SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/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.
/ / Transition Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to _________.
Commission File No. 000-30294
-----------
IMX PHARMACEUTICALS, INC.
-------------------------------------------------
(Name of Small Business Issuer in its Charter)
Utah 87-0394290
- ------------------------------- --------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
1900 Corporate Boulevard, Suite 400 E, Boca Raton, Florida 33431
- ----------------------------------------------------------- --------------
(Address of Principal Executive Offices) (Zip Code)
561.998.5660
- --------------------------------------------------------------------------------
(Issuer's Telephone Number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12
months (or 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 / /
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
At November 10, 2001 there were 8,132,076 shares of common stock, par
value $.001 per share outstanding.
Transitional Small Business Disclosure Format (check one):
Yes / / No /X/
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
INDEX
Page
Number
- ------
Part I. Financial Information
Item 1. Financial Statements
1-3 Condensed Consolidated Balance Sheets as of December 31, 2000
(audited) and September 30, 2001 (unaudited)
4 Condensed Consolidated Statements of Operations for the Nine
Months Ended September 30, 2001 (unaudited) and September 30,
2000 (unaudited) and Three Months Ended September 30, 2001
(unaudited) and September 30, 2000 (unaudited)
5 Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2001 (unaudited) and September 30,
2000 (unaudited) and Three Months Ended September 30, 2001
(unaudited) and September 30, 2000 (unaudited)
6-32 Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis or Plan of Operation
33-37 Text
Part II. Other Information
37 Item 2(c). Recent Sales of Unregistered Securities
38 Item 6. Exhibits and Reports on Form 8-K
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2001 2000
------------- -------------
(Unaudited)
CURRENT ASSETS:
Not Subject to Bankruptcy Proceedings:
Cash and cash equivalents $ 4,000 $ 10,414
Accounts receivable (net of allowance for
doubtful accounts of $50,000 and $50,000) 8,238 10,510
Other receivables 2,459 -
---------- ----------
Current Assets, Not Subject
to bankruptcy proceedings 14,697 20,924
---------- ----------
Subject to Bankruptcy Proceedings:
Cash and cash equivalents 5,719 9,216
Securities available for sale - 1,828
Other receivables 500,000 501,703
Prepaid expenses and other 18,033 18,583
---------- ----------
Current Assets, Subject
to bankruptcy proceedings 523,752 531,330
---------- ----------
Total Current Assets 538,449 552,254
---------- ----------
PROPERTY AND EQUIPMENT:
Subject to Bankruptcy Proceedings:
Building and Land, (net of accumulated
depreciation of $26,335 and $9,989) 973,665 990,011
---------- ----------
Total Property and Equipment 973,665 990,011
---------- ----------
OTHER ASSETS:
Not Subject to Bankruptcy Proceedings:
Inventories in excess of amounts expected
to be sold currently 104,983 110,000
---------- ----------
Total Other Assets, Not Subject
to bankruptcy proceedings 104,983 110,000
---------- ----------
Subject to Bankruptcy Proceedings:
Deposits and other 4,919 6,144
---------- ----------
Total Other Assets, Subject
to bankruptcy proceedings 4,919 6,144
---------- ----------
Total Other Assets 109,902 116,144
---------- ----------
TOTAL ASSETS $1,622,016 $1,658,409
========== ==========
1
See accompanying notes to the consolidated financial statements.
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES
September 30, December 31,
2001 2000
-------------- -------------
(Unaudited)
CURRENT LIABILITIES:
Not Subject to Bankruptcy Proceedings:
Accounts payable $ 836,891 $ 136,299
Accrued expenses and other current
liabilities - 2,523
Commissions payable 278,037 1,113
Sales tax payable 195,383 1,648
---------- ----------
Current Liabilities, Not Subject
to Bankruptcy Proceedings 1,310,311 141,583
Subject to Bankruptcy Proceedings:
Not Subject to Compromise
Current portion of fully secured long term notes 425,000 425,000
Postpetition trade accounts payable 23,668 14,183
Accrued postpetition expenses payable 15,157 -
Accrued salaries payable - Pre-petition 73,746 73,746
Accrued salaries payable - Post-petition 104,334 19,667
Accrued payroll taxes - Pre-petition 6,753 6,753
Accrued payroll taxes - Post-petition 10,433 1,967
Sales tax payable - 193,792
---------- ----------
Current Liabilities, Not Subject
to Compromise 659,091 735,108
---------- ----------
Subject to Compromise
Current portion of unsecured long term notes payable 1,350,172 1,350,172
Prepetition trade accounts payable 890,119 1,572,001
Accrued prepetion expenses 34,279 34,279
Accrued salaries payable - Post-petition 29,791 29,791
Stock recission payable 488,300 488,300
Loans payable 53,500 53,500
Commissions payable - 277,425
---------- ----------
Current Liabilities, subject
to compromise 2,846,161 3,805,468
---------- ----------
Total Current Liabilities 4,815,563 4,682,159
LONG-TERM LIABILITIES:
Not Subject to Bankruptcy Proceedings:
Fully secured long-term notes,
less current portion - -
Officer's notes payable 65,000 30,000
---------- ----------
Long-Term Liabilities, not subject
to bankruptcy proceedings 65,000 30,000
---------- ----------
Subject to Bankruptcy Proceedings:
Not Subject to Compromise
Fully secured long-term notes,
less current portion 287,137 287,137
---------- ----------
Subject to Compromise
Unsecured long term notes payable,
less current portion 554,866 553,366
---------- ----------
Total Long-Term Liabilities 907,003 870,503
---------- ----------
TOTAL LIABILITIES $5,722,566 $5,552,662
---------- ----------
2
See accompanying notes to the consolidated financial statements.
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
STOCKHOLDERS' EQUITY (DEFICIENCY)
September 30, December 31,
2001 2000
------------- -------------
(Unaudited)
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock $ 12,898 $ 12,898
Additional paid-in capital 10,495,487 10,495,487
Retained earnings (deficiency) (14,030,881) (13,815,440)
Treasury stock, at cost - 4,766,446 and
4,766,446 shares (578,054) (578,054)
Accumulated other comprehensive income (loss) - (9,144)
------------ ------------
Total Stockholders' Equity (Deficiency) (4,100,550) (3,894,253)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIENCY) $ 1,622,016 $ 1,658,409
============ ============
3
See accompanying notes to the consolidated financial statements.
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited) (Unaudited)
Nine Months Ended Three Months
September 30, September 30,
----------------------------- -------------------------------
2001 2000 2001 2000
------------ ----------- ------------- ------------
NET SALES $ 102,170 $ 3,660,017 $ 34,881 $ 2,134,706
COST OF SALES 5,449 1,956,883 275 1,435,911
----------- ----------- ----------- -----------
GROSS PROFIT 96,721 1,703,134 34,606 698,795
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Selling 76,087 1,416,160 19,287 132,179
Advertising 636 60,107 16 11,975
General and administrative 227,265 2,020,475 20,686 944,176
Depreciation and amortization 16,346 71,518 5,449 39,635
----------- ----------- ----------- -----------
Total Operating Expenses 320,334 3,568,260 45,438 1,127,965
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (223,613) (1,865,126) (10,832) (429,170)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSES):
Medicis inventory recovery gain (loss) - - - (180,162)
Other 8,172 (6,623) (3,067) (56,070)
----------- ----------- ----------- -----------
Total Other Income (Expenses) - (6,623) (3,067) (236,232)
----------- ----------- ----------- -----------
Loss before income taxes (215,441) (1,871,749) (13,899) (665,402)
Provision for Income Taxes - - - -
----------- ----------- ----------- -----------
Net loss available to
common stockholders (215,441) (1,871,749) (13,899) (665,402)
Other Comprehensive Income (Loss):
Change in unrealized gain (loss) in
securities available-for sale 9,144 1,319 - (7,411)
----------- ----------- ----------- -----------
Comprehensive Loss $ (206,297) $(1,870,430) $ (13,899) $ (672,813)
=========== =========== =========== ===========
- ----------------------------------------------------------------------------------------------------------------------
Weighted average number of shares of
common stock outstanding:
Basic 8,132,076 6,118,938 8,132,076 6,118,938
Diluted N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
Net loss per common share:
Basic $ (0.03) $ (0.31) $ (0.00) $ (0.11)
Diluted N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
4
See accompanying notes to the consolidated financial statements.
IMX PHARMACEUTICALS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------------ ------------------------------
2001 2000 2001 2000
------------ ------------ ------------ -----------
OPERATING ACTIVITIES:
Net loss $ (215,441) $(1,871,749) $ (13,899) $ (665,402)
Adjustments to reconcile net loss
to net cash (used) provided by operating activities:
Depreciation and amortization 16,346 71,518 5,449 40,312
Loss on securities transactions 7,461 - - -
Provision for doubtful accounts - (23,260) - 1,064
Changes in assets and liabilities:
Decrease in accounts receivable 2,272 81,976 (3,969) 27,209
Increase in other receivable (756) - (732) -
Decrease (increase) in inventories 5,017 (1,514,416) 1,397 (708,001)
(Increase) in prepaid expenses 550 (19,253) 550 (18,747)
Decrease (increase) in deposits 1,225 (67,969) - 1,252,031
Decrease (increase) in other assets - (596,865) - (551,865)
(Decrease) increase in stock recission payable - 488,300 - 488,300
(Decrease) increase in accounts payable
and accrued expenses 133,782 833,200 13,847 567,762
----------- ----------- ----------- -----------
Net cash (used) provided by operating activities (49,544) (2,618,518) 2,643 432,663
----------- ----------- ----------- -----------
Investing Activities:
Purchase of furniture and equipment - (1,906,359) - (1,821,096)
Loan repayment from (advance to) related party - 31,153 - 31,153
Proceeds from sale of securities available-for-sale 3,511 - - (2,194)
Net proceeds from (repayment) of loans to related party - - (41,198) (1,028)
Goodwill purchased - (3,524,147) - (3,259,844)
Decrease in investment in securities - 19,619 - 10,889
----------- ----------- ----------- -----------
Net cash (used) provided by investing activities 3,511 (5,379,734) (41,198) (5,042,120)
----------- ----------- ----------- -----------
Financing Activities:
Net proceeds from (repayments of) notes payable - 2,957,890 - 2,019,386
Proceeds from sale of common stock - 277,250 - 277,250
Proceeds from sale of securities available for sale - 6,622 - 6,622
Proceeds from exercise of common stock options - 2,272,750 - 2,272,750
Net proceeds from (repayments of) loans payable 36,122 - 36,122 -
Stock issuance to purchase goodwill - - - (75,000)
----------- ----------- ----------- -----------
Net cash (used) provided by financing activities 36,122 5,514,512 36,122 4,501,008
----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (9,911) (2,483,740) (2,433) (108,449)
Cash and cash equivalents - beginning of period 19,630 2,497,791 12,152 122,500
----------- ----------- ----------- -----------
Cash and cash equivalents - end of period $ 9,719 $ 14,051 $ 9,719 $ 14,051
=========== =========== =========== ===========
- -----------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ 0 $ 7,843 $ 0 $ 166
Cash paid for income taxes $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
5
See accompanying notes to the consolidated financial statements.
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 1- BASIS OF PRESENTATION
The condensed consolidated balance sheet as of September 30, 2001 and
December 31, 2000, the condensed consolidated statements of operations
for the three months and nine months ended September 30, 2001 and 2000
and the condensed consolidated statements of cash flows for the nine
months ended September 30, 2001 and 2000 have been prepared by IMX
Pharmaceuticals, Inc. (the "Company"). The condensed consolidated
financial statements include the accounts of the Company and its
subsidiaries, imx-eti Life Partners, Inc. ("imx-eti"), Sarah J. Inc.
("Sarah J."), Proctozone, Inc. (`Proctozone"), Podiatrx, Inc.
("Podiatrx") and Select Benefits, Inc. ("Select Benefits"). All
significant intercompany balances and transactions have been eliminated
in consolidation.
In the opinion of management, all adjustments (which include
reclassifications and normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash
flows at September 30, 2001 and for all periods presented, have been
made.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the
Company's financial statements and notes thereto included in the
Company's December 31, 2000 Form 10KSB. The results of operations for
the three and nine month periods ended September 30, 2001 are not
necessarily indicative of the operating results for the full year.
NOTE 2- BANKRUPTCY AND PLAN FOR REORGANIZATION
Several acquisitions had required the Company to raise approximately
$1,500,000 in asset based financing to achieve the results forecast by
its business plan. The Company was not able to obtain the financing.
The Company experienced delays in consolidating its operations in Boca
Raton, Florida and Elbow Lake, Minnesota, resulting in expenses that
exceeded its current revenues. Consequently, the Company's cash flow
generated was insufficient to sustain operations and pay its creditors.
Accordingly, the Company decided to file a chapter 11 bankruptcy
petition for the Company and imx-eti Life Partners' Inc. on November
20, 2000 (the "Petition Date").
6
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 2- BANKRUPTCY AND PLAN FOR REORGANIZATION (CONT'D)
On December 27, 2000 the bankruptcy court entered an order authorizing
the joint administration of IMX Pharmaceuticals, Inc. (the parent) and
imx-eti's respective bankruptcy cases. The other subsidiaries Sarah J,
Proctozone, Podiatrix and Select Benefits are not a party to the
bankruptcy proceedings.
On September 5, 2001 a motion was brought to the bankruptcy court to
dismiss imx-eti Life Partners, Inc.'s petition for bankruptcy. The
bankruptcy court granted the motion on September 10, 2001.
Post-petition, The Company has derived revenues from its subsidiaries
through the sale of their respective products. The Company continues to
operate as a debtor in possession.
PLAN FOR REORGANIZATION
Subsequent to the filing of the bankruptcy case it became evident that
the Company could not sustain itself as an entity to assist in the
operation of the subsidiaries respective businesses- the sole source of
its revenues. The Company sought offers for recapitalization of the
business and each of the subsidiaries' businesses by third parties. The
Company received two expressions of interest, only one of which, in the
opinion of the Company's management was substantial. The appeal to the
two parties who expressed an interest in investing in the Company was
based primarily on its status as a public company. Consequently, there
is no value in the assets of the Company to provide a return to
unsecured creditors and if the Company were liquidated, after payments
are made to the secured creditors and priority and administrative
creditors, there would be no property available for distribution to
unsecured creditors.
In the opinion of management, the only substantial offer was received
from Cater Barnard, plc ("Cater Barnard"). Management determined that
the value to be invested in the Company is substantially in excess of
the Company's value as a going concern or on a liquidation basis.
7
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
The Company filed a plan of reorganization (the Plan) with the United
States Bankruptcy Court, Southern District of Florida dated May 23,
2001pursuant to section 1125 of Title 11 of the United States Code.
(The "Bankruptcy code"). The Plan was amended and submitted to the
Bankruptcy court on August 10, 2001 ("the Amended Plan"). The United
States Bankruptcy Court approved the Amended Plan on September 26,
2001. The court order confirming the approval of the Plan was entered
on the docket on October 11, 2001.
Under the Amended Plan, Cater Barnard, p1c, f/k/a VoyagerIT.com ("Cater
Barnard") will invest $27 million in value in the Company and The
Company will continue as a public operating company through the
operating entities consolidated into the Company through this Plan.
Subsequent to the Petition Date, Cater Barnard acquired the claim of
Shulman & Associates for $155,000, which was reduced to $150,000 In
addition, Cater Barnard acquired from Shulman & Associates, its 200,000
shares of the Company's common stock.
Under the Amended Plan, the $27 million shall be invested by Cater
Barnard's transfer of assets sometime during November 2001 (the
"Effective Date"). Cater Barnard and the Company entered into an
agreement on September 30,2001 for the future sale and purchase of the
assets.
The assets purchased by the Company are Cater Barnard's property
interests in ThinkDirect Marketing, Inc. ("TDMI") ($4,000,000 of
convertible promissory notes, seventeen and one-half percent (17.5%) of
the equity of TDMI, and an option to acquire the remaining eighty-two
and one-half percent (82.5%) of TDMI equity), and Envesta, PLC's
("Envesta")ownership of Findstar, plc.
ThinkDirect Marketing, Inc. ("TDMI").
TDMI designs, develops and distributes products and services that
automate and streamline direct marketing and customer relationship
management processes. TDMI is a Delaware corporation, with its
principal place of business in Connecticut.
Findstar, plc
Findstar's business consists of the distribution of anti-virus
software known as Panda Software, one the the United Kingdom's
leading anti-virus software systems. The Panda Software is also
distributed outside the United Kingdom.
8
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
In addition to the above Cater Barnard will also invest up to $300,000
in cash. The $300,000 in cash is intended to be applied to the
satisfaction of administrative expenses and non-tax priority claims.
In satisfaction of payment for the transfer of Cater Barnard's property
interests described above the Company will issue the following to Cater
Barnard:
1. 225,000 shares of the Company's newly issued Class B 5%
preferred stock, with an $80 stated value. The preferred
stock is convertible into The Company's common stock at a
rate of one share of common stock for each $4 of stated
value and shall have voting rights on an "as if" converted
basis.
2. a promissory note in the amount of $3 million, payable in
five (5) years, with interest at the rate of five percent
(5%) per annum, payable in cash or common stock of The
Company.
3. 1,500,000 shares of common stock in The Company.
After the Effective Date, Cater Barnard will possess a majority of the
voting power of the Reorganized Debtor: Unsecured Creditors and Holders
of Allowed Interests will collectively possess approximately 1 million
shares and Cater Barnard will possess 1.5 million shares, plus the
shares it will have converted as a Holder of an Allowed Interest and on
account of its Allowed Unsecured Claim.
The Company shall form a new board of directors, with Cater Barnard
appointing all three (3) members. Griffin Securities, Inc. ("Griffin")
shall be entitled to a ten percent (10%) commission and a three percent
(3%) non-accountable expense allowance of the dollar amount of the
transaction, subject to bankruptcy court approval. The Company will
either pay Griffin's fees or reimburse Cater Barnard for them in common
stock valued at $4.00 per share.
9
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
Additionally, Griffin or its designee shall receive warrants to
purchase 675,000 thousand shares of common stock at $4.00 per share
over the next five years. Griffin and the Debtor negotiated the amount
and terms of the fees payable to Griffin. The Debtor and Griffin
believe the fees are comparable, both in amount and in their terms, to
fees generally earned by brokers for similar services in similar
transactions. The Debtor believes the compensation due to Griffin is
reasonable. Griffin originated the transaction, negotiated its term and
has negotiated with brokers and "market makers" to effectuate the
proposed public sales of the Reorganized Debtor's stock on public
markets to develop a market for its stock. Griffin has hired attorneys
and consultants to review the securities laws as they affect the
transactions contemplated by the Debtor's Plan and has incurred
expenses, including trips to London, England, and Florida for
Bankruptcy court hearings.
Based upon the treatment of certain Claims, the number of outstanding
and issued shares is 10,217,076, 1,285,000 shares that have been
rescinded and includes 800,000 shares of treasury stock, 500,000 of
which are held by Ralph Thomas, as Assignee of Community First Bank, as
collateral and 300,000 shares are held by VitaQuest International as
collateral. The Holders of Equity Interests on the Effective Date will
have their current existing shares consolidated at the rate of twenty
(20) shares to one (1) share. Creditors holding Allowed Unsecured
Claims will receive The Company's common stock at the rate of one (1)
share for every $4.00 owed on account of their Allowed Unsecured Claims
Approximately 348 different shareholders hold the outstanding shares of
the Debtor. Approximately eight percent (8%) of the shares are held by
Bill Forster or members of his family. Mr. Forster and his family's
interest comprise the only interests held by insiders of the Debtor
holding more than five percent (5%) of The Company's stock. Other
shareholders whose interests exceed five percent (5%) include, Dri-
Kleen, Inc, which holds 2,400,000 shares, Ralph Thomas, as Assignee of
Community First Bank, which holds 500,000 shares, VitaQuest
International, which holds 300,000 shares, and Cater-Barnard, f/k/a
VoyagerIt.com, Inc., which holds 700,000 shares. Subsequent to the
occurrence of the transactions contemplated by the Plan, The Company
will continue to be a reporting company and due to the size of its
assets will endeavor to leave the Over-the-Counter Bulletin Board and
seek to have its stock traded on either the NASDAQ market or the
American Stock Exchange as soon as practicable after the Effective
Date. There is no assurance that the Debtor's application will be
accepted or that the Debtor will be listed. It is anticipated that the
revenues from the operating companies will support the cost of funding
its reporting requirements.
10
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
For the fifty-two (52) weeks ending June 25, 2001, the Debtor's stock
had a trading range of $.001 to$1.25. The most recent trade was for
$.001. There is presently no established market for the Debtor's stock.
Since the Debtor's Plan contemplates the acquisition of the operating
companies in which Cater Barnard has interests, it is believed that the
historic trading range of the Debtor's stock is an inaccurate barometer
of the prices at which the Reorganized Debtor's stock may trade after
the transactions with Cater Barnard.
Related Parties:
Related parties to the above transaction are:
Adrian Stecyck who is a director of Cater Barnard, TDMI, and a
principal of Griffin Securities.
Stephen Dean who is a director and chairman of Cater Barnard and a
Non-executive chairman of Envesta.
Peter Holmes who is a director of Cater Barnard and Finance Director of
Envesta.
VoyagerFinancial News. plc which has an eighty percent (80%) ownership
interest in Griffin Securities.
Cater Barnard plc., which has a forty-five percent (45%) ownership
interest in VoyagerFinancial.plc.
Note 3- GOING CONCERN
The Company has incurred operating losses for each of the last four
years ended December 31, 1997, 1998, 1999 and 2000 and the nine months
ended September 30, 2001. As of September 30, 2001 the Company's
current liabilities exceeded its current assets by $4,277,492 and its
total liabilities exceeded its total assets by $4,100,550. These
matters raise substantial doubt about the ability of the Company to
continue as a going concern. The Company's continuance will be
dependent on the ability to restructure its operations to achieve
profitability in the near term and its ability to raise sufficient debt
or equity capital to fund continuing operations until such
restructuring is completed.
11
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 4- ACQUISITIONS AND AGREEMENTS
CATER BARNARD, PLC AGREEMENT
In October 2000 the Company purchased from Cater Barnard, plc (f/k/a/
VoyagerIT.com and f/k/a Enviro-Tech.com plc) debt owed to VoyagerIT.com
from Enviro-Tech International, Inc. (the "Debt"). The purchase price
for the Debt was $500,000. In satisfaction of payment the Company
issued 500,000 shares of the Company's common stock, $0.001 par value,
at an issue price of $1.00 per share (the "Pledged shares").
Terms of the purchase agreement include that should Cater Barnard, plc
realize net sales proceeds totaling $500,000 by selling fewer than all
the Pledged shares, Cater Barnard, plc would renounce its rights to the
remainder of the Pledged shares and surrender them to the Company for
cancellation or otherwise deal with them as mutually agreed to by the
parties.
If by July 1, 2001, the sum of the aggregate net proceeds of sale of
the Pledged shares sold by Cater Barnard, plc and the value of the
retained Pledged shares (the "Sum") is less than $500,000 the Company
agreed to pay immediately to Cater Barnard, plc an amount equal to the
shortfall between the Sum and $500,000.
The value of the Pledged shares retained was to be taken at the average
closing bid on the last 20 trading days before July 1, 2001.
Cater Barnard, plc was granted an unsecured claim in the bankruptcy for
$500,000. It will receive 125,000 shares of post consolidation common
stock in the Company in settlement of that claim.
12
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
Note 5- STOCK RECISSION
On July 8, 2000, 1,300,000 shares of common stock were issued to
approximately thirteen (13) individuals at $.38 per share. Based upon
the subsequent discovery of materially erroneous information concerning
the volume of sales, the issuance of the stock was rescinded on
November 5, 2000, by the Company's board of directors for five (5) of
the individuals holding 435,638 shares of common stock. The Company
lacked the funds to pay the individuals affected and therefore the
liabilities created by the rescission were recorded as stock rescission
payable. Subsequent to the Petition Date, The Company's board of
directors resolved to rescind the issuance of the balance of 849,342
shares of common stock and the schedules will be amended to reflect
these individuals and entity as unsecured creditors. One individual who
was issued 15,000 shares elected to not participate in the rescission.
NOTE 6- SECURITIES AVAILABLE FOR SALE
Securities available for sale consist of shares of common stock in
Hydron Technologies, Inc. ("Hydron"). September 30, 2001 and December
31, 2000, the cost basis of $0 and $ 10,972 of the common stock in
Hydron exceeded the market value by $0 and $9,144 respectively.
NOTE 7- INVENTORIES
Inventories consisted of the following:
September 30 December 31
2001 2000
------------- -------------
Other Assets Current Assets
------------- --------------
Finished goods $ 89,247 $ 94,264
Packaging supplies 15,736 15,736
-------- --------
Total $104,983 $110,000
======== ========
As of September 30, 2001 the Company held inventory of $ 104,983 shown
on the balance sheet as a non-current asset. In the opinion of
management, inventory held is not expected to be sold currently.
13
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 8- SUBSTANTIAL LOSSES FROM APPLICATION OF LOWER OF COST OR MARKET RULE
During 2000, the Company significantly reduced its production and
marketing efforts in connection with several of its products. This
decision was based on the projected continued loss of market share for
these products and the inability to deliver product on a timely basis.
All of IMX Pharmaceuticals, Inc. & imx-eti Life Partners Inc.'s
inventory was not in physical control of The Company. Management does
not have sufficient resources to pursue control of this inventory and
has abandoned it.
The value of the inventories of Sarah J, Proctozone, and Podiatrix have
been significantly reduced due to The Company's diminished capability
to market and distribute its products. Management has reduced these
inventories to their estimated liquidation value. Accordingly at
September 30, 2001 and December 31, 2000 inventories held by the
companies listed below were written down to their estimated net
realizable value.
Estimated Estimated
Carrying Net Realizable Net Realizable
Value Value Value
Company December 31, 2000 September 30,2001 December 31, 2000
- ------------------------------ ------------------------- ------------------------- --------------------------
IMX Pharmaceuticals, Inc. $ 18,295 $ - $ -
imx-eti Life Partners, Inc. 1,528,289 - -
Sarah J. Inc. 453,992 94,983 100,000
Proctozone, Inc. 80,390 5,000 5,000
Podiatrx, Inc. 119,518 5,000 5,000
Select Benefits Inc. - - -
------------------------- ------------------------- --------------------------
$ 653,900 $ 104,983 110,000
========================= ========================= ==========================
14
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 9- IMPAIRMENT OF ASSETS HELD AND USED
During the nine months ended September 30, 2001 and the year ended
December 31, 2000 the assets listed below were deemed to be impaired
and written down to their fair market value. Fair value, which was
determined by reference to the present value of the estimated future
cash inflows of such assets, exceeded their carrying value by $ 893,733
at December 31, 2000.
Mach. and Furniture and Leasehold Other
Company: Totals equipment fixtures Imprvements Land Buildings assets
- ----------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
IMX Pharmaceuticals, inc $ 296,071 $ 219,937 $ 54,533 $ 21,601 $ 0 $ 0 $ 0
imx-eti Life Partners, Inc. 1,818,157 780,862 7,114 0 150,000 850,000 30,181
Sarah J., Inc. 125,072 106,688 0 0 0 0 18,384
Proctozone, Inc. 0 0 0 0 0 0 0
Podiatrx, Inc. 8,319 0 0 0 0 0 8,319
Select Benefits, Inc. 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Totals 2,247,619 1,107,487 61,647 21,601 150,000 850,000 56,884
Less: Accumulated
depreciation through
December 31, 2000 (363,875) (268,353) (35,292) (18,314) 0 (9,989) (31,927)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net book value 1,883,744 839,134 26,355 3,287 150,000 840,011 24,957
Less: Valuation
allowance (893,733) (839,134) (26,355) (3,287) 0 0 (24,957)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net relizable value
at December 31, 2000 990,011 0 0 0 150,000 840,011 0
Less: Accumulated
depreciation for the nine
months ended
September 30, 2001 (16,346) 0 0 0 0 (16,346) 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net relizable value
at September 30, 2001 $ 973,665 $ - $ - $ - $ 150,000 $ 856,357 $ -
=========== =========== =========== =========== =========== =========== ===========
Management established valuation allowances for these assets based on
the following circumstances:
Machinery, Equipment, Furniture and Fixtures
IMX and IMX-ETI:
These assets were not in physical control of The Company. Management
does not have sufficient resources to pursue control of these assets
and therefore abandoned them.
15
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
Sarah J, Proctozone, Podiatrix:
These assets have been taken out of service and are expected to provide
no further economic benefits.
Leasehold Improvements:
IMX PHARMACEUTICALS, INC.
The Company abandoned its leasehold improvements at the expiration of
their Boca Raton, Florida corporate office lease term.
Other Assets:
IMX PHARMACEUTICALS, INC, and IMX-ETI
Other assets were comprised of unamortized programming fees and
licensing agreements. Due to The Company's diminished capability to
market and distribute its products these assets are expected to provide
no further economic benefits.
NOTE 10- LIABILITIES SUBJECT TO COMPROMISE
On November 20, 2000, IMX Pharmaceuticals Inc. and the imx-eti Life
Partners, Inc. (The "Debtors") filed petitions for relief under Chapter
11 of the federal bankruptcy laws in the United States Bankruptcy Court
for the Southern District of Florida. Under Chapter 11, certain claims
against the Debtor in existence prior to the filing of the petitions
for relief under the federal bankruptcy laws are stayed while the
Debtor continues business operations as Debtor-in-possession. On
September 5, 2001 a motion was brought to the bankruptcy court to
dismiss the imx-eti Life Partners, Inc.'s petition for bankruptcy. The
bankruptcy court granted the motion on September 10, 2001. The
creditor's of both IMX Pharmaceuticals, Inc. and imx-eti Life Partners,
Inc. are reflected in the December 31, 2000. balance sheet as
"liabilities subject to compromise." The creditor's of only IMX
Pharmaceuticals, Inc. are reflected in the September 30, 2001 balance
sheet as "liabilities subject to compromise." Additional claims
(liabilities subject to compromise) may arise subsequent to the filing
date resulting from rejection of executory contracts, including leases,
and from determination by the court (or agreed to by parties in
interest) of allowed claims for contingencies and other disputed
amounts. Claims secured against the debtors assets ("secured claims")
also are stayed, although the holders of such claims have the right to
move the court for relief from the stay. Secured claims are secured
primarily by liens on the Debtors' property, plant and equipment.
16
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 11- UNRECORDED LIABILITY
The Debtors' received approval from the Bankruptcy Court to pay or
otherwise honor certain of their prepetition obligations, including
employee wages. The Debtors have determined that there is insufficient
collateral to cover the interest portion of scheduled payments on their
prepetition debt obligations. Contractual interest on those obligations
is estimated at $96,000, which is approximately $ 86,000 more than
reported interest expense; therefore, the Debtor has discontinued
accruing interest on these obligations.
NOTE 12- INCOME TAXES
The provision for income taxes in the consolidated statements of
operations is as follows:
September 30 September 30
------------ ------------
2001 2000
------------ ------------
Current:
Federal $0 $0
State 0 0
------------ ------------
$0 $0
------------ ------------
Deferred:
Federal $0 $0
State 0 0
------------ ------------
$0 $0
------------ ------------
Applicable incomes taxes for financial reporting purposes differ from
the amounts computed by applying the statutory federal and state income
tax rates as follows:
September 30, December 31,
------------------- ----------------
2001 2000
------------------- ----------------
Tax benefit at statutory rate $ 62,800 $ 3,570,000
Increase (decrease) in tax
resulting from:
State income tax, net of federal tax benefit 11,500 610,000
Other 0 0
Increase (decrease) in
valuation allowance (74,300) (4,180,000)
----------- -----------
Income taxes $ 0 $ 0
=========== ===========
17
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
The approximate tax effects of temporary differences that give rise to
the deferred tax assets and deferred tax (liabilities) are as follows:
September 30 December 31,
--------------- -------------
2001 2000
--------------- -------------
Fair value of common stock options and
warrants $ 0 $ 0
Start-up costs 0 0
Depreciation and amortization 0 0
Other 0 0
Net operating loss carry forwards 11,308,000 11,093,000
------------ ------------
0
11,308,000 11,093,000
Less: valuation allowance (11,308,000) (11,093,000)
------------ ------------
Total net deferred tax asset $ 0 $ 0
============ ============
At September 30, 2001, the Company had net operating loss carryforwards
of approximately $ 11,308,000 for income tax purposes. Those losses are
available for carry forward for periods ranging from fifteen to twenty
years, and will expire beginning in 2011. Any future significant
changes in ownership of the Company may limit the annual utilization of
the tax net operating loss carry forwards.
NOTE 13 - CAPITAL STOCK
At December 31, 2000 and September 30, 2001, the Company had
reserved 874,641 and 869,641 shares of common stock
respectively for issuance relating to unexpired options and
warrants.
18
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 14- STOCK OPTIONS
On January 21, 1996, the Company adopted a stock option plan with
2,000,000 shares of Common stock reserved for the grant of options to
key employees, non-employees, officers and directors of the Company. On
September 9, 1998, the Company adopted a stock option plan with
1,200,000 shares of common stock reserved for grant of options to key
employees, non-employees, officers and directors of the Company.
Options under these plans are exercisable over a period of ten years
with various vesting terms. All shares granted are subject to
significant restrictions as to disposition by the optionee.
A summary of the Company's stock option activity is as follows:
Nine months ended Three months ended
September 30, 2001 September 30, 2001
------------------------------- ----------------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
- --------------------------------------------------------- ----------------------------------
Options outstanding,
beginning of period 520,000 $ 1.61 515,000 $ 1.61
Granted - - - -
Exercised - - - -
Forfeited/canceled (5,000) 2.36 - -
- -----------------------------------------------------------------------------------------
Outstanding at end of
period 515,000 $ 1.61 515,000 $ 1.61
- -----------------------------------------------------------------------------------------
19
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
A summary of the Company's fixed stock options outstanding is as
follows:
Weighted
Average
Remaining Weighted Weighted
Range of Options Contractual Average Options Average
Exercise Price Outstanding Life in Years Exercise Price Exercisable Exercise Price
- -------------------------------------------------------------------------------------------------------------------
December 31, 2000
- -------------------------------------------------------------------------------------------------------------------
$1.00 300,000 5.76 $ 1.00 300,000 $ 1.00
$1.75 - 2.50 220,000 5.88 2.40 210,000 2.40
- -------------------------------------------------------------------------------------------------------------------
$0.75 - 6.50 520,000 5.81 1.59 510,000 1.58
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
September 30, 2001
- -------------------------------------------------------------------------------------------------------------------
$1.00 300,000 4.77 $ 1.00 300,000 $ 1.00
$1.75 - 2.50 215,000 5.04 2.40 210,000 2.40
- -------------------------------------------------------------------------------------------------------------------
$0.75 - 6.50 515,000 4.88 1.61 510,000 1.60
- -------------------------------------------------------------------------------------------------------------------
SFAS No. 123, "Accounting for Stock-Based Compensation", requires the
Company to provide pro forma information regarding net income (loss)
and income (loss) per share as if compensation cost for the Company's
employee stock option plans had been determined in accordance with the
fair value based method prescribed in SFAS No. 123. The Company
estimates the fair value of each option at the grant date by using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2000 and 2001, expected volatility
ranging from 45% to 46%; risk-free interest rates ranging from 4.35% to
6% and expected lives ranging from 2 to 10 years.
Under the accounting provisions of SFAS 123, the Company's net income
(loss) and income (loss) per share would have changed to the pro forma
amounts indicated below:
Nine Months Three Months
Ended September 30, Ended September 30,
------------------------------- ---------------------------
2001 2000 2001 2000
------------ ------------- ---------- -----------
Net income (loss) applicable to
common stockholders
As reported $ (215,441) $ (1,871,749) $ (13,899) $ (665,402)
Pro forma $ (215,441) $ (1,871,749) $ (13,899) $ (665,402)
Income (loss) per share - basic
As reported $ (0.03) $ (0.32) $ (0.00) $ (0.11)
Pro forma $ (0.03) $ (0.32) $ (0.00) $ (0.11)
Income (loss) per share - diluted
As reported $ (0.03) $ (0.30) $ (0.00) $ (0.11)
Pro forma $ (0.03) $ (0.30) $ (0.00) $ (0.11)
20
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 15- STOCK WARRANTS
In connection with a 1996 Private Placement 58,000 warrants, each to
purchase one share of common stock for $3.00 per share, and exercisable
for the three year period ending July 9, 1999, were issued to placement
agents. During July 1997, in connection with a financial advisory
agreement with the placement agents, the exercise price of the 58,000
warrants was reduced to $2.50 per share, and the exercise period was
extended to February 9, 2001. The Company recorded approximately
$71,000 as deferred consulting expense for the estimated fair value of
warrants which are being amortized over the two year term of the
agreement.
On March 31, 1999, in connection with the Company's 1997 Private
Placement of convertible preferred stock (Note 13), 88,160 (76,750
original shares, plus 11,410 shares issued in lieu of cash as preferred
stock dividends) shares outstanding at March 31, 1999 were converted
into ten shares of common stock and warrants to purchase ten shares of
common stock at any time during the period ending July 2002 for $6.50
per share. As of September 30, 2001 no warrants to purchase common
stock have been exercised.
In addition to warrants issued to investors in the February, 1997
Private Placement, warrants to purchase 7,586.25 shares of Convertible
Preferred Stock were issued to placement and selling agents with an
exercise price of $30 per share, and are exercisable for the five year
period ending July, 2002. Each share of preferred stock is convertible
into 10 shares of common stock at $3.50 per share and 10 warrants, each
warrant to purchase one share of common stock at $6.50 per share. Prior
to the March 31, 1999 conversion, no warrants to purchase preferred
stock had been exercised.
During July 1997, in connection with an agreement with a financial
advisor, the Company issued warrants to purchase 50,000 shares of
common stock at $4.75 per share, exercisable prior to July 2002. The
Company recorded approximately $67,000 as deferred consulting expense
for the estimated fair value of the warrants, which is being amortized
over the two year term of the agreement.
21
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
In connection with notes payable issued during 1997, as of September
30, 2001, warrants to purchase 85,120 shares of common stock have been
issued. Also, in connection with February, 1998 closing of the October,
1997 Private Placement, warrants to purchase 20,180 shares of common
stock were issued to placement and selling agents. Each of the warrants
mentioned above has an exercise price of $3.50 per share, and expires
five years from the date of issuance. As of September 30, 2001 and
2000, no warrants have been exercised. The aggregate number of common
shares reserved for issuance upon the exercise of warrants is 354,641
as of September 30, 2001. The expiration date and exercise prices of
the outstanding warrants are as follows:
Outstanding Expiration Exercise
Warrants Date Price
------------- ---------- -----------------
58,000 2001 $ 2.50
132,863 2002 1.75 - 4.75
163,778 2003 1.75 - 3.50
NOTE 16- NET INCOME (LOSS) PER COMMON SHARE
The following table sets forth the computation of basic and diluted net
loss per common share:
22
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------- ----------------------------
2001 2000 2001 2000
------------ ----------- ---------- ----------
Numerator:
Numerator for basic and diluted
Loss per share available
to common stockholders $ (215,441) $(1,871,749) $ (13,899) $ (665,402)
----------- ----------- ----------- -----------
Denominator:
Denominator for basic loss per
share-weighted-average shares 8,132,076 6,118,938 8,132,076 6,118,938
Effect of dilutive securities:
Common stock options 0 0 0 0
----------- ----------- ----------- -----------
Denominator for diluted loss per
share-adjusted weighted average
shares and assumed conversions 8,132,076 6,118,938 8,132,076 6,118,938
----------- ----------- ----------- -----------
Basic net loss per common share $ (0.03) $ (0.31) $ (0.00) $ (0.11)
----------- ----------- ----------- -----------
Diluted net loss per common share $ (0.03) $ (0.31) $ (0.00) $ (0.11)
----------- ----------- ----------- -----------
Net loss per common share is calculated by dividing the net loss by the
weighted-average shares of common stock and common stock equivalents
outstanding during the period. Excluded from the computation of net
loss per common share - diluted at September 30, 2001, were outstanding
options of 515,000 and warrants to purchase of 354,641 shares of common
stock respectively, at exercise prices ranging from $2.50 to $6.50,
because to do so would be anti-dilutive.
NOTE 17- RELATED PARTY TRANSACTIONS
During 2000 and 2001, the Company received advances from related
parties. The balances due to these related parties as of September 30,
2001 and December 31, 2000 respectively were as follows:
23
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
Loans Payable Notes Payable
----------------------------- -------------------------------
Sept. 30, Dec. 31, Sept. 30, Dec. 31,
Relationship 2001 2000 2001 2000
- ----------------- ------------- ------------ --------------- ------------
Officers $ 53,500 $ 53,500 $ 137,634 $ 101,134
Officer's sister 0 0 12,500 12,500
------------- ------------ --------------- ------------
$ 53,500 $ 53,500 $ 150,134 $ 113,634
============= ============ =============== ============
NOTE 18- COMMITMENTS AND CONTINGENCIES
On July 1, 1998, the Company entered into an employment agreement for a
period of three years with William Forster, the Company's Chairman of
the Board, President and Chief Executive Officer. Mr. Forster is
entitled to receive an annual salary of $225,000 and a bonus based on a
percentage of the Company's sales (as defined).
Effective July 1, and August 1, 1998, the Company entered into
employment agreements with two officers for annual salaries totaling
approximately $205,000, plus discretionary bonuses, and bonuses upon
the sale of the Company's interest in the LLC (as defined). The term of
each agreement is three years.
The Company has entered into a series of product development agreements
with a consultant that provide for compensation to the consultant in
the form of cash, options to purchase shares of the Company's common
stock which vest as products are developed, royalties based upon net
sales of products, a royalty based upon the sale of the rights to the
products developed, and an interest in any patents granted on products
developed by the consultant to the Company.
Bioglan Pharma PLC and Bioglan Pharma, Inc.
In November 1999, Bioglan Pharma PLC and Bioglan Pharma, Inc.
(collectively, "Bioglan") commenced an arbitration action against the
Company, Medicis and the LLC, in which Bioglan claims damages for
breach of various contractual obligations arising out of the sale of
the LLC and the Exorex product line to Bioglan.
24
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
Specifically, Bioglan claims that Medicis, the LLC and the Company
breached an Asset Purchase Agreement by transferring inventories to
Bioglan that had a remaining shelf life less than 12 months and was
otherwise unmarketable. The Asset Purchase Agreement specified that
Bioglan was to take title to all Inventories having a shelf life
greater than 12 months, and the Company was to take title to
inventories having a shelf life of 12 months or less. The products were
warehoused together. Management believes that Medicis, under an interim
management agreement with Bioglan, filled Bioglan orders with the
Company's inventories. In addition, the Company has filed a
counterclaim in the arbitration against Bioglan for damages relating to
the conversion of this property.
In the second claim, Bioglan seeks unspecified damages from the
Company, Medicis and the LLC because it claims that the inventories
that it received had not been properly stored and therefore were
unmarketable. Management believes that this claim does not have any
merit. since it was never advised by the manufacturer, Meyer-Zall, of
any requirement for cold storage for the product. The Company intends
to vigorously defend this matter. However, management cannot assess the
likelihood of an unfavorable outcome, or the range of potential loss,
if any, which might result from this claim.
Dri-Kleen, Inc.
A disputed payable in the approximate amount of $ 1,475,000 has been
asserted by Dri-Kleen, Inc. related to the acquisition of imx-eti.
Management believes that this matter will be resolved as part of the
bankruptcy proceedings and the exact amount of the liability, if any,
is indeterminate therefore no accrual has been made.
Accrued Salaries Payable, Pre-petition
The Bankruptcy Court limits the amount of pre-petition accrued salaries
that may be classified as "not subject to compromise" to $4,340 per
employee (the Limit"). Any amount due an employee above this Limit (the
"Over Limit Amount") is deemed a "liability subject to compromise" and
will be subject to the same settlement terms as the other creditors
within this class. The Over Limit Amount as of September 30, 2001 was
$29,791. The payroll taxes related to the Over Limit Amount are deemed
"liabilities not subject to compromise". The Over Limit Amount payroll
taxes are estimated at $2,979 and are included in the Accrued payroll
taxes, pre-petition of $6,753.
25
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 19- OTHER RECEIVABLES
Other receivables are as follows:
The $500,000 due from Dri-Kleen Inc. is composed of approximately
$400,000 in loan debt, $30,000 of accrued interest on the debt and
$60,000 of expenses paid by the Company on behalf of Dri-Kleen, Inc.
September 30, December 31,
2001 2000
----------------------- --------------------
Subject to bankruptcy proceedings:
- ----------------------------------
Due from Dri-Kleen, Inc. $ 500,000 $ 500,000
Other 0 1,703
----------------------- --------------------
Total $ 500,000 $ 501,703
======================= ====================
NOTE 20- SALES TAX PAYABLE
As of September 30, 2001 imx-eti Life Partners, Inc. estimated an
unpaid sales tax liability in excess of $195,000. At the Board of
Directors meeting of November 5, 2000 the Board approved a resolution
to indemnify the Company's Officers against any claim made or
successfully asserted against any Company Officer for any unpaid sales
or other tax liability and the costs of defending against the claim.
26
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
Additionally the Company resolved that if a claim of personal tax
liability for which indemnification may be sought against the Company
is asserted, the Company Officer shall advise The Company to that
effect and shall thereafter permit The Company to participate at its
sole expense in the negotiation and settlement of that claim and to
join in or assume the defense of any legal action arising there from
with counsel selected by The Company and reasonably satisfactory to the
Company Officer. The Company Officer may implead The Company in any
action that is subject to indemnity.
NOTE 21- NOTES PAYABLE
Notes payable consist of the following as of December 31, 2000:
PARTIALLY
FULLY SECURED OR
SECURED UNSECURED
------- -----------
Non-interest bearing promissory note payable,
Pure Distributors, Inc. d/b/a Envion
International, payable
in 24 monthly installments of $31,250 principal
only $ 0 $ 718,750
Promissory note payable, Wachovia Bank, N.A.,
bearing
Interest at 9.5% per annum, payable in 24 monthly
installments of $8,851 principal and
interest. 0 175,038
27
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 21 - NOTES PAYABLE (CONT'D)
PARTIALLY
FULLY SECURED OR
SECURED UNSECURED
------- ----------
Non-interest bearing promissory note payable, Dri-Kleen, Inc.
d/b/a Enviro-Tech International, related to the purchase of
inventory. The note is payable as the related inventory is
sold by The Company with the balance due and payable 90 days
from the inception of the note. 0 600,000
Non-interest bearing promissory note payable, Vitaquest
International, Inc. payable in 12 monthly installments of
$6,000 in the first year commencing August 1, 2000, followed
by 12 monthly installments of $7,000 commencing August 1,
2001, then increasing to monthly installments of $8,000.
commencing August 1, 2002 and continuing until the note is
paid in full. All overdue amounts are subject to a 5% penalty. 0 192,000
Promissory note payable, Community First National Bank, bearing
interest at 5% per annum, payable in 24 monthly installments of $6,250
principal and interest with balloon payments as follows:
November 2001 $ 75,000
August 2002 $ 250,000
August 2003 $ 132,637
632,637 0
28
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 21 - NOTES PAYABLE (CONT'D)
PARTIALLY
FULLY SECURED OR
SECURED UNSECURED
------- ----------
Non-recourse note payable, Select Benefits, Inc. monthly
installments equal to 15% of sales from a select group of
clients that pre-existed the acquisition date (Note 1) The
note paydown is estimated at $60,000 per year. 0 188,909
Non-interest bearing note payable, Marc Balmuth, with no
stated repayment terms. 0 20,000
Non-interest bearing notes payable, William
Forster, with no stated repayment terms. 97,000 4,134
Non-interest bearing note payable, Jo Ann Forster,
with no stated repayment terms 12,500 0
Non-interest bearing loan payable, Distributors,
with no stated repayment terms 0 4,707
---------------- ----------------
Total Notes and Loans Payable 742,137 1,903,538
Less Current Portion (425,000) (1,350,172)
--------------- -----------------
Non Current Portion $ 317,137 $ 553,366
============== ================
29
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 21 - NOTES PAYABLE (CONT'D)
Notes payable consist of the following as of September 30, 2001:
PARTIALLY
FULLY SECURED OR
SECURED UNSECURED
------- ----------
Non-interest bearing promissory note payable,
Pure Distributors, Inc. d/b/a Envion
International, payable in 24 monthly installments
of $31,250 principal only $ 0 $ 718,750
Promissory note payable, Wachovia Bank, N.A.,
bearing Interest at 9.5% per annum, payable
in 24 monthly installments of $8,851 principal
and interest. 0 175,038
Non-interest bearing promissory note payable, Dri-Kleen, Inc.
d/b/a Enviro-Tech International, related to the purchase of
inventory. The note is payable as the related inventory is
sold by The Company with the balance due and payable 90 days
from the inception of the note. 0 600,000
30
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 21 - NOTES PAYABLE (CONT'D)
PARTIALLY
FULLY SECURED OR
SECURED UNSECURED
------- ----------
Non-interest bearing promissory note payable, Vitaquest
International, Inc. payable in 12 monthly installments of
$6,000 in the first year commencing August 1, 2000, followed
by 12 monthly installments of $7,000 commencing August 1,
2001, then increasing to monthly installments of $8,000.
commencing August 1, 2002 and continuing until the note is
paid in full. All overdue amounts are subject to a 5% penalty. 0 192,000
Promissory note payable, Community First National Bank,
bearing interest at 5% per annum, payable in 24 monthly
installments of $6,250 principal and interest with balloon
payments as follows:
November 2001 $ 75,000
August 2002 $ 250,000
August 2003 $ 132,637
632,637 0
Non-recourse note payable, Select Benefits, Inc. monthly
installments equal to 15% of sales from a select group of
clients that pre-existed the acquisition date (Note 1) The
note paydown is estimated at $60,000 per year. 0 188,909
31
IMX PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of September 30, 2001 and for the nine month
periods ended September 30, 2000 and 2001 are unaudited)
NOTE 21 - NOTES PAYABLE (CONT'D)
PARTIALLY
FULLY SECURED OR
SECURED UNSECURED
------- ----------
Non-interest bearing note payable, Marc Balmuth, with no
stated repayment terms. 0 20,000
Non-interest bearing notes payable, William Forster, with
no stated repayment terms. 132,000 5,634
Non-interest bearing note payable, Jo Ann
Forster, with no stated repayment terms 12,500 0
Non-interest bearing loan payable,
Distributors, with no stated repayment terms 0 4,707
------------- ---------------
Total Notes and Loans Payable 777,137 1,905,038
Less Current Portion (425,000) (1,350,172)
------------- ---------------
Non Current Portion $ 352,137 $ 554,866
============= ===============
32
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
The third quarter of 2001 was the final period of Company operation
under court supervision. On September 10, 2001, the Bankruptcy Court dismissed
the bankruptcy case covering imx-eti LifePartners, Inc., one of the Company's
wholly owned subsidiaries. The Company's other subsidiaries, Sarah J, Inc.
(d/b/a Mother 2 Be(TM)), Proctozone(TM), Inc., Podiatrx(TM), Inc., and IMX
Select Benefits Corporation, were never parties to the bankruptcy proceedings,
and have maintained minor activity during the period.
Prior to the second quarter of last year, IMX was a development company
primarily engaged in the development of lines of health and beauty products that
the company believes will offer superior benefits to consumers. The Mother 2
Be(R), Proctozone(TM), and Podiatrx(TM) lines were launched in 1999 and 2000.
During the second and third quarters of last year, the Company,
embarked upon a series of acquisitions designed to make it a Multi Level
Marketing company with a large North American Independent Distributor network
and a modern manufacturing, warehousing, and distribution facility for its
growing array of proprietary products.
Unfortunately, delays in the consolidation of the Company's operations
in Boca Raton, Florida and Elbow Lake, Minnesota and failure to secure the
needed $1,500,000 in asset based financing depleted the Company's cash. This,
together with operational difficulties caused by contractual differences with
Envion International at their facility in Nashua, New Hampshire resulted, on
November 20, 2000, in the Company's bankruptcy.
Acquisitions
During the prior year, the Company purchased the Enviro-Tech
Distribution Network, all of Enviro-Tech's inventory of Dri Wash n' Guard(TM)
and nutritional supplement products, and its 45,000 square foot factory,
warehouse, and distribution center in Elbow Lake, Minnesota, all of the stock of
Select Benefits Corporation, and became the exclusive worldwide distributor of
all of Envion International's products.
Enviro-Tech distributed the Dri Wash n' Guard(TM) line of waterless car
and home cleaning products, as well as its proprietary nutritional, vitamin, and
skin care products. Select Benefits provides discount health care memberships
that provide discounts of 10% to 60% for prescription drugs, vision care,
dentistry, chiropractic, hearing, and other health related benefits. Envion's
main products included meal replacement bars and nutritional supplements
marketed under the BioZone(R) and Envitamins(R) names.
Bankruptcy
On November 20, 2000 the Company and its wholly-owned subsidiary,
imx-eti LifePartners, Inc. filed voluntary petitions for relief under Chapter 11
of the United States Bankruptcy Code in the United States Bankruptcy Court for
the Southern District of Florida, West Palm Beach Division. On December 27,
2000, the Bankruptcy Court ordered the joint administration of the two cases.
33
On August 10, 2001, the Company filed its Third Amended Plan of
Reorganization. The Plan provides, in part, for a one for twenty consolidation
of the Company's existing Common Stock, the payment of cash to the Company's
priority and secured creditors, and the issuance to its unsecured creditors of
one share of common stock for each four ($4) dollars of debt. Under the Plan,
Cater Barnard, plc and Envesta, plc, a company in which Cater Barnard holds
approximately 87% of the equity, will transfer assets valued, according to the
plan, at $27,000,000 to the Company in exchange for a package of Company notes,
Company Common Stock valued at four ($4) dollars per share, and shares of a new
class of Preferred Stock convertible into shares of Common Stock at four ($4)
dollars per share. The cash needs of the plan are being funded by the purchase
of approximately 75,000 shares of common stock at four ($4) dollars per share by
Cater Barnard, plc. If the Company requires additional funds, Cater Barnard may
purchase shares of the Company's new class of Preferred Stock.
On September 10, 2001, the Bankruptcy Court dismissed imx-eti
LifePartners, Inc.'s Bankruptcy Case.
On September 26, 2001, after a hearing, the Court confirmed the Plan.
The order was entered on October 11, 2001. It is expected that the Plan will be
declared effective during November 2001.
On September 30, 2001, the Company, Cater Barnard, and Envesta executed
an agreement for the transfer of the assets (the "Purchase Agreement"). The
closing is anticipated during November 2001.
The Plan of Reorganization
On September 26, 2001, the United States Bankruptcy Court, Southern
District of Florida held a hearing on the confirmation the Registrant's Third
Amended Plan of Reorganization (the "Plan") filed August 10, 2001. The order
confirming the approval of the Plan was entered on the docket on October 11,
2001. All administrative expenses, priority tax claims and US Trustee's fees
will be paid in full. The Plan provides for nine Class of Claims, each treated
in its own way. Class 1 (unpaid wages) and Classes 2, 3, 4, 6, and 7 (allowed
secured claims) will be paid in full. Class 5 a disputed secured claim will be
paid a mixture of cash and IMX Common Stock and Class 8 (allowed unsecured
claims) will be paid one share of IMX Common Stock for each four ($4.00) dollars
of allowed debt. Class 9 (the existing equity holders) will have their present
holdings replaced by one share of IMX Common Stock for each 20 shares they now
own. No fractional shares will be issued. Any partial shares due to members of
Classes 8 or 9 will be rounded up to a full share.
34
The Acquisition
Pursuant to the Purchase Agreement, in exchange for the assets
described below, the Company will issue to Cater Barnard and Envesta 225,000
shares of its newly created Class B Convertible Preferred Stock, its promissory
notes in the aggregate principal amount of $3,000,000.00, and 1,500,000 shares
of its post consolidation common stock. The Class B Preferred Stock has an $80
stated value per share. It is convertible into IMX Common Stock at a rate of one
share of Common Stock for each $4.00 of stated value. The notes mature in five
(5) years and bear interest at the rate of five percent (5%) per annum. The
interest or principal may be paid in cash or IMX Common Stock, at the Company's
discretion.
In addition, the Company will issue 877,500 shares of the Company's
post consolidation Common Stock and a five year warrant to purchase an
additional 675,000 shares of IMX's post consolidation Common Stock at $4.00 per
share to Cater Barnard as designee of Griffin Securities, Inc. ("Griffin"). The
securities are to be issued in payment for Griffin's services in connection with
the forgoing transaction.
After the conclusion of this transaction and the IMX Common Stock
consolidation, and assuming full conversion of the Class B Preferred Stock,
Cater Barnard and Envesta will hold approximately 73% of the equity of the
Company.
Upon closing, Cater Barnard will transfer all its interests in
ThinkDirectMarketing, Inc. ("TDMI") to the Company. Cater Barnard's interests in
TDMI consist of $4,000,000 of TDMI convertible promissory notes, seventeen and
one-half percent (17.5%) of the equity of TDMI, and an option to acquire the
remaining eighty-two and one-half percent (82.5%) of the TDMI equity. TDMI
designs, develops and distributes products and services that automate and
streamline direct marketing and customer relationship management processes.
At the same time, Envesta will transfer all of its ownership of
Findstar, plc to the Company. Findstar's business consists of the distribution
of anti-virus software known as Panda Software, one of the United Kingdom's
leading anti-virus software systems. The Panda Software is also distributed
outside the United Kingdom.
The agreement also obligated Cater Barnard to invest approximately
$300,000 in cash to fund the Company's Plan of Reorganization and pay the
Company's Debtor in Possession administrative expenses and the tax and non-tax
priority claims. Cater Barnard will receive one share of the Company's post
consolidation common stock for each four ($4.00) dollars invested. If the
Company requires additional funds, Cater Barnard may fund them through the
purchase of shares of the Company's new class of Preferred Stock.
As of the closing, Registrant's current Chairman and directors will
resign and Stephen Dean, Adrian Stecyk, and Mark Garratt will be elected
directors.
35
Post Bankruptcy Activities
On December 1, 2000 the Company entered into an agreement with
Dri-Kleen Inc. (Dri-Kleen) whereby Dri-Kleen would operate the business of
marketing Dri Wash N' Guard products and other non Dri-Wash products (the
"Operating Agreement"). Dri-Kleen will operate the voice-mail, e-mail, and toll
free numbers. The operation of the business also includes payment by Dri-Kleen,
Inc. of all operational expenses including those associated with the Elbow Lake,
Minnesota facility. As remuneration for its services Dri-Kleen will receive
ninety-seven percent of the net sales, defined as retail sales less forty
percent, during the agreement term from all sales generated through its
operation of the Dri Wash N Guard business and the other non Dri-Wash products.
The Company will receive three percent of all net commissionable sales.
During this quarter, the Company received $ 35,940 under this contract,
for a total of $ 83,779 from its inception to September 30, 2001.
Results of Operations
For the three months and nine months ended September 30, 2001,
consolidated net sales were approximately $34,900 and $102,200, as compared to
about $2,134,700 and $3,660,000, for the same periods ended September 30, 2000.
This decrease was entirely due to the almost total cessation of sales activities
after the Company's bankruptcy filing.
Gross profit margin for the three and nine months ended September 30,
2001 was 99% and 95% compared to 33% and 52 % for the same periods ended
September 30, 2000. The high margins are primarily attributable to the sales
figure's inclusion of proceeds received from Dri-Kleen without any offsetting
cost.
Total operating expenses were approximately $45,400 and $320,300 for
the three and nine months ended September 30, 2001. This compares with
$1,128,000 and $3,568,300 for the same periods ended September 30, 2000. The
continuing decrease is attributed to personnel and operating reductions as the
Company adjusts to its bankruptcy.
For the three months and nine months ended September 30, 2001, the net
loss from operations was approximately $(10,800) and $(223,600), as compared to
$(429,200) and $(1,865,100) for the same periods ended September 30, 2000. The
almost complete cessation of Company activity has substantially controlled its
losses.
Liquidity and Capital Resources
At September 30, 2001, the Company's financial condition
included a working capital deficit of approximately $(4,277,500) million as
compared to approximately $(4,139,900) at December 31, 2000.
36
Inflation
Inflation rates in the United States have not had a significant impact
on operating results for the periods presented.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this item and elsewhere in this report
regarding matters that are not historical facts are forward-looking statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995). Because such forward-looking statements include risks and uncertainties,
actual results may differ materially from those expressed or implied by such
forward-looking statements. All statements that address operating performance,
events or developments that management expects or anticipates to incur in the
future, including statements relating to sales and earnings growth or statements
expressing general optimism about future operating results, are forward-looking
statements. The forward-looking statements are based on management's current
views and assumptions regarding future events and operating performance. Many
factors could cause actual results to differ materially from estimates contained
in management's forward-looking statements. The differences may be caused by a
variety of factors, including but not limited to adverse economic conditions,
competitive pressures, inadequate capital, unexpected costs, lower revenues and
net incomes and forecasts, the possibility of fluctuation and volatility of the
Company's operating results and condition, inability to carry out marketing and
sales plans, and loss of key executives, among other things.
Part II. Other Information
Items 1,3,4, and 5 are omitted as they are either not applicable or
have been included in Part I.
Item 2 (c) Recent Sales of Unregistered Securities
On the effective date of the Plan if Reorganization, all 8,132,076
shares of Common Stock presently outstanding and 300,000 shares of treasury
stock held as collateral will be automatically consolidated on the basis of one
share for each 20 presently held. Any fractional shares will be rounded up to
the next full share. In addition, all unsecured, allowed claims will be settled
on the basis of one share for every four ($4.00) dollars of allowed claim. Here,
too, any fractional shares will be rounded up to the next full share.
Approximately 691,500 shares will be issued to creditors. The consolidation and
this issuance are exempt from the registration requirements of Section 5 of the
Securities Act pursuant to section 1145 of the United States Bankruptcy Act.
Pursuant to the Acquisition Agreement, the Company will issue 225,000
shares of its new Class B Preferred Stock and 1,500,000 shares of its post
consolidation Common Stock. The transaction, in which the purchasers of the
shares represented that the shares were being acquired for investment and not
for distribution, will be exempt from the registration requirements of Section 5
of the Securities Act under Section 4(2) of the Securities Act because it did
not involve a public distribution of the Company's securities.
37
At the closing, the Company will issue an additional 877,500 shares of
the Company's post consolidation Common Stock and a five year warrant to
purchase an additional 675,000 shares of IMX's post consolidation Common Stock
at $4.00 per share to Cater Barnard as designee of Griffin Securities, Inc.
("Griffin"). The securities, which are to be issued in payment for Griffin's
services in connection with the acquisition, will be acquired for investment and
not as part of a distribution. Therefore, this issuance is exempt from the
registration requirements of Section 5 of the Securities Act under Section 4(2)
of the Securities Act as not involving a public distribution of the Company's
securities
Pursuant to the plan, Cater Barnard, plc will purchase of approximately
75,000 shares of common stock at four ($4) dollars per share to provide the
initial cash necessary to fund the Plan. If additional funds are required for
the Plan, Cater Barnard may purchase shares of the Company's new class of
Preferred Stock at $80 per share. Both securities will be purchased for
investment and not for distribution and are therefore exempt from the
registration requirements of Section 5 of the Securities Act under Section 4(2)
of the Securities Act as sales not involving the public distribution of
securities.
Item 6. Exhibits and Reports on Form 8-K
(b) A report on Form 8-K (reporting items 2, 3, and 7) was filed on
October 12, 2001.
38
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has caused this quarterly report on Form 10-QSB to be
signed in its behalf by the undersigned thereunto duly authorized on the 15th
day of November 2001.
IMX PHARMACEUTICALS, INC
By: /s/ Leonard Kaplan
----------------------------------------
Leonard Kaplan, Chief Financial Officer
39