Additionally, the Company expects to continue its work to develop commercially viable non-drug applications of its Cytoporin technologies, including but not limited to topical antiseptics and industrial biocides. The Company intends to actively evaluate its existing portfolio of proprietary technologies in efforts to seek out opportunities to license those technologies to third parties for both pharmaceutical and non-pharmaceutical applications. The Company believes that such licensing efforts may generate the potential for both near-term and long-term revenues and may initiate contacts with strategic partners. The Company expects that its success may depend on its ability to enter into strategic partnerships and alliances with well-established companies to provide the necessary capital to develop the Company's platform technology to the stage of commercial viability. In this regard, the Company intends to seek out such relationships and may explore opportunities for amalgamation with other, more established, companies. 4 PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is currently not involved in any litigation. Item 2. Changes in Securities During the quarter ended June 30, 2001, the Company issued options to employees to purchase an aggregate of 355,000 common shares at a price of $1.50 per share. These options were issued for services rendered during the quarter pursuant to existing employment agreements. The Company recorded no compensation in compensation expense in consideration for the issuance of these options as exercise price was in excess of share price on the OTCBB exchange. 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 Form 10-KSB for the fiscal year ended December 31, 2000 Incorporated by reference to Form 10-KSB for 2000 filed by Registrant with the SEC (File No. 33-20897-D) on April 14, 2000 and as subsequently amended on May 18, 2001. (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. August 10, 2001 By: /s/ THOMAS L. FRAZER Thomas L. Frazer, Director, Vice President and Chief Financial Officer 5 HELIX BIOMEDIX, INC. (A Development Stage Company) FINANCIAL STATEMENTS June 30, 2001 CONTENTS Page Balance Sheet................................................. F-1 Statements of Operations...................................... F-2 Statements of Cash Flows...................................... F-3 Notes to Financial Statements................................. F-4 Helix BioMedix, Inc. (A Development Stage Company) BALANCE SHEET June 30, 2001 ASSETS CURRENT ASSETS Cash and cash equivalents $ 52,709 Prepaid expenses 6,784 ---------- Total current assets 59,493 PROPERTY AND EQUIPMENT Machinery and equipment 1,591 Furniture and fixtures 393 ---------- 1,984 Less: Accumulated depreciation 743 ---------- 1,241 OTHER ASSETS Debt discount 60,000 Antimicrobial technology (net) 93,125 Patents pending and approved (net) 504,819 ---------- 657,944 ---------- TOTAL ASSETS $ 718,678 ========== LIABILITIES AND STOCKHOLDERS' DEFECIT CURRENT LIABILITIES Accounts payable - trade $ 99,207 Payroll taxes payable 7,709 Notes payable 350,000 Notes payable - related parties 163,154 Accrued interest payable 3,000 ---------- Total current liabilities 623,070 LONG-TERM LIABILITIES 163,154 STOCKHOLDERS' DEFECIT Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares issued or outstanding - Common stock, $0.001 par value, 25,000,000 shares authorized, 5,022,196 shares issued and outstanding 5,022 Additional paid-in-capital, net of Deferred compensation component 6,634,087 Deficit accumulated during the development stage (6,706,655) ---------- (67,546) ---------- Total liabilities and stockholders' deficit $ 718,678 ========== The accompanying notes are an integral part of the financial statements. F-1 Helix BioMedix, Inc. (A Development Stage Company) STATEMENTS OF OPERATIONS For the period from inception (November 7, 1988) to June 30, 2001
Inception to For the three months For the six months June 30, ended June 30, ended June 30, 2001 2001 2000 2001 2000 ------------ --------- --------- ---------- -------- REVENUE $ 19,500 $ - $ - $ - $ - OPERATING EXPENSES Accounting, legal & Professional 1,054,419 124,986 107,413 197,809 189,918 Advertising 13,566 - - - - Amortization 213,152 10,445 12,844 20,890 19,798 Consulting fees 1,917,530 522,600 - 555,484 582,500 Other general & administrative 1,013,089 171,366 121,663 307,313 192,524 Research & development 2,061,899 45,000 50,597 115,350 159,097 ------------ -------- -------- --------- -------- TOTAL OPERATING EXPENSES 6,273,655 874,397 292,517 1,196,846 1,143,837 ------------ -------- -------- --------- --------- NET LOSS FROM OPERATIONS (6,254,155) (874,397) (292,517) (1,196,846)(1,143,837) OTHER (INCOME) EXPENSE Gain on settlement of lawsuit (48,574) - - - - Interest income (75,757) (902) (14,477) (3,173) (28,406) Interest expense 576,831 13,000 18,676 19,526 29,766 ------------ -------- ------- --------- -------- 452,500 12,098 4,199 16,353 1,360 ------------ -------- ------- --------- -------- NET LOSS $(6,706,655) $ (886,495) $(296,716) $(1,213,199)$(1,145,197) =========== ========= ========== ========== ========= NET LOSS PER SHARE $ (4.46) $ (0.18) $ (0.06) $ (0.25)$ (0.25) ============ ========= ========== ========== ========= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,503,430 4,951,717 4,843,450 4,951,717 4,584,450 ============ ========== ========== =========== ==========
The accompanying notes are an integral part of the financial statements. F-2 Helix BioMedix, Inc. (A Development Stage Company) STATEMENTS OF CASH FLOWS For the period from inception (November 7, 1988) to June 30, 2001 Inception to For the six months June 30, ended June 30, 2001 2001 2000 ------------ ----------- ---------- NET CASH FLOWS FROM OPERATIONS $ (3,926,336) $ (599,137) $ (449,479) CASH FLOWS FROM INVESTING ACTIVITIES Investment in Helix Delaware (10) - - Purchase of property and equipment (1,984) - - Patents (406,084) (25,583) (11,588) ------------ ----------- ---------- NET CASH FLOWS FROM INVESTING ACTIVITIES (408,078) (25,583) (11,588) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of stock for debt 832,819 - - Issuance of stock for cash 2,019,380 - - Cash received in reverse acquisition 634,497 - - Notes payable 357,394 350,000 (27,000) Related party notes payable (net) 542,733 (163,154) - ------------ ----------- ---------- NET CASH FLOWS FROM FINANCING ACTIVITIES 4,387,123 186,846 (27,000) ------------ ----------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 52,709 (437,874) (488,067) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 490,583 1,455,820 ------------ ----------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 52,709 $ 52,709 $ 967,753 ============ =========== ========== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES AND OTHER CASH INFORMATION Stock issued to acquire patents $ 66,486 $ - $ - Debt issued to acquire technology 200,000 - - Bridge loans outstanding at acquisition 200,000 - - Patent costs included in accounts payable 99,859 - - Accounts payable converted to notes 704,559 - - Accrued interest rolled into notes 403,463 - - Notes converted to equity 1,639,548 - - Cash paid for interest 76,062 6,526 41,485 Cash paid for income taxes - - - The accompanying notes are an integral part of the financial statements. F-3 Helix BioMedix, Inc. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS June 30, 2001 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 operations. All such adjustments are of a normal and recurring nature. These financial statements should be read in conjunction with the audited financial statements at December 31, 2000. 2. Options and Warrants During the quarter ended June 30, 2001, the Company entered into new consulting agreements and revised existing employment agreements. Various provisions in these agreements granted 355,000 options to purchase shares of common stock of the Company at $1.50 per share. These options expire on either June 15, 2011 or June 30, 2011. Also 165,500 existing options were extended, and will expire on June 30, 2011, rather than January 2003. The Company also granted warrants to purchase 390,000 shares of the Company's common stock at $1.50 per share, 50,000 warrants at $3.00 per share, 50,000 warrants at $4.50 per share and 50,000 warrants at $6.00 per share. All warrants expire on between December 31, 2009 and June 30, 2011. A total of $417,600 in consulting fees has been charged to additional paid in capital for these warrants and options. In connection with the debt with detachable warrants issued during the quarter ended June 30, 2001, there were 87,500 warrants issued to purchase shares of the Company's common stock at a price not to exceed $1.50. (See Note 3) 3. Post Quarter-End Financing Subsequent to the close of the quarter and through August 10, 2001 the Company issued debt of $565,000 pursuant to a private placement of 6% unsecured promissory notes and warrants. These notes are due and payable June 30, 2002. The attached warrants bear a per share exercise price of the lesser of (1) $1.50; or (ii) the per share price paid by investors in an equity financing generating proceeds to the Company of at least $1,500,000 that closes on or prior to December 31, 2001. F-4 -----END PRIVACY-ENHANCED MESSAGE-----