-----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, Bhdr3mqeYB+qWvt5WZLzZ57+q0+/99/n55L0a2xY28gZO33Jg5KqES8awX912XJ3 YPQ704a7CWLyNiKjhk2V/A== 0000950134-96-005721.txt : 19961101 0000950134-96-005721.hdr.sgml : 19961101 ACCESSION NUMBER: 0000950134-96-005721 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961031 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: 96651031 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 SEPTEMBER 30, 1996 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 September 30, 1996 -------------------------------------------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 333-4413 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 FAX 806-376-9301 - -------------------------------------------------------------------------------- (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 October 31, 1996, there were 5,414,232 shares of the issuer's common stock outstanding. This report contains 13 pages. 1 2 AMARILLO BIOSCIENCES, INC. INDEX
PART I: FINANCIAL INFORMATION PAGE NO. -------- Item 1. Financial Statements Consolidated Balance Sheets - December 31, 1995 and September 30, 1996 . . . . . . . . . . . . . . . . . 3 Consolidated Statements of Operations - Three Months and Nine Months Ended September 30, 1995 and 1996 and Cumulative from June 25, 1984 (Inception) through September 30, 1996 . . . . . . . 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1995 and 1996 and Cumulative from June 25, 1984 (Inception) through September 30, 1996 . . . . . . . . . . . . . . . . . 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, September 30, 1995 1996 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 1,108,527 $ 4,226,533 Marketable securities -- 4,922,067 Prepaid expenses 26,395 131,841 ----------- ----------- Total current assets 1,134,922 9,280,441 Property and equipment, net 114,593 109,640 Patent license, net of accumulated amortization of $59,118 and $64,622 at December 31, 1995 and September 30, 1996, respectively 65,882 60,378 Organization cost, net of accumulated amortization of $6,335 and $6,667 at December 31, 1995 and September 30, 1996, respectively 663 330 Investment in ISI common stock 475,000 505,000 ----------- ----------- Total assets $ 1,791,060 $ 9,955,789 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Deferred contract revenues $ 417,140 $ -- Accounts payable 148,274 97,223 Accrued interest expense 453,699 543,699 Accrued restricted stock grants 114,844 -- Other accrued expenses 19,000 19,874 ----------- ----------- Total current liabilities 1,152,957 660,796 Notes payable to related party 2,000,000 2,000,000 ----------- ----------- Total liabilities 3,152,957 2,660,796 ----------- ----------- Shareholders' equity (deficit): Common stock, $.01 par value: Authorized shares - 10,000,000 Issued shares - 3,048,672 and 5,414,232 in 1995 and 1996, respectively 30,487 54,142 Additional paid-in capital 3,589,591 13,312,638 Deficit accumulated during the development stage (4,955,975) (6,101,787) Unrealized gain on marketable securities -- 30,000 Treasury stock - 13,440 shares, at cost (26,000) -- ----------- ----------- Total shareholders' equity (deficit) (1,361,897) 7,294,993 ----------- ----------- Total liabilities and shareholders' equity (deficit) $ 1,791,060 $ 9,955,789 =========== ===========
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 Nine months ended (Inception) September 30, September 30, through -------------------------- ------------------------- Sept. 30, 1995 1996 1995 1996 1996 ---------------------------------------------------------------------- Revenues: Contract revenues $ 330,035 $ -- $ 839,049 $ 417,140 $ 9,000,000 Interferon sales -- -- -- 6,805 420,578 Interest income 15,462 37,194 83,661 57,289 566,565 Sublicense fees -- 5,000 50,000 5,000 113,334 Royalty income -- -- -- -- 31,544 Other -- 43,000 500,000 43,000 552,371 ---------------------------------------------------------------------- 345,497 85,194 1,472,710 529,234 10,684,392 Expenses: Research and development expenses 155,643 168,095 615,806 422,540 6,873,402 Selling, general, and administrative expenses 139,673 820,430 939,230 1,156,040 9,325,490 Interest expense 30,000 34,799 90,000 96,466 552,287 ---------------------------------------------------------------------- 325,316 1,023,324 1,645,036 1,675,046 16,751,179 ---------------------------------------------------------------------- Income (loss) before 20,181 (938,130) (172,326) (1,145,812) (6,066,787) income taxes Income tax expense -- -- -- -- 35,000 ---------------------------------------------------------------------- Net income (loss) $ 20,181 $ (938,130) $ (172,326) $(1,145,812) $(6,101,787) ====================================================================== Income (loss) per share $ .01 $ (.22) $ (.06) $ (.33) ======================================================= Weighted average shares outstanding 3,035,232 4,255,286 3,034,038 3,444,885 =======================================================
See accompanying notes. 4 5 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cumulative from June 25, 1984 (Inception) through Nine months ended September 30, Sept. 30, 1995 1996 1996 -------------------------------------------- Net cash used in operating activities $(1,061,763) $(1,728,305) $(5,131,565) ----------- ----------- ----------- Net cash provided by (used in) investing activities 59,641 (4,926,391) (5,913,921) ----------- ----------- ----------- Net cash provided by financing activities 74,100 9,772,702 15,272,019 ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents (928,022) 3,118,006 4,226,533 Cash and cash equivalents at beginning of period 964,005 1,108,527 -- ----------- ----------- ----------- Cash and cash equivalents at end of period $ 35,983 $ 4,226,533 $ 4,226,533 =========== =========== =========== Supplemental Disclosure of Cash Flow Information Cash paid for income taxes $ -- $ -- $ 37,084 =========== =========== ===========
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 SB-2, are unaudited (except for the December 31, 1995 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 nine months ended September 30, 1996 are not necessarily indicative of the results that may be expected for the full year ending December 31, 1996. 2. Loss per share. Loss per share is computed based on the weighted average number of common shares outstanding. 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 their 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 September 30, 1996 Compared to Three Months Ended September 30, 1995. During the three months ended September 30, 1995, the Company had total revenues of $345,497 compared to total revenues of $85,194 during the three months ended September 30, 1996. Revenues for 1995 consisted of interest income of $15,462 and contract revenues in the amount of $330,035. During the 1996 third quarter, the Company received a $5,000 sublicense fee and a $43,000 reimbursement of research and development cost in exchange for the grant by the Company of a sublicense for the development and sale of oral IFNa for dog and cat applications worldwide except in Japan. Other 1996 revenues consisted of interest income of $37,194. During the 1995 third quarter, research and development expenses were $155,643 as compared to $168,095 during the 1996 third quarter. During 1995 and 1996, the Company incurred general and administrative expenses of $139,673 and $820,430, respectively. The 1996 third quarter expenses were $680,757 more than the 1995 third quarter due primarily to the issuance of common stock to three officers of the Company pursuant to stock grants. The amount of compensation associated with the stock grants was $630,000 of which $134,531 had been accrued as of June 30, 1996 leaving a balance of $495,469 which was expensed in the third quarter of 1996. 7 8 Nine Months Ended September 30, 1996 Compared to Nine Months Ended September 30, 1995 During the nine months ended September 30, 1996, the Company had total revenues of $529,234 compared to total revenues of $1,472,710 during the nine months ended September 30, 1995. Revenues for 1996 consisted of interest income of $57,289 and deferred contract revenues recognized in the amount of $417,140 based on research and development and administrative costs incurred. In 1995, $550,000 of the revenues were received in connection with the settlement of a patent infringement action brought by the Company in New Zealand. Of the total settlement amount, $50,000 was in exchange for the grant by the Company of a sublicense of the technology that was the subject of the lawsuit and $500,000 was a reimbursement of research and development costs incurred by the Company. Had the Company not received the $500,000 payment toward research and development costs from the settlement, the remaining balance of deferred contract revenue ($417,140) would have been recognized as contract revenue in 1995. During 1995, deferred contract revenues of $839,049 were recorded as earned based on research and development and administrative costs incurred. Other 1995 revenues consisted of interest income of $83,661. During 1996, research and development expenses were $422,540 as compared to $615,806 during 1995. The decrease of $193,266 in 1996 was the result of certain clinical studies being completed in 1995. During 1996 and 1995, the Company incurred general and administrative expenses of $1,156,040 and $939,230, respectively. The 1996 general and administrative expenses exceeded 1995 by $216,810 due primarily to the issuance of common stock to three officers of the Company pursuant to stock grants. The amount of compensation expense associated with the stock grants for 1996 was $515,156. In 1995, the Company incurred litigation expense of $260,628. 8 9 LIQUIDITY AND CAPITAL RESOURCES At September 30, 1996, the Company had cash of $4,226,533 and marketable securities of $4,922,067 with accounts payable of $97,223 and other funding commitments for clinical studies of approximately $19,000. 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 net proceeds of its recent initial public offering (approximately $9,377,000) together with the Company's existing capital resources, will be sufficient to satisfy the Company's estimated cash requirements for at least the next 24 months. The Company estimates that an aggregate of $11,100,000 will be needed over approximately the next three years to complete its primary development projects. Such amount is in excess of the net proceeds of the offering and the existing capital of the Company. Therefore, 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 shareholders 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 net proceeds of the initial 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 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 September 30, 1996. 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: October __, 1996 By: ----------------------------------- Joseph M. Cummins President and Chief Executive Officer Date: October __, 1996 By: ----------------------------------- Charles H. Hughes Financial Vice President and Chief Financial Officer (Chief Accounting Officer) 11 12 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 - 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 SEPTEMBER 30, 1996 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPT. 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS INCLUDED IN ITS FORM 10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 1996. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 4,226,533 4,922,067 0 0 0 9,280,441 221,210 111,570 9,955,789 660,796 2,000,000 0 0 54,142 7,240,851 9,955,789 6,805 529,234 0 422,540 0 0 96,466 (1,145,812) 0 (1,145,812) 0 0 0 (1,145,812) (.33) (.33)
-----END PRIVACY-ENHANCED MESSAGE-----