-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JkzbgbtTWO9RCLDaLcKt7c436qwxG6xDgXRFGKzqISrRXwNf1Fn74MmvKlEXBShT +n3IuBGRTxSVMsXhpQwB2A== 0000950134-97-005565.txt : 19970731 0000950134-97-005565.hdr.sgml : 19970731 ACCESSION NUMBER: 0000950134-97-005565 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970730 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMARILLO BIOSCIENCES INC CENTRAL INDEX KEY: 0001014763 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 751974352 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-20791 FILM NUMBER: 97648025 BUSINESS ADDRESS: STREET 1: 800 W 9TH AVE CITY: AMARILLO STATE: TX ZIP: 79101-3206 BUSINESS PHONE: 8063761741 MAIL ADDRESS: STREET 1: AMARILLO BIOSCIENCES INC STREET 2: 800 W 9TH AVE CITY: AMARILLO STATE: TX ZIP: 79101-3206 10QSB 1 FORM 10-QSB FOR QUARTER ENDED JUNE 30, 1997 1 United States SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1997 ---------------------------------------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-20791 AMARILLO BIOSCIENCES, INC. - ------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) TEXAS 75-1974352 - ------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 800 West Ninth, Amarillo, TX 79101 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 806-376-1741 - ------------------------------------------------------------------------------- (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[X] No[ ]. As of July 17, 1997, there were 5,414,232 shares of the issuer's common stock outstanding. 1 2 AMARILLO BIOSCIENCES, INC. INDEX
PART I: FINANCIAL INFORMATION PAGE NO. --------- Item 1. Financial Statements Consolidated Balance Sheets - December 31, 1996 and June 30, 1997.............................................................. 3 Consolidated Statements of Operations - Three Months and Six Months Ended June 30, 1996 and 1997 and Cumulative from June 25, 1984 (Inception) through June 30, 1997.................. 4 Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 1996 and 1997 and Cumulative from June 25, 1984 (Inception) through June 30, 1997.................. 5 Notes to Consolidated Financial Statements............................ 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.................................... 7 PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K...................................... 10 Signatures ...................................................................... 11
2 3 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) CONSOLIDATED BALANCE SHEETS
December 31, June 30, 1996 1997 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 2,799,297 $ 1,533,029 Marketable securities 5,984,370 5,984,370 Prepaid expenses 107,535 56,926 Other current assets -- 173,849 ------------- ------------- Total current assets 8,891,202 7,748,174 Property and equipment, net 144,507 136,691 Patent license, net of accumulated amortization of $66,471 and $70,117 at December 31, 1996 and June 30, 1997, respectively 58,529 54,883 Organization costs, net of accumulated amortization of $4,667 and $4,799 at December 31, 1996 and June 30, 1997, respectively 330 198 Investment in ISI common stock 471,500 625,000 ------------- ------------- Total assets $ 9,566,068 $ 8,564,946 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 138,298 $ 74,801 Accrued interest expense 273,296 332,546 Other accrued expenses 65,357 18,886 ------------- ------------- Total current liabilities 476,951 426,233 Notes payable to related party 2,300,000 2,300,000 ------------- ------------- Total liabilities 2,776,951 2,726,233 STOCKHOLDERS' EQUITY: Common stock, $.01 par value: Authorized shares - 10,000,000 Issued shares - 5,414,232 54,142 54,142 Additional paid-in capital 13,312,638 13,312,638 Deficit accumulated during the development stage (6,574,163) (7,678,067) Unrealized gain (loss) on marketable securities (3,500) 150,000 ------------- ------------- Total stockholders' equity 6,789,117 5,838,713 ------------- ------------- Total liabilities and stockholders' equity $ 9,566,068 $ 8,564,946 ============= =============
See accompanying notes. 3 4 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) CONSOLIDATED STATEMENTS OF OPERATIONS
Cumulative from June 25, 1984 Three months ended Six months ended (Inception) June 30, June 30, through ------------------ ---------------- June 30, 1996 1997 1996 1997 1997 --------------------------------------- ----------------------------------- ----------------- Revenues: Contract revenues $ 14,566 $ -- $ 417,140 $ -- $ 9,000,000 Interferon sales 4,805 -- 6,805 -- 420,578 Interest income 8,941 120,602 20,095 221,670 927,788 Sublicense fees -- -- -- -- 113,334 Royalty income -- -- -- -- 31,544 Other -- -- -- 26,000 578,371 ------------------ ------------------ ---------------- ----------------- ----------------- 28,312 120,602 444,040 247,670 11,071,615 Expenses: Research and development expenses 120,236 327,702 254,445 586,027 7,681,257 Selling, general, and administrative expenses 96,898 294,154 335,610 706,297 10,392,291 Interest expense 31,667 29,625 61,667 59,250 641,134 ------------------ ------------------ ---------------- ----------------- ----------------- 248,801 680 651,722 1,351,574 18,714,682 ------------------ ------------------ ---------------- ----------------- ----------------- Loss before Income taxes (220,489) (559,879) (207,682) (1,103,904) (7,643,067) Income tax expense -- -- -- -- 35,000 ------------------ ------------------ ---------------- ----------------- ----------------- Net loss $ (220,489) $ (559,879) $ (207,682) $ (1,103,904) $ (7,678,067) ================== ================== ================ ================= ================= Net loss per share $ (0.07) $ (0.10) $ (0.07) $ (0.20) ================== ================== ================ ================= Weighted average shares outstanding 3,035,232 5,414,232 3,035,232 5,414,232 ================== ================== ================ =================
See accompanying notes. 4 5 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Cumulative from June 30, June 25,1984 -------------------------- (Inception) through 1996 1997 June 30, 1997 ----------- ----------- -------------- Net cash used in operating activities $ (868,691) $(1,263,323) $ (6,620,951) ----------- ----------- ------------ Net cash used in investing activities (2,467) (2,945) (7,023,039) ----------- ----------- ------------ Net cash provided by financing activities 1,000,000 -- 15,177,019 ----------- ----------- ------------ Net increase (decrease) in cash and cash equivalents 128,842 (1,266,268) 1,533,029 ----------- ----------- ------------ Cash and cash equivalents at beginning of period 1,108,527 2,799,297 -- ----------- ----------- ------------ Cash and cash equivalents at end of period $ 1,237,369 $ 1,533,029 $ 1,533,029 =========== =========== ============ Supplemental Disclosure of Cash Flow Information Cash paid for income taxes $ -- $ -- $ 37,084 =========== =========== ============ Cash paid for interest $ -- $ -- $ 6,466 =========== =========== ============
See accompanying notes. 5 6 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation. The accompanying consolidated financial statements, which should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Form 10-KSB, are unaudited (except for the December 31, 1996 consolidated balance sheet which was derived from the Company's audited financial statements), but have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months and six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the full year ending December 31, 1997. 2. Loss per share. Loss per share is computed based on the weighted average number of common shares outstanding. During March 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share". This statement currently has no effect on the computation of loss per share as the Company is in a net loss position and the potential dilutive effect of common stock equivalents is not considered in the computation. 3. Initial public offering. On August 13, 1996, the Company completed its initial public offering of 2,000,000 shares of its common stock. Net proceeds to the Company were approximately $8,072,000. On August 29, 1996, the underwriter exercised its option to acquire an additional 300,000 shares of common stock with net proceeds to the Company of $1,305,000. 6 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1997. During the three months ended June 30, 1996, the Company had total revenues of $28,312 compared to total revenues of $120,602 during the three months ended June 30, 1997. During the 1996 second quarter, the remaining deferred contract revenues of $14,566 were recorded as earned. Other 1996 revenues consisted of interest income of $8,941 and interferon sales of $4,805. The 1997 second quarter revenues consisted solely of interest income. During the 1996 quarter, research and development expenses were $120,236 as compared to $327,702 during the 1997 quarter. The increase of $207,466 in 1997 was the result of certain clinical studies being started in 1997. During 1996 and 1997, the Company incurred general and administrative expenses of $96,898 and $294,154, respectively. The 1997 second quarter expenses were $197,256 more than the 1996 second quarter due primarily to an overall increase in the Company's activities and the additional cost associated with the Company being a publicly-held company in 1997. The major increases were experienced in the following expense items -- consultants $72,754 over 1996, travel $32,225 over 1996, general insurance $15,088 over 1996, public and investor relations $25,035 over 1996, legal $33,087 over 1996, and clinical supplies $21,465 over 1996. 7 8 Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1997 During the six months ended June 30, 1996, the Company had total revenues of $444,040 compared to total revenues of $247,670 during the six months ended June 30, 1997. Revenues for 1996 consisted of interest income of $20,095 and deferred contract revenues recognized in the amount of $417,140 based on research and development and administrative costs incurred. Revenues for 1997 consisted of interest income of $221,670 and other income of $26,000. During 1996, research and development expenses were $254,445 as compared to $586,027 during 1997. The increase of $331,582 in 1997 was the result of certain clinical studies being started in 1997. During 1996 and 1997, the Company incurred general and administrative expenses of $335,610 and $706,297, respectively. The 1997 general and administrative expenses exceeded 1996 by $370,687 due primarily to an increase in the Company's activities and the additional costs associated with the Company being a publicly-held company in 1997. The major increases were experienced in the following expense items -- consultants $105,704 higher than 1996, conferences & meetings $42,915 higher than 1996, travel $29,543 higher than 1996, general insurance $33,198 higher than 1996, public and investor relations $72,260 higher than 1996, legal $59,068 higher than 1996, and clinical supplies $21,465 over 1996. 8 9 LIQUIDITY AND CAPITAL RESOURCES At June 30, 1997, the Company had cash of $1,533,029 and marketable securities of $5,984,370 with accounts payable of $74,801 and other funding commitments for clinical studies of approximately $1.7 million. The Company intends to focus its development activities on the treatment of Sjogrens syndrome, oral mucositis in cancer patients, hepatitis B and C and the common cold ("Primary Development Projects"). The Company anticipates, based on its currently proposed plans and assumptions relating to its operations (including assumptions regarding the progress of its research and development and the timing and costs associated with its Primary Development Projects), that the Company's existing capital resources will be sufficient to satisfy the Company's estimated cash requirements for at least the next 21 months. Unless the Company generates significant revenues during such period, which the Company believes is unlikely, the Company will need additional financing to fully fund such development. Moreover, the Company's estimate of the amount required to complete its Primary Development Projects may prove to be inaccurate. The Company has no current arrangements with respect to, or sources of, additional financing and it is not anticipated that any of the officers, directors or stockholders of the Company will provide any portion of the Company's future financing requirements. There can be no assurance that, when needed, additional financing will be available to the Company on commercially reasonable terms, or at all. In the event that the Company's plans change, its assumptions change or prove inaccurate, or if the remaining net proceeds of the Company's recent public offering, together with other capital resources, otherwise prove to be insufficient to fund operations, the Company could be required to seek additional financing sooner than currently anticipated. Any inability to obtain additional financing when needed would have a material adverse effect on the Company, including requiring the Company to significantly curtail or possibly cease its operations. 9 10 PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION The Company announced on July 14, 1997 that it has engaged PPD Pharmaco, a leading clinical research organization, to conduct Amarillo Biosciences' Phase III clinical trial testing low dose oral interferon alpha in patients experiencing dry mouth due to Sjogren's syndrome. Under the terms of the agreement, PPD Pharmaco will manage the trial and assist the Company in preparing a development plan including a Food and Drug Administration approval application. The trial is anticipated to begin in early 1998. PPD Pharmaco is a wholly-owned subsidiary of Pharmaceutical Product Development, Inc. of Wilmington, N.C. Tom D'Alonzo, a director of the Company since March 1997, is the President and COO of Pharmaceutical Product Development, Inc. In April 1996, the National Institutes of Health ("NIH") announced that it would be conducting a clinical trial of the use of low dose oral IFN alpha therapy for the treatment of AIDS-related symptoms. The study was to enroll 560 AIDS patients and test three different forms of IFN alpha, including the form produced by Hayashibara Biochemical Laboratories as well as forms produced by two licensees of the Company. On June 12, 1997, the NIH announced that the clinical trial of three preparations of Low-Dose Oral Alpha Interferon in HIV-Infected Patients was to be closed. The Division of AIDS (DAIDS) determined that the clinical trial would not reach a successful conclusion due to poor accrual, missing data, and high drop-out rate. The protocol called for completion of accrual within one year of its opening in April 1996. Only 263 of the proposed 560 patients had been accrued and greater than 20% of those patients dropped out of the study before completing the required study visits or had not been seen for at least three of the six sequential monthly visits. The extent of any further development work, for the treatment of AIDS-related symptoms, to be undertaken by the Company has not been determined at this time. The clinical study of IFN as it relates to AIDS, has not been a Primary Development Project of the Company (See Liquidity and Capital Resources). ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit 27. Financial Data Schedule No reports on Form 8-K were filed during the quarter ended June 30, 1997. 10 11 SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMARILLO BIOSCIENCES, INC. Date: July 30, 1997 By: /s/ JOSEPH M. CUMMINS ------------------------------------- Joseph M. Cummins President and Chief Executive Officer Date: July 30, 1997 By: /s/ CHARLES H. HUGHES ------------------------------------- Charles H. Hughes Executive Vice President and Chief Financial Officer (Chief Accounting Officer) 11 12 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTIONS - ----------- ------------ 24 FINANCIAL DATA SCHEDULE
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS INCLUDED IN ITS FORM 10-QSB FOR THE PERIOD ENDED JUNE 30, 1997. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1,533,029 5,984,370 0 0 0 7,748,174 268,025 131,334 8,564,946 426,233 2,300,000 0 0 54,142 5,784,571 8,564,946 0 247,670 0 586,027 0 0 59,250 (1,103,904) 0 (1,103,904) 0 0 0 (1,103,904) (.20) (.20)
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