FLEMINGTON PHARMACEUTICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
New Accounting Pronouncements - SFAS No. 128, "Earnings per
Share," was issued in February 1997, and is effective for
financial statements issued for periods ending after December
15, 1997. SFAS 128 requires that earnings per share be presented
more in line with earnings per share standards of other
countries. The Company expects to adopt SFAS 128 for the year
ending July 31, 1998. The Company has not yet determined the
effect of adoption of this new pronouncement on its financial
statements.
Risk Concentrations:
(a) Major Customers- During the year ended July 31, 1997, the
Company had revenue from two customers located in Germany
and France of approximately 24% and 23%, respectively, of
the Company's total revenue.
For the year ended July 31, 1996 the Company completed a
one time transaction with a customer located in the United
States which represented approximately 60% of the Company's
total revenue (see Note 2). During the year ended July 31,
1996, the Company had revenue from two other customers
located in France and Germany approximating 14% and 10%,
respectively, of the Company's total revenues.
(b) Accounts Receivable - At July 31, 1997, the Company had
unsecured accounts receivable from three customers located
in France, Germany and the United Arab Emirates
approximating 37%, 36% and 13%, respectively, of the
Company's total accounts receivable.
The Company has long standing relationships with its
principal customers and feels that credit risk associated
with these customers is limited. With regard to new
customers, the Company receives customer referrals through
long standing relationships.
(c) Significant Employees - All of the Company's consulting and
study reporting activities are performed by major
stockholders of the Company. As a result, the Company is
completely dependent upon these stockholders to continue
with these revenue activities.
(d) Supplier Dependence - The Company believes that certain raw
materials, including inactive ingredients, are available
only from a limited number of suppliers and that certain
packaging materials intended for use in connection with its
spray products currently are available only from sole
source suppliers. Although the Company does not believe it
will encounter difficulties in obtaining inactive
ingredients or packaging materials necessary for the
manufacture of its products there can be no assurance that
the Company will be able to enter into satisfactory
purchasing agreements or arrangements, thereby causing a
potential significant adverse effect on the Company's
ability to arrange for the manufacture of formulated
products.
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