July 30, 1999
FEMINIQUE CORP (FEMQ)
Quarterly Report (SEC form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operating requirements, for the last three years, primarily by the issuance of long and short-term
debt, convertible debentures or notes and the sale of common stock. The Company incurred $2,000,000 of long-term debt in
fiscal 1996 for the acquisition of the feminine hygiene product line. The payment of this note was restructureded in December
1998. In fiscal 1997, the Company incurred long-term debt of $575,000 with the issuance of Convertible Debentures. As of
September 30, 1998, all other long-term debt was converted to common stock, repaid or canceled. In December 1998, the
Board of Directors authorized the issuance of Rule 144 restricted shares of common stock in a private placement to raise up to
$1,000,000 in order to provide immediate and essential working capital. As a result of this private placement, the Company
has raised $800,000: $100,000 in December 1998, $500,000 in January 1999 and $200,000 in February 1999. The
Company also raised capital from the sales of common shares, the proceeds of which are as follows: $2,547,658 in Fiscal
1996, $1,075,000 in Fiscal 1997 and $182,556 in Fiscal 1998. As of March 31, 1999, the Company has cash of $387,188.
With the restructuring of the Company, the feminine hygiene Branded products have become the core business with which the
company expects to grow. The Brands, which were acquired in March 1996, have been established approximately over thirty
years on average and are sold under the Brand names Vaginex*, Koromex* and Feminique*. Sales of these Brands are being
made to food and drug chains, drug wholesalers, domestic and overseas distributors, clinics and government agencies. The
Company expects to expand sales of these Brand names in Fiscal 1999 through increased advertising, aggressive sales
marketing through the Company's new nationwide independent sales representatives as well as new marketing programs and
new products.
The Company believes that the foregoing, private placement, the restructuring of its long-term debt and the expected increased
sales volume will be adequate to meet its current objectives.
RESULTS OF OPERATIONS
Revenues of continuing operations for the quarter ended March 31, 1999 were $620,223 representing a slight increase over
revenues of $619,881 in the comparable quarter ended March 31, 1998. Revenues for the prior quarter ended December 31,
1998 were $718,782. For the six months ended March 31, 1999 revenues were $1,339,005 versus $1,242,373 in the
comparable six months of fiscal 1998. Revenues for fiscal 1999 and 1998 remained fairly constant even though the industry as
a whole has been consolidating.
Gross margins of continuing operations for the quarter ended March 31, 1999 were 58.7% compared to 61.2% in the same
quarter in 1998. Gross margin for the prior quarter was 65.8%. Gross margins of continuing operations for the six months
ended March 31, 1999 were 62.5% compared to 63.1% in the same period in 1998. The net loss of continuing operations for
the second quarter of fiscal 1999 was $88,402 or 14.3% compared to $53,051 or 8.6% in 1998. For the six months ended
March 31, 1999 the net loss of continuing operations was $67,393 or 5.0% compared to $63,339 or 5.1% in 1998. For the
six months ended March 31, 1999 the overall net loss was $67,393 compared to a net profit in 1998 of $1,711,665 which
includes income of $1,775,004 from discontinued operations. The decrease in gross margin and the minor increase in net losses
from continuing operations were primarily due to the climate of the industry in order to maintain market share. During the latter
part of the second quarter the Company has implemented various maneuvers which should secure the Compan's overall
improvement in both gross margin and net income.
Selling, general and administrative expenses of continuing operations increased to $412,491 from $353,117 and $770,255
from $673594 for the quarter and six months ended March 31, 1999 respectively. The increases in these expenses were
primarily due to advertising and consulting fees to better position the Company's products within the industry.
Interest expense of continuing operations for the quarter ended March 31, 1999 was $50,280 compared to $31,875 in the
same quarter in 1998. For the six months ended March 31, 1999 interest expense was $97,143 versus $78,243 for the same
period in 1998. The increase in interest expense was primarily due to the Company's note obligations which was restructured
December 15, 1998. |
