The 10QSB hs been filed; the most important part (so far as I can tell) is as follows:
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Three Months Ended June 30, 1998 as compared to the
Three Months Ended June 30, 1997RESULTS OF OPERATIONS
During the third quarter of the fiscal year ending September 30, 1998 the
Company generated revenue of $16,665 from product testing and the sale of
products as compared to $475 of royalty and product sale revenue in the same
quarter of the prior year. This represents an increase of $16,190 in revenue
from last year.
A significant portion of the Company's strategy is to expand its testing of
natural products. The Company believes that it has an opportunity to develop a
new area of quality assurance that will add value to the products it tests. As a
result, the Company has developed BioFit (TM) (Bio Functional Integrity Testing)
testing program. This unique testing program is able to certify consistent
bio-functionality of herbal and other dietary supplements. This new "functional"
approach to quality assurance will assist consumers in selecting herbs and other
botanical products based on their demonstrated biological activity, rather than
relying solely on analytical techniques which measure only the presence or
absence of certain marker compounds. This new approach to quality assurance
bridges the gap between purely analytical methods of validation and the use of
clinical trials to validate the effectiveness of natural products relative to
the structure and function claims being made for them under the Dietary
Supplement Health and Education Act of 1994.
Since the Company's inception (April 15, 1991) through June 30, 1998, it has
invested $7,210,000 in product testing research, development and engineering.
The Company expended $165,000 in the third quarter of fiscal 1998, as compared
to $400,000 in the third quarter in fiscal 1997, this represents a decrease of
$235,000. This decrease is attributable to lower personnel costs and the
cancellation of the research agreement with the National Cancer Institute.
General and administrative expenses were $371,000 for the third quarter of
fiscal 1998 as compared to $526,000 in the third quarter of fiscal 1997. These
expenses relate to the administration and management of the Company, including
personnel costs, legal, accounting, consulting, investor relations and the
administration of the research, development and product engineering activities.
This decrease of $155,000 is attributable to lower personnel costs, lower legal
and other professional and consulting costs and other general cost reductions.
The Company anticipates its general and administrative expenses will be lower in
the final quarter of fiscal 1998 than in the final quarter of fiscal 1997.
The Company has incurred net losses of $17,867,000 as a development stage
company from inception (April 15, 1991) to June 30, 1998, of which $511,000 was
incurred in the third quarter of fiscal 1998 and $ 1,094,000 was incurred in
third quarter of fiscal 1997. The basic net loss per share of common stock
amounted to $.03 for the three months ended June 30, 1998 and $.09 for the three
months ended June 30, 1997. The Company anticipates that losses will continue
throughout fiscal 1998, but at a significantly lower level than prior years.
Paracelsian, Inc. has entered into an agreement with R.P. Scherer North America,
a division of R.P. Scherer Corporation, that establishes R.P. Scherer North
America as the exclusive marketing and distribution agent for Paracelsian's
BioFIT (Bio Functional Integrity Testing) Certification program in the Dietary
Supplement and OTC market segments in North America. The agreement also provides
for collaboration between the two companies on the development of new dietary
supplements and OTC products.
Under the terms of the North American agreement, Paracelsian will initially
complete development of 10 BioFIT assay systems. R.P. Scherer North America will
pay Paracelsian initial fees, concurrent with the completion of the BioFIT assay
systems, certification of products, and completion of agreements with R.P.
Scherer customers. The companies will market the program jointly. The terms of
the agreement further call for Paracelsian to receive royalties on the sale of
all BioFIT certified products and the establishment of minimum royalty payments.
In addition to the initial fees, Paracelsian Inc. will receive a minimum of
$400,000 in royalty payments in the initial period of the agreement. Paracelsian
must receive minimum royalties of $700,000 in the subsequent 12-month period.
The agreement will continue to renew automatically upon the receipt of minimum
prescribed royalty payments, with Paracelsian receiving royalties adjusted
upward annually. The agreement also calls for negotiation of a worldwide
agreement within 90 days, on terms and conditions essentially equivalent to
those in the North American agreement. 14
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The Company has also signed a collaborative research agreement with the Southern
Research Institute. Under this agreement, the Southern Research Institute will
invest in testing a series of the Company's Traditional Chinese Medicine (TCM)
herbal extracts for "in vivo" (live) anti-tumor activity against human breast
cancer and prostate cancer. |
