UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File Number 1-8366
POLYDEX PHARMACEUTICALS LIMITED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Commonwealth of the Bahamas None
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
421 Comstock Road, Toronto, Ontario, Canada M1L 2H5
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (416) 755-2231
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during
the preceding 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
------- -------
Indicate the number of shares outstanding of each of the issuer's
classes of common shares, as of the latest practicable date.
Common Shares, $.0167 Par Value 3,030,717 shares
- ------------------------------- ---------------------------------
(Title of Class) (Outstanding at September 5, 2000)
POLYDEX PHARMACEUTICALS LIMITED
TABLE OF CONTENTS
PAGE
----
PART I FINANCIAL INFORMATION
Item 1 CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Consolidated Balance Sheets
July 31, 2000 and January 31, 2000...........................................................3
Consolidated Statements of Operations
Three Months ended July 31, 2000 and 1999 and
Six Months ended July 31, 2000 and July 31, 1999.............................................4
Consolidated Statements of Shareholders' Equity
Six Months ended July 31, 2000 and 1999......................................................5
Consolidated Statements of Cash Flows
Six Months ended July 31, 2000 and 1999......................................................6
Segmented Information
Three Months ended July 31, 2000 and 1999 and
Six Months ended July 31, 2000 and 1999......................................................7
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................................8
Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK............................................................................12
PART II OTHER INFORMATION
Item 4 SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.............................................................................14
Item 6 EXHIBITS AND REPORTS ON FORM 8-K.............................................................15
Signatures...................................................................................17
-2-
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
(Expressed in United States dollars)
===========================================================================================================================
(Unaudited)
July 31 January 31
2000 2000
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 659,300 $ 799,565
Trade accounts receivable 880,949 1,204,495
Inventories:
Finished goods 1,531,634 1,186,110
Work in process 66,303 53,023
Raw materials 565,779 678,145
--------------------------------------------------------------------------------------------------------------
2,163,716 2,051,251
Prepaid expenses and other current assets 46,747 73,072
--------------------------------------------------------------------------------------------------------------------
3,750,712 4,128,383
Property, plant and equipment, net 5,183,043 5,154,333
Patents, net 142,520 153,611
Due from shareholder 1,392,279 1,396,615
Deferred income taxes 720,485 1,146,000
Other assets 45,630 39,414
- ---------------------------------------------------------------------------------------------------------------------------
$ 11,234,669 $ 12,018,356
===========================================================================================================================
===========================================================================================================================
(Unaudited)
July 31 January 31
2000 2000
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 47,068 $ -
Accounts payable 1,050,673 1,279,778
Accrued liabilities 528,463 454,824
Income taxes payable 22,116 17,072
Current portion of long-term debt 392,879 523,454
Current portion of capital lease obligations 120,391 118,093
--------------------------------------------------------------------------------------------------------------------
2,161,590 2,393,221
Long-term debt 1,001,175 1,096,473
Capital lease obligations 539,872 616,302
Due to shareholder 693,790 672,766
Deferred income taxes - 274,960
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,396,427 5,053,722
Shareholders' equity:
Capital stock
Authorized:
100,000 Class A preferred shares, par value $0.10 per share
899,400 Class B preferred shares, par value $0.0167 per share
10,000,000 common shares, par value $0.0167 per share
Issued and outstanding:
899,400 Class B preferred shares 15,010 15,010
3,030,717 common shares (2000 - 3,021,917) 50,350 50,203
Contributed surplus 23,151,085 23,121,345
Deficit (15,603,612) (15,528,932)
Accumulated other comprehensive income (774,591) (692,992)
--------------------------------------------------------------------------------------------------------------------
6,838,242 6,964,634
- ---------------------------------------------------------------------------------------------------------------------------
$ 11,234,669 $ 12,018,356
===========================================================================================================================
-3-
POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(Expressed in United States dollars)
===============================================================================================================================
Quarter Ended Quarter Ended Year to Date Year to Date
July 31 July 31 July 31 July 31
2000 1999 2000 1999
- -------------------------------------------------------------------------------------------------------------------------------
Sales $ 3,105,898 $ 3,027,285 $ 6,498,727 $ 6,197,926
Cost of products sold 2,278,949 2,245,541 4,718,640 4,389,648
- -------------------------------------------------------------------------------------------------------------------------------
826,949 781,744 1,780,087 1,808,278
Expenses:
General and administrative 415,847 392,717 824,252 790,525
Research and development 264,358 164,012 358,109 243,516
Depreciation 144,355 126,473 282,498 250,156
Interest expense 76,142 36,653 150,788 71,387
Selling and promotion 38,501 33,151 81,547 52,871
Amortization 5,545 5,479 11,091 10,953
------------------------------------------------------------------------------------------------------------------------
944,748 758,485 1,708,285 1,419,408
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations (117,799) 23,259 71,802 388,870
Other income:
Interest and other 9,125 7,682 20,530 16,300
- -------------------------------------------------------------------------------------------------------------------------------
9,125 7,682 20,530 16,300
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) before the undernoted (108,674) 30,941 92,332 405,170
Recovery of (provision for) income taxes (45,803) (55,393) (167,012) (201,690)
- -------------------------------------------------------------------------------------------------------------------------------
Net income (loss) for the period $ (154,477) $ (24,452)$ (74,680) $ 203,480
===============================================================================================================================
Per share information:
Earnings (loss) per common share for the period:
Basic $ (0.05) $ (0.01)$ (0.02) $ 0.07
Diluted $ (0.05) $ (0.01)$ (0.02) $ 0.07
==============================================================================================================================
Weighted average number of common shares
outstanding for the period 3,027,567 3,016,917 3,025,684 3,016,917
==============================================================================================================================
-4-
POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Unaudited)
(Expressed in United States dollars)
===============================================================================================
Year to Date Year to Date
July 31 July 31
2000 1999
- ------------------------------------------------------------------------------------------------
Preferred Shares:
Balance, beginning of period $ 15,010 $ 15,010
Private placement of preferred shares - -
--------------------------------------------------------------------------------------
Balance, end of period $ 15,010 $ 15,010
================================================================================================
Common Shares:
Balance, beginning of period $ 50,203 $ 48,552
Sale of shares under purchase contingency - 300
Common share options exercised 147 -
--------------------------------------------------------------------------------------
Balance, end of period $ 50,350 $ 48,852
================================================================================================
Contributed Surplus:
Balance, beginning of period $ 23,121,345 $ 22,464,783
Sale of shares under purchase contingency - 73,488
Common share options exercised 29,740 -
--------------------------------------------------------------------------------------
Balance, end of period $ 23,151,085 $ 22,538,271
================================================================================================
Deficit:
Balance, beginning of period $ (15,528,932) $ (16,498,775)
Net income (loss) for the period (74,680) 203,480
--------------------------------------------------------------------------------------
Balance, end of period $ (15,603,612) $ (16,295,295)
================================================================================================
Accumulated Other Comprehensive Income:
Balance, beginning of period $ (692,992) $ (783,542)
Currency translation adjustment for the period (81,599) 46,152
--------------------------------------------------------------------------------------
Balance, end of period $ (774,591) $ (737,390)
================================================================================================
Comprehensive Income for the period:
Net income (loss) for the period $ (74,680) $ 203,480
Currency translation adjustment for the period (81,599) 46,152
--------------------------------------------------------------------------------------
$ (156,279) $ 249,632
================================================================================================
-5-
POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Expressed in United States dollars)
==================================================================================================================
Year to Date Year to Date
July 31 July 31
2000 1999
- ------------------------------------------------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net income (loss) for the period $ (74,680) $ 203,480
Add (deduct) items not affecting cash:
Depreciation and amortization 293,589 261,109
Imputed interest on share value guarantee payable 44,678 -
Imputed interest on lawsuit settlement payable 17,759 -
Deferred income taxes 140,566 190,650
Legal expenses charged to deferred gain - (2,665)
Change in non-cash operating working capital 66,777 (558,768)
-----------------------------------------------------------------------------------------------------------
488,689 93,806
-----------------------------------------------------------------------------------------------------------
Investing activities:
Additions to property, plant and equipment and patents (390,440) (537,068)
Repayment of due from shareholder, net 4,336 29,360
-----------------------------------------------------------------------------------------------------------
(386,104) (507,708)
-----------------------------------------------------------------------------------------------------------
Financing activities:
Proceeds from long-term debt 49,896 77,422
Repayment of long-term debt (335,770) (50,949)
Repayment of capital lease obligations (56,914) -
Payment of mandatorily redeemable capital stock - (50,000)
Proceeds from (repayment of) advances from shareholder, net 21,024 22,254
Increase (decrease) in bank indebtedness 47,068 55,822
Exercise of common share options 29,887 -
-----------------------------------------------------------------------------------------------------------
(244,809) 54,549
Effect of exchange rate changes on cash 1,960 8,622
- ------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash position (140,265) (350,731)
Cash, beginning of period 799,565 655,131
- ------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 659,300 $ 304,400
==================================================================================================================
-6-
POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
Segmented Information (Unaudited)
(Expressed in United States dollars)
All operations are carried out through Dextran Products Limited
("Dextran") in Canada and through Chemdex, Inc. ("Chemdex") in the
United States. The operations of Chemdex represent the veterinary
products business and the operations are carried out through its
wholly-owned subsidiary, Veterinary Laboratories, Inc. Each of Dextran
and Chemdex operates as a strategic business unit offering different
products. Each subsidiary comprises a reportable segment as follows:
Dextran - manufactures and sells bulk
quantities of Dextran and several
of its derivatives to large
pharmaceutical companies
throughout the world.
Veterinary products - manufactures and sells
veterinary pharmaceutical
products and specialty chemicals
in the United States. The primary
customers are distributors and
private labelers, who in turn
sell to the end-user of these
products.
===================================================================================================================================
Quarter Ended Quarter Ended Year to Date Year to Date
July 31 July 31 July 31 July 31
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------
SALES:
Dextran $ 1,331,350 $ 1,283,951 $ 2,554,124 $ 2,527,045
Veterinary products 1,901,817 1,828,697 4,176,023 3,883,916
-------------------------------------------------------------------------------------------------------------------------
Total segment sales 3,233,167 3,112,648 6,730,147 6,410,961
Less: intercompany sales elimination 127,269 85,363 231,420 213,035
-------------------------------------------------------------------------------------------------------------------------
Total consolidated sales $ 3,105,898 $ 3,027,285 $ 6,498,727 $ 6,197,926
===================================================================================================================================
INCOME (LOSS) FROM OPERATIONS:
Dextran $ 132,935 $ 192,082 $ 375,585 $ 567,452
Veterinary products (4,520) 13,249 161,792 182,655
-------------------------------------------------------------------------------------------------------------------------
Total income from operations from segments 128,415 205,331 537,377 750,107
Less: Unallocated corporate expenses 246,214 182,072 465,575 361,237
-------------------------------------------------------------------------------------------------------------------------
Total consolidated income from operations $ (117,799) $ 23,259 $ 71,802 $ 388,870
===================================================================================================================================
ASSETS:
Dextran $ 5,839,900 $ 5,313,001
Veterinary products 4,184,465 4,006,488
-------------------------------------------------------------------------------------------------------------------------
Total assets from segments 10,024,365 9,319,489
Corporate assets 1,210,304 1,128,411
-------------------------------------------------------------------------------------------------------------------------
Total consolidated assets $ 11,234,669 $ 10,447,900
===================================================================================================================================
-7-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(a) RESULTS OF OPERATIONS
During the fiscal quarter ended July 31, 2000, the Registrant's pre-tax loss
from operations amounted to $117,799, as compared to pre-tax income from
operations of $23,259 for the second quarter of fiscal 2000, ending July 31,
1999. This decrease in results is primarily due to a decrease in operating
profits during the quarter at Dextran Products Limited ("Dextran") of $59,147,
and at Veterinary Laboratories Inc. ("Vet Labs") of $17,769 and an increase in
corporate expenses of $64,142. The decrease in operating profits is primarily
attributable to a significant increase in research and development expenditures
as compared to the same quarter last year.
Sales volume for the second quarter of fiscal 2001 increased from $3,027,285 to
$3,105,898, representing an increase of $78,613 or 3%.
Vet Labs experienced a quarter over quarter increase in sales of $73,120, or 4%,
due to increases in both the liquids and boluses product lines resulting from
increased demand. Sales in the injectable product line in the second quarter of
fiscal 2001 were consistent with that experienced in the second quarter of
fiscal 2000. Within the injectable product line, there was a product mix sales
variance. Injectable iron dextran sales declined by approximately $98,000 from
the second quarter in fiscal 2000. However this reduction was offset by
increased sales of injectable vitamin products of approximately $100,000. Vet
Labs continues to increase its market penetration with the vitamin products.
Sales at Dextran remained constant as compared to the second quarter in fiscal
2000.
In the second quarter of fiscal 2001, sales of euthanasia products amounted to
$186,882, as compared to $165,381 in the second quarter of fiscal 2000. During
this quarter, the United States Food and Drug Administration ("FDA") granted an
emergency release of raw materials by the euthanasia product supplier which
allowed Vet Labs to formulate and sell such products. This release was granted
due to the short supply of euthanasia products in the field. However, there
continue to be federal regulatory problems with the raw material supplier.
Barring future FDA emergency releases, management does not expect any further
sales of these products until late in 2000, when the necessary raw materials are
expected to become available.
Gross margins increased from 26% in the second quarter of fiscal 2000 to 27% in
the first quarter of fiscal 2001. Dextran's quarter over quarter gross margin
decreased from 40% to 36% while Vet Labs' gross margin increased from 15% to
19%. Vet Labs experienced a lower than normal gross margin in the second quarter
of fiscal 2000 due to a product mix sales variance. The gross margin achieved at
Vet Labs this quarter is consistent with that experienced in the first quarter
this year. Management expects the gross margin at Vet Labs to continue at these
levels.
-8-
The margin decrease at Dextran is primarily due to increased utility costs.
Increased oil and gas costs in the second quarter of fiscal 2001 have
contributed to higher utility costs at Dextran. The new production equipment
uses more power because of its increased capacity. Management expects to realize
significant cost savings from the more efficient new production equipment once
the plant refurbishment is completed and production capacity is increased.
Management expects strong sales and margins to continue at Dextran. As expected,
summer months are typically slower sales months for Vet Labs as large animals
are put outdoors to pasture and therefore have less need for vitamins and other
supplements. Management is therefore forecasting higher sales levels in the
third quarter of fiscal 2001 than were achieved in the second quarter at Vet
Labs.
General and administrative expenses in the second quarter of fiscal 2001
increased by $23,130 or 6% from the second quarter of fiscal 2000 due primarily
to an increase in payroll. Depreciation and amortization in the second quarter
of fiscal 2001 increased by $17,948 or 14% from the second quarter of fiscal
2000 due primarily to the capital expenditures at Dextran relating to plant
refurbishment.
Research and development costs in the second quarter of fiscal 2001 increased by
$100,346 or 61% as compared to the second quarter of fiscal 2000 due to the
continued development of a raw material for a human injectable product and the
cellulose sulfate project at Dextran, and the development of additional new
products at Vet Labs. Development costs for these products are expected to
continue for the remainder of the year.
Research and development, in conjunction with the Rush Medical Center in
Chicago, relating to Cellulose Sulfate gel is progressing. Pre-IND tests have
indicated that this gel holds great promise as a topical prophylactic for
sexually transmitted diseases, including AIDS, and as a contraceptive. Phase I
human clinical trials to test the safety and tolerance of this gel were
successfully completed. This trial was funded by the Consortium for Industrial
Collaboration in Contraceptive Research (CICCR). The project team is moving
ahead to prepare clinical supplies for long-term toxicology and further clinical
trials. Management expects funding to continue from CICCR for this project.
Interest expense in the second quarter of fiscal 2001 increased by $39,489 or
108% as compared to the second quarter in fiscal 2000 due to the financing of
capital expenditures for production equipment in fiscal 2000. Interest expense
also includes imputed interest of $32,388 on long-term payables incurred in the
fourth quarter of fiscal 2000.
Selling and promotion expenses in the second quarter of fiscal 2001 increased by
$5,350 or 16% as compared to the second quarter of fiscal 2000, primarily
-9-
due to the retention of a public relations firm subsequent to the second quarter
of fiscal 2000.
Operating results for the quarter ended July 31, 2000 are not necessarily
indicative of the results that may be expected for the year ended January 31,
2001. For further information, refer to the consolidated statements and
footnotes thereto included in the Registrant's annual report on Form 10-K for
the year ended January 31, 2000.
(b) LIQUIDITY AND CAPITAL RESOURCES
The Registrant in the second quarter of fiscal 2001 generated cash flow from
operations of $423,519 compared to the second quarter of fiscal 2000 cash flow
from operations of $19,347. This increase of $404,172 is primarily attributable
to the large decrease in accounts receivable during the quarter. A reduction in
accounts receivable turns non-cash operating working capital into cash. The
decrease in accounts receivable is attributable to increased collections during
the quarter.
There were no significant changes in inventory levels at either Dextran or Vet
Labs during the quarter.
Management has budgeted $750,000 for plant refurbishment and capital equipment
purchases during fiscal 2001. The majority of the $203,343 of capital
expenditures on plant and equipment during the second quarter of fiscal 2001
related to production and research and development equipment at Dextran. There
are no production interruptions planned for the next quarter due to this
refurbishment.
LONG-TERM OBJECTIVES
At the beginning of the year, two critical long-term objectives were identified.
1. Bring new products to market. During the second quarter, development work
has continued on the cellulose sulfate project and a raw material for a
human injectable product. Vet Labs is continuing development of new
veterinary products.
2. Upgrade and refurbish existing production facilities to increase capacity
and efficiency. Refurbishment of the Dextran plant is continuing and
planning for the next two phases is nearing completion.
-10-
FORWARD-LOOKING STATEMENTS SAFE HARBOR
This Form 10-Q, including the Management's Discussion and Analysis of Financial
Condition and Results of Operations, contains various "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which represent the Company's expectations or beliefs concerning future
events, including, but not limited to statements regarding management's
expectations of regulatory approval and the commencement of sales. In addition,
statements containing expressions such as "believes", "anticipates", "plans" or
"expects" used in this Form 10-Q, the Company's Annual Report, and the Company's
periodic reports on Forms 10-K and 10-Q previously filed with the Securities and
Exchange Commission are intended to identify forward-looking statements. The
Company cautions that these and similar statements in this Form 10-Q, the
Company's Annual Report, and in previously filed periodic reports including
reports filed on Forms 10-K and 10-Q are further qualified by important factors
that could cause actual results to differ materially from those in the
forward-looking statements. These factors include, without limitation, changing
market conditions, the progress of clinical trials, and the results obtained,
the establishment of new corporate alliances, the impact of competitive products
and pricing, and the timely development, FDA approval and market acceptance of
the Company's products, none of which can be assured.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normally recurring accruals) considered necessary for a fair presentation
have been included.
-11-
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
JULY 31, 2000
INTEREST RATE SENSITIVITY
The table below provides information about the Company's financial
instruments that are sensitive to changes in interest rates. All financial
instruments are held for other than trading purposes. The Company does not
have a material exposure to interest rate risk.
The table presents principal cash flows and related weighted average
interest rates by expected maturity dates.
Expected Maturity Date
-------------------------------------------------------------------- Fair
31-Jan-01 31-Jan-02 31-Jan-03 31-Jan-04 31-Jan-05 Thereafter Total Value
--------- --------- --------- --------- --------- ---------- ----- -----
(US$ Equivalent)
ASSETS
Notes receivable:
Variable rate ($US) 46,051 11,530 12,568 13,699 14,932 588,044 686,824 686,824
Average interest rate 8.87% 9.00% 9.00% 9.00% 9.00% 9.00% 8.98%
LIABILITIES:
Long-term debt:
Fixed rate ($US) 377,062 266,843 909,022 4,758 - - 1,557,685 1,557,685
Average interest rate 9.19% 9.14% 9.03% 9.45% 0.00% 0.00% 9.20%
Fixed rate ($CDN) 165,543 188,048 87,098 87,934 96,182 210,231 835,036 835,036
Average interest rate 9.04% 9.03% 9.23% 9.00% 9.00% 9.00% 9.05%
Variable rate ($US) (53,547) (46,820) (50,565) (54,611) (58,979) 883,722 619,200 619,200
Average interest rate 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
-12-
POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
JULY 31, 2000
EXCHANGE RATE SENSITIVITY
The table below provides information about the Company's financial
instruments that are sensitive to changes in foreign currency exchange
rates. All financial instruments are held for other than trading purposes.
The Company's major exposure to exchange rate risk is that the Canadian
dollar rises dramatically in relation to the U.S. dollar and that this
significantly reduces the gross margin experienced at Dextran Products.
Management monitors the margin at Dextran to ensure that an acceptable
margin level is maintained. Management has the ability, to some extent, to
adjust sales prices to maintain an acceptable margin level.
The table presents principal cash flows and related weighted average
interest rates by expected maturity dates.
Expected Maturity Date
---------------------------------------------------------------------------- Fair
31-Jan-01 31-Jan-02 31-Jan-03 31-Jan-04 31-Jan-05 Thereafter Total Value
--------- --------- --------- --------- --------- ---------- ----- -----
(US$ Equivalent)
LIABILITIES:
Long-term debt:
Fixed rate ($CDN) 165,543 188,048 87,098 87,934 96,182 210,231 835,036 835,036
Average interest rate 9.04% 9.03% 9.23% 9.00% 9.00% 9.00% 9.05%
-13-
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The 2000 Annual General Meeting of the Members was held on
June 22, 2000.
(b) Not applicable.
(c) At the Annual Meeting, Mr. George G. Usher and Mr. Thomas C. Usher
were elected as directors of the Company to hold office for a
three-year term expiring at the Annual General Meeting of the Members
held in 2003 or until successors are duly elected and qualified. The
tabulation of votes in person or by proxy at the Annual Meeting with
respect to Mr. George G. Usher's and Mr. Thomas C. Usher's election
are as follows:
Against or Abstain and
Class For Withheld Non-Votes
----- --- -------- ---------
George G. Common Shares 1,928,386 26,227 1,074,060
Usher Class B Preferred 1,798,800(1) -- --
Shares
Thomas C. Common Shares 1,928,121 26,492 1,074,060
Usher Class B Preferred 1,798,800(1) -- --
Shares
- ------------
(1) the 899,400 outstanding Class B Preferred Shares of the Company have two
votes per share.
The Shareholders of the Company also approved a proposal to
authorize the Board of Directors of the Company to appoint the
Company's independent public accountants and fix their
remuneration ("Proposal No. 2"). The tabulation of votes present
in person or by proxy at the Annual Meeting with respect to the
foregoing proposal is as follows:
-14-
Against or Abstain and
Class For Withheld Non-Votes
----- --- -------- ---------
Proposal No. 2 Common Shares 1,949,114 5,500 1,074,059
Class B Preferred 1,798,800(1) -- --
Shares
- ------------
(1) the 899,400 outstanding Class B Preferred Shares of the Company have two
votes per share.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Memorandum of Association of Polydex Pharmaceuticals Limited, as
amended to date (filed as Exhibit 3.1 to the Annual Report on Form
10-K filed April 30, 1997, and incorporated herein by reference)
3.2 Articles of Association of Polydex Pharmaceuticals Limited, as
amended to date (filed as Exhibit 3.2 to the Quarterly Report on
Form 10-Q filed September 13, 1999, and incorporated herein by
reference)
10.1 Employment Agreement between Polydex Pharmaceuticals Limited and
Thomas C. Usher dated December 22, 1993, as amended on November 1,
1996 (filed as Exhibit 10.1 to the Annual Report on Form 10-K
filed April 30, 1997, and incorporated herein by reference)*
10.2 Amendment to Employment Agreement between Polydex Pharmaceuticals
Limited and Thomas C. Usher dated February 1, 1999 (filed as
Exhibit 10.2 to the Registrant's Annual Report on Form 10-K filed
April 29, 1999, and incorporated herein by reference)*
10.3 Employment Agreement between Polydex Pharmaceuticals Limited and
George G. Usher dated December 22, 1993 (filed as Exhibit 10.2 to
the Annual Report on Form 10-K filed April 30, 1997, and
incorporated herein by reference)*
10.4 Amendment to Employment Agreement between Polydex Pharmaceuticals
Limited and George G. Usher dated February 1, 1999 (filed as
Exhibit 10.2 to the Registrant's Annual Report on Form 10-K filed
April 29, 1999, and incorporated herein by reference)*
-15-
10.5 Research Agreement among Dextran Products Limited, Canadian
Microbiology Consortium, British Columbia's Children's Hospital
and the University of British Columbia, dated April 1, 1996 (filed
as Exhibit 10.4 to the Annual Report on Form 10-K filed April 30,
1997, and incorporated herein by reference)
10.6 Joint Venture Agreement among Chemdex, Inc., Veterinary
Laboratories Inc. and Sparhawk Laboratories, Inc., dated December
1, 1992 (filed as Exhibit 10.5 to the Annual Report on Form 10-K
filed April 30, 1997, and incorporated herein by reference)
10.7 Manufacturing Agreement among Sparhawk Laboratories, Inc., Agri
Laboratories, Ltd. and Veterinary Laboratories Inc., dated
September 23, 1996 (filed as Exhibit 10.6 to the Annual Report on
Form 10-K filed April 30, 1997, and incorporated herein by
reference)
10.8 Stock Sale and Purchase Agreement between Continental Grain
Company and Polydex Pharmaceuticals Limited dated October 30,
1992, as amended on November 22, 1996 (filed as Exhibit 10.8 to
the Annual Report on Form 10-K filed April 30, 1997, and
incorporated herein by reference)
27 Financial Data Schedule
- ----------------
* Indicates a management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
Not applicable.
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SIGNATURES
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.
Date: September 11, 2000
POLYDEX PHARMACEUTICALS LIMITED
(Registrant)
By /s/ George G. Usher
----------------------------------------------
George G. Usher, Chairman, President and Chief
Executive Officer
(Principal Executive Officer)
By /s/ Sharon L. Wardlaw
----------------------------------------------
Sharon L. Wardlaw, Treasurer, Secretary and
Chief Financial and Accounting Officer
(Principal Financial Officer)
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EXHIBIT INDEX
Exhibit Number Exhibit Description
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27 Financial Data Schedule