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 MARCH 31, 2002 OR
[ ] 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 0-25353
DEMEGEN, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1065575
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1051 BRINTON ROAD, PITTSBURGH, PENNSYLVANIA 15221
(Address of principal executive offices) (Zip Code)
412-241-2150
(Registrant's telephone number, including area code)
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 Exchange 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
--- ---
As of April 20, 2002, there were 46,467,778 shares of the registrant's common
stock outstanding.
DEMEGEN, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements and Notes to Financial Statements
(a) Condensed Balance Sheets as of March 31, 2002 (unaudited)
and September 30, 2001 3
(b) Statements of Operations for the Three Months Ended
March 31, 2002 and 2001 (unaudited) 4
(c) Statements of Operations for the Six Months Ended
March 31, 2002 and 2001 and Inception
(December 6, 1991) to March 31, 2002 (unaudited) 5
(d) Statements of Cash Flows for the Six Months
Ended March 31, 2002 and 2001 and Inception
(December 6, 1991) to March 31, 2002 (unaudited) 6
(e) Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
ITEM I. FINANCIAL INFORMATION
DEMEGEN, INC
CONDENSED BALANCE SHEETS
MARCH 31, SEPTEMBER 30,
2002 2001*
------------ ------------
ASSETS (UNAUDITED)
CURRENT ASSETS
Cash and short-term investments $ 49,064 $ 537,478
Accounts receivable 33,900 46,310
Prepaid expenses and other current assets -- 6,500
------------ ------------
TOTAL CURRENT ASSETS 82,964 590,288
PROPERTY, PLANT AND EQUIPMENT 437,661 475,479
Less: accumulated depreciation (277,897) (280,116)
------------ ------------
159,764 195,633
INTANGIBLE ASSETS 31,162 31,162
Less: accumulated amortization (780) --
------------ ------------
30,382 31,162
OTHER ASSETS 20,317 20,417
------------ ------------
TOTAL ASSETS $ 293,427 $ 837,500
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
CURRENT LIABILITIES
Accounts payable $ 1,005,039 $ 725,552
Unearned revenue 310,000 50,000
Accrued payroll 122,875 50,000
Current portion of notes payable 265,884 97,130
Other accrued liabilities 33,751 21,851
------------ ------------
TOTAL CURRENT LIABILITIES 1,737,549 894,533
LONG TERM PORTION OF NOTES PAYABLE 170,312 354,286
------------ ------------
TOTAL LIABILITIES 1,907,861 1,248,819
REDEEMABLE CONVERTIBLE PREFERRED STOCK 2,444,506 2,305,748
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Common stock 46,468 44,023
Warrants 4,362,301 4,362,301
Additional paid-in capital 20,299,522 20,315,014
Deferred Compensation (52,977) (332,344)
Subscription Receivable (340,306) (291,150)
Deficit accumulated during the development stage (28,373,948) (26,814,911)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY) (4,058,940) (2,717,067)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT (CAPITAL DEFICIENCY) $ 293,427 $ 837,500
============ ============
*Derived from audited financial statements.
See accompanying notes to financial statements.
3
DEMEGEN, INC
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------------------
2002 2001
------------ ------------
INCOME $ 89,095 $ 589,526
EXPENSES:
Research and development 685,254 853,254
General & administration 290,211 226,055
Interest 5,644 5,130
Depreciation and amortization 19,489 1,208,295
------------ ------------
TOTAL EXPENSES 1,000,598 2,292,734
------------ ------------
NET LOSS (911,503) (1,703,208)
Preferred dividend and accretion amounts (69,617) (67,758)
------------ ------------
NET LOSS APPLICABLE TO COMMON STOCK $ (981,120) $ (1,770,966)
============ ============
LOSS PER SHARE OF COMMON STOCK, BASIC AND DILUTED $ (0.02) $ (0.05)
============ ============
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING 45,267,000 34,779,778
============ ============
See accompanying notes to financial statements.
4
DEMEGEN, INC
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS INCEPTION
ENDED MARCH 31, (DECEMBER 6, 1991)
----------------------------------- TO
2002 2001 MARCH 31, 2002
------------ ------------ --------------
INCOME $ 366,783 $ 775,977 $ 6,058,049
EXPENSES:
Research and development 1,238,293 1,349,185 10,844,127
General & administration 498,019 476,755 12,091,331
License amortization and purchased research & development
related to Periodontix acquisition -- 1,161,000 7,667,739
Interest 10,215 9,592 1,027,180
Depreciation and amortization 40,533 94,751 781,773
------------ ------------ ------------
TOTAL EXPENSES 1,787,060 3,091,283 32,412,150
------------ ------------ ------------
NET INCOME (LOSS) (1,420,277) (2,315,306) (26,354,101)
Preferred dividend and accretion amounts (138,766) (135,074) (2,019,847)
------------ ------------ ------------
NET LOSS APPLICABLE TO COMMON STOCK $ (1,559,043) $ (2,450,380) $(28,373,948)
============ ============ ============
INCOME (LOSS) PER SHARE OF COMMON STOCK, BASIC AND DILUTED $ (0.03) $ (0.07)
============ ============
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING 44,638,053 33,531,426
============ ============
See accompanying notes to financial statements.
5
DEMEGEN, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS INCEPTION
ENDED MARCH 31, (DECEMBER 6, 1991)
----------------------------------- TO
2002 2001 MARCH 31, 2002
------------ ------------ --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,420,277) $ (2,315,306) $(26,354,101)
Adjustments to Reconcile Net Loss to Cash:
Depreciation and amortization 40,533 94,751 781,773
License amortization and purchased research & development
related to Periodontix acquisition -- 1,161,000 7,667,739
Provision for uncollectable accounts 42,358 -- 42,358
Stock issued for services 118,344 113,144 2,396,934
Stock based compensation 28,668 43,002 157,673
Issuance of stock and options to employees and directors 70,152 -- 2,156,625
Warrants issued for interest -- -- 286,434
Other 98 (15,593) 53,395
Changes in Assets and Liabilities
Other than Cash:
Accounts receivable (29,948) 7,218 (76,258)
Prepaid expenses and current assets 6,500 -- --
Accounts payable and other liabilities 414,262 (63,326) 2,055,862
Unearned revenue 260,000 120,000 310,000
------------ ------------ ------------
NET CASH USED BY OPERATING ACTIVITIES (469,310) (855,110) (10,521,566)
CASH FLOWS FROM INVESTING ACTIVITIES:
Intangible assets -- (48,912) (408,280)
License with and acquisition of Periodontix -- (50,000) (230,000)
Proceeds from sale of property, plant and equipment 36,491 -- 36,491
Purchase of property, plant and equipment (40,375) (21,718) (454,485)
------------ ------------ ------------
NET CASH USED BY INVESTING ACTIVITIES (3,884) (120,630) (1,056,274)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt 40,375 8,544 1,357,657
Principal payments on debt (55,595) (20,141) (231,097)
(Decrease) increase in payable to employees and directors -- -- 2,687,962
Net proceeds from issuance of equity instruments -- -- 7,701,132
Proceeds from exercise of stock options -- 6,250 111,250
------------ ------------ ------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (15,220) (5,347) 11,626,904
------------ ------------ ------------
Net Increase (Decrease) in Cash and Equivalents (488,414) (981,087) 49,064
Cash and Cash Equivalents, Beginning of Period 537,478 1,825,352 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 49,064 $ 844,265 $ 49,064
============ ============ ============
INTEREST PAID DURING PERIOD $ 2,696 $ 5,723 $ 52,954
============ ============ ============
See accompanying notes to financial statements.
6
DEMEGEN, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2002
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements of Demegen, Inc. (the "Corporation") are
unaudited. However, in the opinion of management, they include all adjustments
necessary for a fair presentation of financial position, results of operations
and cash flows. The financial statements do not include any adjustments relating
to the recoverability and classification of assets or the amount and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continued existence is
dependent upon its ability to generate sufficient cash flows from equity
financing and successfully concluding additional license agreements.
The Company historically has obtained its working capital through equity
issuances to shareholders, royalty payments and from certain borrowing
arrangements. Management has plans in Fiscal 2002 to issue additional equity to
shareholders and to obtain additional funding support from grants and product
development partners. Should these plans not be successful, there is uncertainty
as to the Company's ability to continue as a going concern through the year
ending September 30, 2002.
All adjustments made during the three months and six months ended March 31, 2002
were of a normal, recurring nature. The amounts presented for the three months
and six months ended March 31, 2002 are not necessarily indicative of results of
operations for a full year. Additional information is contained in the Annual
Report on Form 10-KSB of the Corporation for the year ended September 30, 2001,
as filed on January 2, 2002, and the Quarterly Report on Form 10-QSB of the
Corporation for the quarter ended December 31, 2001, as filed on February 12,
2002, which should be read in conjunction with this quarterly report.
NOTE 2 - FEDERAL INCOME TAXES
No federal or state income tax has been provided for the three or six months
ended March 31, 2002 and 2001 due to existence of unused net operating loss
carryforwards.
The Corporation did not pay any income taxes during the six months ended March
31, 2002 and 2001.
7
NOTE 3 - NET EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted earnings
(loss) per share:
FOR THE SIX MONTHS
ENDED MARCH 31,
2002 2001
------------ ------------
NUMERATOR FOR BASIC AND DILUTED EARNINGS PER SHARE:
Net Income (Loss) $ (1,420,277) $ (2,315,306)
Preferred stock dividends and accretion amounts (138,766) (135,074)
------------ ------------
Numerator for basic and diluted earnings per share--income
available to common stockholders $ (1,559,043) $ (2,450,380)
============ ============
DENOMINATOR FOR BASIC AND DILUTED EARNINGS PER SHARE:
Denominator for basic and diluted earnings per share--
weighted average shares 44,638,053 33,531,426
============ ============
BASIC AND DILUTED EARNINGS PER SHARE $ (0.03) $ (0.07)
============ ============
FOR THE THREE MONTHS
ENDED MARCH 31,
2002 2001
------------ ------------
NUMERATOR FOR BASIC AND DILUTED EARNINGS PER SHARE:
Net Income (Loss) $ (911,503) $ (1,703,208)
Preferred stock dividends and accretion amounts (69,617) (67,758)
------------ ------------
Numerator for basic and diluted earnings per share--income
available to common stockholders $ (981,120) $ (1,770,966)
============ ============
DENOMINATOR FOR BASIC AND DILUTED EARNINGS PER SHARE:
Denominator for basic and diluted earnings per share--
weighted average shares 45,267,000 34,779,778
============ ============
BASIC AND DILUTED EARNINGS PER SHARE $ (0.02) $ (0.05)
============ ============
NOTE 4 - DOW AGROSCIENCES AGREEMENT
On October 31, 2001 Dow AgroSciences, LLC notified the Company that it was
exercising its right to terminate its license agreement with the Company. In
October 2001, Dow AgroSciences paid the Company $485,000 consisting of $225,000
for the semi-annual research payment and $260,000 for the minimum annual
royalty. In December 2001, Dow AgroSciences asserted a claim for the Company to
return the most recent minimum royalty payment of $260,000. The Company does not
believe that the now terminated agreement requires it to do so. The $260,000
annual minimum royalty has been deferred as "Unearned Revenue" until the matter
is clarified.
In December 2001, the Company commenced an arbitration proceeding in Pittsburgh,
PA against Dow AgroSciences LLC for damages the Company's management believes it
has sustained as a result of Dow AgroSciences' failure to perform certain
contractual obligations under the agreement that was terminated by Dow
AgroSciences on October 31, 2001. The
8
Company is asserting a claim for substantial damages. The Company can not
predict the outcome of the arbitration. Arbitration of the matter is scheduled
for July 2002.
NOTE 5 - NOTES RECEIVABLE
During March 2002, in conjunction with the exercise of options, the Company sold
2,150,000 shares of common stock to an executive and a former executive of the
Company at purchase prices of $.05 to $.15 per share. Recourse (to the general
assets of the borrowers) promissory notes in the amount of $167,500 are to be
issued in conjunction with this sale.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PROSPECTIVE/FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of The Private Securities Litigation Reform Act of 1995 (as amended,
the "Act"). In particular, when use herein, the words "plan," "estimates,"
"confident that," "believe," "expect," or "intend to," and similar expressions
are intended to identify forward-looking statements within the meaning of the
Act and are subject to the safe harbor created by the Act. Such statements are
subject to certain risks and uncertainties and actual results could differ
materially from those expressed in any of the forward-looking statements. Such
risks and uncertainties include, but are not limited to, market conditions,
general acceptance of the Company's products and technologies, possible delays
or failures to develop and/or commercialize any technology, possible risks
related to adverse clinical results, impact of alternative technology advances,
inherent risks in early stage development of such technology, reimbursement
policies imposed by third-party payers in the event that any of the
Corporation's technologies are approved for sale on the market, competitive
factors, the ability to successfully complete additional financings and other
risks described in the Corporation's reports and filings with the Securities and
Exchange Commission.
RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 2002 AND 2001
During the six months ended March 31, 2002 ("Fiscal 2002"), grants, license fees
and other income decreased to $0.37 million compared to $0.76 million in the six
months ended March 31, 2001 ("Fiscal 2001"). Fiscal 2002 revenue includes $0.225
million for the semi-annual research payment from Dow AgroSciences, which was
recognized into income in connection with the termination of the agreement and
$0.1 million in license fees received from a licensee. The fiscal 2001 amount
included a $0.4 million grant to expand efforts to develop therapeutics to treat
cancer and $0.32 million of license and research support payments from Dow
AgroSciences.
Total expenses decreased to $1.8 million from $3.1 million in the corresponding
prior fiscal six month period. The decrease was due to additional preclinical
development activities in the prior fiscal six month period and included $1.16
million of amortization of the deferred license fee with Periodontix and
reduction of the personnel and operating expenses.
Research and development expenditures decreased slightly to $1.24 million from
$1.35 million in the corresponding prior fiscal quarter. The decrease was
primarily due to decreased clinical activity in the current fiscal period.
General and administrative expenses remained relatively constant at $0.5
million.
During the six months ended March 31, 2002 and 2001, the Corporation made no
provision for federal or state income taxes due to the existence of net
operating loss carryforwards.
10
The Corporation reported a loss of $1.42 million for the six months ended March
31, 2002 compared to net loss of $2.32 million for the six months ended March
31, 2001 as a direct result of the factors discussed above.
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
During the three months ended March 31, 2002 ("Fiscal 2002"), grants, license
fees and other income decreased to $0.09 million compared to $0.59 million in
the three months ended March 31, 2001 ("Fiscal 2001"). The majority of the
Fiscal 2002 revenue was from a licensee. The Fiscal 2001 amount included a $0.4
million grant to expand efforts to develop therapeutics to treat cancer and
$0.16 million of license and research support payments from Dow AgroSciences.
Total expenses decreased to $1 million from $2.3 million in the corresponding
prior fiscal quarter. The decrease was due to less preclinical development
activities in the current fiscal quarter. Additionally, the prior fiscal quarter
included $1.16 million of amortization of the deferred license fee with
Periodontix.
Research and development expenditures decreased to $0.69 million from $0.85
million in the corresponding prior fiscal quarter. The decrease was due to a
decrease in preclinical activities in the current fiscal quarter. General and
administrative expenses increased slightly to $0.29 million from $0.23 million.
During the six months ended March 31, 2002 and 2001, the Corporation made no
provision for federal or state income taxes due to the existence of net
operating loss carryforwards.
The Corporation reported a loss of $0.91 million for the three months ended
March 31, 2002 compared to net loss of $1.7 million for the three months ended
March 31, 2001 as a direct result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended March 31, 2002, the Corporation's cash decreased by
$0.49 million to $0.05 million. The cash decrease was due to $0.47 million of
cash used by operating activities and $0.02 million of cash used in financing
activities. The $0.02 million of cash used by financing activities consisted of
$0.04 million proceeds of a new debt instrument offset by $0.056 million of
principal payments on debt.
Cash flows used by operating activities totaled $0.47 million in the six months
ended March 31, 2002. Cash outflows included the net loss of $1.42 million and a
$0.03 million increase in accounts receivable. These cash outflows were
partially offset by cash inflows which principally included $0.04 million of
depreciation and amortization, $0.04 million of a provision for uncollectable
accounts, $0.15 million of stock issued for services and stock based
compensation, $0.07 million for the issuance of restricted stock to employees, a
$0.41 million increase in accounts payable and other liabilities and a $0.26
million increase in unearned income related to the deferral of the annual
royalty paid but disputed by Dow AgroSciences.
11
Investing activities consisted of $0.04 million for the purchase of equipment,
which was totally offset by $0.04 million of proceeds from the sale of
equipment.
During the six months ended March 31, 2001, the Corporation's cash decreased by
$0.98 million to $0.84 million. The cash decrease was due to $0.86 million of
cash used by operating activities and $0.12 million of cash used by investing
activities.
Cash flows used by operating activities totaled $0.86 million in the six months
ended March 31, 2001. Cash outflows included the net loss of $2.32 million and a
$0.06 million decrease in accounts payable and other liabilities. These cash
outflows were partially offset by cash inflows which principally included a
$0.12 million increase in unearned revenue, $0.16 million for stock issued for
services and stock based compensation and $1.26 million of depreciation and
amortization, including $1.16 million of amortization of the deferred license
fee with Periodontix.
Cash flows used by investing activities totaled $0.12 million in the six months
ended March 31, 2001 and included the $0.05 million cash payment as part of the
Periodontix license and purchase option agreements and $0.07 million for the
purchase of equipment and patent related activities.
The $0.005 million of cash utilized by financing activities consisted of $0.02
principal payments on notes partially offset by $0.01 million of proceeds from
an equipment loan and $0.01 million from the exercise of stock options.
The Company is subject to the risks associated with emerging technology-oriented
companies. Primary among these risks are the ability to obtain sufficient
financing, competition from substitute products and the ability to successfully
develop and market its products. As of March 31, 2002, the Company had an
accumulated deficit of $28.4 million. In addition, the Company has a working
capital deficiency of approximately $1.655 million as of March 31, 2002.
For the three and six months quarter ended March 31, 2002 and year ended on
September 30, 2001, respectively, the Company incurred losses of $0.912 million,
$1.42 million and $10.503 million respectively, and used $0.30 million, $0.47
million and $1.945 million, respectively, of cash for operations during the
quarter, the six months and the year ended on March 31, 2002, March 31, 2002 and
September 30, 2001, respectively.
Since its July 2001 fundraising, the Company has not been able to obtain
additional capital to advance the Company's product development efforts. As of
March 31, 2002, cash resources are nearly exhausted and the Company is
delinquent in $85,000 of payments due under employment contracts and unable to
meet remaining monthly obligations, is overdue on payments to many of its
creditors, and has deferred a $7,500 interest payment to a note holder.
As a result of the Company's cash position, during the past two quarters, the
majority of the employees have resigned or been terminated. The lease for its
Watertown facility has been terminated, thereby eliminating future obligations,
but allowing use of a limited portion of the space until June 30, 2002.
Equipment not needed for continuing operations at the
12
Watertown facility has been disposed or will be relocated to Pittsburgh.
Subsequent to March 31, 2002, the Company's remaining employees will be working
on either a part-time or deferred salary basis.
The Company is continuing to seek additional investments. Concurrently it is
seeking to achieve partnerships with pharmaceutical or biotechnology companies
to co-develop product applications. In addition, the Company is exploring the
sale or merger of the Company to another company with suitable financial and
human resources.
The Company's core assets are represented by its intellectual property, which
includes more than twenty issued patents and the developments accomplished to
date for its three leading product applications. These include:
o a drug to treat oral infections that afflict HIV and many cancer
patients; there is an approved IND (Investigational New Drug
Application); and a Phase I/II clinical trial is ready to begin.
o a second drug to treat cystic fibrosis infections. An Orphan Drug
application has been submitted and there is funding support from the
Cystic Fibrosis Foundation.
o a third drug for infected wounds and burns. This product is currently
being advanced by a DFB Pharmaceuticals, Inc., which has an option to
license this application for topical dermatological applications.
In addition, a number of collaborations are continuing on agricultural
applications without cost to the Company. These collaborators provide the
necessary funding and resources to introduce the Company's technologies into a
variety of crops.
The Company believes its creditors will continue to cooperate until the Company
is able to achieve new funding or partnerships, but there is no assurance that
this will continue to be the case.
Should these plans not be successful, there is uncertainty as to the Company's
ability to continue as a going concern through the year ending September 30,
2002. It is extremely uncertain that new sources of cash will be identified and
will be received during the remainder of fiscal 2002.
The financial statements do not include any adjustments relating to the
recoverability and classification of assets or the amount and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.
13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In December 2001, the Company commenced an arbitration proceeding in Pittsburgh,
PA against Dow AgroSciences LLC for damages the Company's management believes it
has sustained as a result of Dow AgroSciences' failure to perform certain
contractual obligations under the agreement that was terminated by Dow
AgroSciences on October 31, 2001. The Company is asserting a claim for
substantial damages. The Company can not predict the outcome of the arbitration.
Arbitration of the matter is scheduled for July 2002. Also, in December 2001,
Dow AgroSciences asserted a claim for the Company to return the most recent
minimum royalty payment. The Company does not believe that the now terminated
agreement requires it to do so.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In February 2002, the Company issued 295,000 shares of restricted stock to
certain employees for services rendered to the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT INDEX
EXHIBIT NO. AND DESCRIPTION
PAGES OF SEQUENTIAL
NUMBERING SYSTEM
(b) Reports on Form 8-K
The registrant did not file any current reports on Form 8-K during the three
months ended March 31, 2002.
14
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.
DEMEGEN, INC.
By /s/Richard D. Ekstrom
-----------------------------------
Richard D. Ekstrom
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer, Principal
Financial Officer and Principal
Accounting Officer)
Notes Receivable
During March 2002, the Company sold 2,150,000 shares of common stock to an
executive and a former executive of the Company at purchase prices of $.05
to $.15 per share. Recourse (to the general assets of the borrowers)
promissory notes in the amount of $167,500 are to be issued in conjunction
with this sale.
Date: May 14, 2002
15