-----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, AaN3BGPrbP6HD6jGQAhHk3D0Nij3jxTro/rs7oqXlbSLEr06umJ10h0UfK51svST DMZ8JHowK+l0gU6OBwcFEA== 0001013993-01-500058.txt : 20020410 0001013993-01-500058.hdr.sgml : 20020410 ACCESSION NUMBER: 0001013993-01-500058 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 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: 1784552 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 hel0901qsb.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 September 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.) 22122 20th Avenue S.E. #148 Bothell, WA 98021 (425) 402-8400 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 September 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 of September 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 third 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 early stage 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 September 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 (v) move of the Company headquarters to and establishment of an in-house laboratory in Bothell, Washington. The Company further enhanced its patent estate when it was awarded a fourth US patent on October 16, 2001 (application number 1996000749066). With the expanded operations of the Company in year 2000 and continued efforts into 2001, net losses for the three month period ending September 30, 2001 decreased to a level of $408,148 compared with $409,382 from the comparative period of the previous year. The accumulated losses since inception (November 7, 1988) through September 30, 2001 have increased to a level of $7,114,803. As noted in the Annual Report on Form 10-KSB/A 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 nine months of the year 2001 the Company has an average monthly cash outflow of $129,257 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 $810,000 during the third quarter. This is reflected on the Balance Sheet (page F-1). Following the close of the third quarter, prior to the date of this report, the Company has raised an additional $330,000. It is the plan of management to terminate this private placement initiative when an aggregate of $2,750,000 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 two 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 including the hiring of a Chief Scientific Officer and additional scientific staff. The following scientific personnel were employed: Dr. Scott M. Harris, Director of Chemistry and Dr. Lijuan Zhang, Senior Microbiologist to assist the Company in continuing development of its proprietary peptides. Company headquarters were moved to Bothell, Washington and implementation of in-house laboratory capabilities begun. The SAB, composed of prominent scientists who provide a broad spectrum of expertise from academia, medicine, and the biotechnology/pharmaceutical industry, met with its focus being on identification of core and non-core applications and strategy development for commercial exploitation of such application. Management believes that facilities enhancement, retention of in-house scientific personnel and collaboration with SAB members will assist in promotion of its proprietary technologies, refine its understanding of the mechanisms of those technologies, and develop commercially viable avenues for utilization of those technologies. 3 The Company pursued an exclusive licensing agreement with the University of British Columbia for the rights to commercialize several classes of peptides that are structurally distinct from the existing Helix proprietary compounds. The intent to license novel peptides from the University of British Columbia was publicly disclosed via a press release on August 3, 2001. An agreement was executed on October 12, 2001. The terms of the agreement include a payment to the University of British Columbia for reimbursement of patent prosecution costs and the issuance of Company common shares of stock and a grant of options to the University and selected researchers associated with the discovery of peptides. These peptides were discovered through research conducted by R.E.W Hancock, Ph.D, Professor, Department of Microbiology and Immunology, University of British Columbia. Dr. Hancock is an internationally recognized authority on antimicrobial peptides and holds numerous patents describing their composition and use as novel antibacterial, antifungal and antiviral agents. Dr. Hancock will also be granted warrants to purchase Company shares at the time of license agreement execution. Helix will pursue their development of these compounds as new pharmaceutical agents and in non-FDA applications. The annual shareholder meeting has been scheduled for Tuesday, December 11, 2001 and Mr. Randall L.W. Caudill will be proposed as a new board of director member as part of the ongoing corporate governance strengthening. 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 September 30, 2001, the Company issued options to purchase an aggregate of 75,000 common shares to employees and 50,000 shares to consultants at a price of $1.50 per share. These options were issued for services rendered during the quarter pursuant to existing employment/consulting agreements. Warrants to purhcase an aggregate of 202,500 shares at a price of $1.50 per share were issued to purchasers of promissory notes pursuant to a private placement. 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/A for the fiscal year ended December 31, 2000 Incorporated by reference to Form 10-KSB/A 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. November 12, 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 September 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 September 30, 2001 ASSETS CURRENT ASSETS Cash and cash equivalents $ 324,115 Prepaid expenses 8,184 ---------- Total current assets 332,299 PROPERTY AND EQUIPMENT Machinery and equipment 51,077 Furniture and fixtures 8,906 ---------- 59,983 Less: Accumulated depreciation 837 ---------- 59,146 OTHER ASSETS Debt discount 119,325 Deposits 54,405 Antimicrobial technology (net) 90,313 Patents pending and approved (net) 522,896 ---------- 786,939 ---------- TOTAL ASSETS $ 1,178,384 ========== LIABILITIES AND STOCKHOLDERS' DEFECIT CURRENT LIABILITIES Accounts payable - trade $ 33,764 Payroll taxes payable 54 Notes payable 1,160,000 Notes payable - related parties 163,154 Accrued interest payable 19,852 ---------- Total current liabilities 1,376,824 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 6,748,187 Deficit accumulated during the development stage (7,114,803) ---------- (361,594) ---------- Total liabilities and stockholders' deficit $1,178,384 ========== 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 September 30, 2001
Inception to For the three months For the nine months September 30, ended September 30, ended September 30, 2001 2001 2000 2001 2000 ------------ --------- --------- ---------- -------- REVENUE $ 19,500 $ - $ - $ - $ - OPERATING EXPENSES Accounting, legal & Professional 1,096,168 41,749 103,258 239,558 293,176 Advertising 13,566 - - - - Amortization 223,596 10,444 9,899 31,334 29,697 Consulting fees 1,943,357 25,827 2,594 592,911 585,094 Other general & administrative 1,258,841 245,752 199,732 553,065 392,256 Research & development 2,087,649 25,750 96,177 141,100 255,274 ----------- -------- -------- --------- -------- TOTAL OPERATING EXPENSES 6,623,177 349,522 411,660 1,557,968 1,555,497 ----------- -------- -------- --------- --------- NET LOSS FROM OPERATIONS (6,603,677) (349,522) (411,660) (1,557,968)(1,555,497) OTHER (INCOME) EXPENSE Gain on settlement of lawsuit (48,574) - - - - Interest income (76,810) (1,053) (12,337) (4,226) (40,743) Interest expense 636,510 59,679 10,059 79,205 39,825 ----------- -------- -------- --------- -------- 511,126 58,626 (2,278) 45,204 (918) ----------- -------- -------- --------- -------- NET LOSS $(7,114,803) $ (408,148) $(409,382) $(1,632,947)$(1,554,579) =========== ======== ======== ========== ========== NET LOSS PER SHARE $ (4.34) $ (0.08) $ (0.08) $ (0.33)$ (0.32) ============ ========= ========== ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,640,106 5,022,196 4,853,490 5,022,196 4,853,490 ============ ========= ========== ========== ==========
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 September 30, 2001 Inception to For the nine months September 30, ended September 30, 2001 2001 2000 ------------ ----------- ---------- NET CASH FLOWS FROM OPERATIONS $ (4,381,222) $(1,054,023) $ (651,788) CASH FLOWS FROM INVESTING ACTIVITIES Investment in Helix Delaware (10) - - Purchase of property and equipment (59,983) (57,999) - Patents (431,793) (51,292) (25,498) ------------ ----------- ---------- NET CASH FLOWS FROM INVESTING ACTIVITIES (491,786) (109,291) (25,498) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of stock for debt 832,819 - - Issuance of stock for cash 2,019,680 - - Cash received in reverse acquisition 634,497 - - Notes payable 1,167,394 1,160,000 (27,000) Related party notes payable (net) 542,733 (163,154) - ------------ ----------- ---------- NET CASH FLOWS FROM FINANCING ACTIVITIES 5,197,123 996,846 (27,000) ------------ ----------- ---------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 324,115 (166,468) (704,286) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 490,583 1,455,820 ------------ ----------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 324,115 $ 324,115 $ 751,534 ============ =========== ========== 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 89,114 19,578 51,635 The accompanying notes are an integral part of the financial statements. F-3 Helix BioMedix, Inc. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS September 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 September 30, 2001, the Company entered into new consulting agreements and employment agreements. Various provisions in these agreements granted 125,000 options to purchase shares of common stock of the Company at $1.50 per share. These options expire on either July 13, 2011, September 10, 2011, or October 1, 2001. In connection with the debt with detachable warrants issued during the quarter ended September 30, 2001, there were 202,500 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 November 8, 2001, the Company issued debt of $330,000 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 (i) $1.50; or (ii) the per share price paid by investors in equity financing generating proceeds to the Company of at least $1,500,000 that closes on or prior to May 31, 2002. F-4 -----END PRIVACY-ENHANCED MESSAGE-----