-----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, NypFWzavCXANg71aUbvrhH3z8vQ04fBTIJvJC61rfaeLO7K5JnuoXufbsm7res6G 2aE2rhRNS6m8txPxWar2aw== 0000799698-96-000011.txt : 19960513 0000799698-96-000011.hdr.sgml : 19960513 ACCESSION NUMBER: 0000799698-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYTRX CORP CENTRAL INDEX KEY: 0000799698 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 581642740 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15327 FILM NUMBER: 96560259 BUSINESS ADDRESS: STREET 1: 154 TECHNOLOGY PKWY STREET 2: TECHNOLOGY PARK/ATLANTA CITY: NORCROSS STATE: GA ZIP: 30092 BUSINESS PHONE: 4043689500 MAIL ADDRESS: STREET 1: 154 TECHNOLOGY PARKWAY CITY: NORCROSS STATE: GA ZIP: 30092 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 1O-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _________________ Commission file number 0-15327 CYTRX CORPORATION (Exact name of Registrant as specified in its charter) Delaware 58-1642740 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 154 Technology Parkway, Norcross, Georgia 30092 (Address of principal executive offices) (Zip Code) (404) 368-9500 (Registrant's telephone number) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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_____ Number of shares of CytRx Corporation Common Stock, $.001 par value, issued and outstanding as of March 31, 1996: 7,860,802. CYTRX CORPORATION Form 10-Q Table of Contents Page PART I. FINANCIAL INFORMATION Item 1 Financial Statements: Condensed Consolidated Balance Sheets as of March 31, 1996 (unaudited) and December 31, 1995 3 Condensed Consolidated Statements of Operations (unaudited) for the Three Month Periods Ended March 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Month Periods Ended March 31, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K 10 SIGNATURES 11 EXHIBIT 11 -- Computation of Net Loss Per Share 12 2 Part I - FINANCIAL INFORMATION Item 1. - Financial Statements CYTRX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 1996 December 31, 1995 ------------- ----------------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 2,982,373 $16,645,570 Short-term investments 20,214,691 8,556,235 Receivables 247,631 91,077 Inventories 9,906 6,318 Other current assets 523,339 267,420 ---------- ----------- Total current assets 23,977,940 25,566,620 Property and equipment, net 5,041,722 5,137,764 Other assets 256,686 255,599 ---------- ---------- Total assets $29,276,348 $30,959,983 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 18,842 $ 266,125 Accrued liabilities 773,223 923,373 ---------- ---------- Total current liabilities 792,065 1,189,498 Commitments Stockholders' equity: Common stock, $.001 par value, 18,750,000 shares authorized; 7,919,552 and 7,915,308 shares issued at March 31, 1996 and December 31, 1995, respectively 7,920 7,915 Additional paid-in capital 62,540,423 62,514,691 Treasury Stock (58,750 shares) (242,343) (242,343) Accumulated deficit (33,821,717) (32,509,778) ---------- ---------- Total stockholders' equity 28,484,283 29,770,485 ---------- ---------- Total liabilities and stockholders' equity $29,276,348 $30,959,983 ========== ========== See accompanying notes. 3 CYTRX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Month Period Ended March 31, ---------------------------------- 1996 1995 ----------- ----------- Revenues: Net sales $ 337,525 $ 136,006 Investment income, net 303,972 396,892 Other income 33,768 20,464 --------- --------- 675,265 553,362 Expenses: Cost of sales 112,715 11,141 Research and development 987,219 1,680,182 Selling and marketing 166,832 26,548 General, administrative and business development 720,438 812,471 Write-off of patent costs 0 1,395,476 --------- --------- 1,987,204 3,925,818 --------- --------- Net loss $(1,311,939) $(3,372,456) ========== ========== Net loss per share -- see Exhibit 11 $ (0.17) $ (0.43) ========== ========== See accompanying notes. 4 CYTRX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Month Period Ended March 31, ---------------------------------- 1996 1995 ---------- ----------- Cash flows from operating activities: Net loss $(1,311,939) $(3,372,456) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 164,107 131,477 Write-off of patent costs 0 1,395,476 Net change in assets and liabilities (814,581) (98,632) ---------- ---------- Total adjustments (650,474) 1,428,321 ---------- ---------- Net cash used by operating activities (1,962,413) (1,944,135) Cash flows from investing activities: Increase in short-term investments (11,658,456) (679,263) Capital expenditures, net (68,065) (30,112) ---------- ---------- Net cash used by investing activities (11,726,521) (709,375) Cash flows from financing activities: Proceeds from issuance of common stock 25,737 23,371 ---------- ---------- Net decrease in cash and cash equivalents (13,663,197) (2,630,139) Cash and cash equivalents at beginning of period 16,645,570 3,395,974 ---------- ---------- Cash and cash equivalents at end of period $ 2,982,373 $ 765,835 ========== ========== See accompanying notes. 5 CYTRX CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1996 (Unaudited) 1. DESCRIPTION OF COMPANY AND BASIS OF PRESENTATION CytRx Corporation is a biopharmaceutical company engaged in the research and development of critical care pharmaceutical products intended for use in the treatment of vascular and infectious diseases, and cancer. Reference herein to "the Company" includes CytRx and its wholly-owned subsidiaries -- Vaxcel, Inc., Vetlife, Inc. and Proceutics, Inc. Vaxcel is developing the Optivax vaccine delivery system. Vetlife is developing non-antibiotic solutions to enhance food animal growth. Proceutics provides high quality preclinical development services to the pharmaceutical industry. The accompanying condensed consolidated financial statements at March 31, 1996 and for the three month periods ended March 31, 1996 and 1995 include the accounts of CytRx and its wholly-owned subsidiaries. The condensed consolidated financial statements as of March 31, 1996 and for the periods ended March 31, 1996 and 1995 are unaudited, but include all adjustments, consisting of normal, recurring entries, which the Company's management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with the Company's audited financial statements in its Form 10-K for the year ended December 31, 1995. 2. INVENTORIES Inventories at March 31, 1996 and December 31, 1995 are comprised of the following: March 31, 1996 December 31, 1995 -------------- ----------------- Finished goods $ 7,656 $ 4,068 Raw materials 2,250 2,250 ------ ------ $ 9,906 $ 6,318 ====== ====== 3. REVERSE STOCK SPLIT All share and per share information in the accompanying condensed consolidated financial statements and notes thereto has been retroactively adjusted to reflect a one-for-four reverse stock split effective February 6, 1996. 6 4. NET LOSS PER COMMON SHARE Net loss per common share is computed based on the weighted average number of common shares outstanding during each period. Stock options and warrants outstanding are excluded from the computation of net loss per share since their effect is antidilutive. 5. Marketing and Distribution Agreement In January 1996, Vetlife signed an agreement with Ivy Laboratories, Inc. to market and distribute Ivy's line of FDA approved cattle growth products and devices in North America. The newly created Vetlife Cattle Marketing Group will begin marketing products by January 1997. In connection with the agreement, Vetlife arranged for a letter of credit in the amount of $5 million in favor of Ivy Laboratories. The letter of credit is collateralized by approximately $6 million of short-term investments. 7 Item 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition and Liquidity At March 31, 1996 the Company had cash and short-term investments of $23.2 million and net assets of $28.5 million, compared to $25.2 million and $29.8 million, respectively, at December 31, 1995. Working capital totalled $23.2 million at March 31, 1996, compared to $24.4 million at December 31, 1995. The Company has no material capital commitments. During 1995 the Company formed a new subsidiary, Proceutics, Inc., to provide preclinical development services to the pharmaceutical industry. CytRx contributed existing property and staff resources to the venture which commenced formal operations in January 1996. Management believes that while Proceutics will continue to provide services to its affiliates, revenue derived from third party resources will contribute to the Company's consolidated liquidity and capital resources. In January 1996 Vetlife signed an agreement with Ivy Laboratories, Inc. to market and distribute Ivy's line of FDA approved cattle growth products and devices in North America. Unless Ivy receives FDA approval in 1996 to market certain products currently pending agency review, marketing and selling activities are not expected to begin until January 1997. Management expects that revenue generated from this arrangement will support Vetlife's other product development programs. Given its current operating plans, management believes that cash and short-term investments on hand, combined with investment income, revenues generated by Proceutics and Vetlife, and sales of Titermax, will be sufficient to satisfy the Company's working capital needs for the next several years. The Company's future cash requirements are dependent upon a number of factors, including the progress of the Company's product development activities, the expense of obtaining regulatory approvals, the determination of the commercial potential of the Company's products under development and the status of competitive products. The Company will consider additional sources of funding as appropriate and available. Results of Operations The following table presents the breakdown of consolidated results of operations by operating unit for the three month periods ended March 31, 1996 and 1995. Although the subsequent discussion addresses the consolidated results of operations for CytRx and its subsidiaries, management believes this presentation of net results by operating unit is important to an understanding of the consolidated financial statements taken as a whole. 8 Three Month Period Ended March 31, ---------------------------------- (in thousands) 1996 1995 ------ ------ CytRx $ (361) $(2,716) Proceutics (409) - Vaxcel (296) (374) Vetlife (246) (282) ------ ------ Consolidated $(1,312) $(3,372) Net sales were $338,000 during the three months ending March 31, 1996 compared to $136,000 for the same period in 1995. Cost of sales were $113,000 (33% of net sales) in the 1996 period as compared to $11,000 (8% of net sales) in 1995. Selling and marketing expenses in the first quarter of 1996 were $167,000 as compared to $27,000 during 1995. Each of these increases from 1995 is attributable to the activities of Proceutics, which commenced formal operations in January 1996, as well as other service revenues. Net sales for the first quarter of 1995 consist solely of Titermax sales. Investment income was $304,000 during the first quarter of 1996 as compared to $397,000 for the same period in 1995, corresponding to reductions in cash and investment balances. Research and development expenditures in 1996 decreased by $693,000, or 41%, over 1995 for the three months ended March 31. This decrease is due to a reduction in the scope of the Company's preclinical development activities combined with a shift of certain personnel and capital resources to Proceutics. General, administrative and business development expenses in 1996 decreased by $92,000, or 11%, from 1995 for the three months ended March 31. This decrease is primarily due to the Company's cost reduction program. 9 Part II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 11 -- Statement re: computation of net loss per share (attached hereto). (b) Reports on Form 8-K: None. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CYTRX CORPORATION (Registrant) Date: May 10, 1996 By:/s/ Mark W. Reynolds Mark W. Reynolds Controller (Chief Accounting Officer) 11 EX-11 2 CYTRX CORPORATION EXHIBIT 11 COMPUTATION OF NET LOSS PER SHARE COMPUTATION OF LOSS PER SHARE - PRIMARY Three Month Period Ended March 31, ---------------------------------- 1996 1995 ---------- ---------- Net loss $(1,311,939) $(3,372,456) ========= ========= Average number of common shares outstanding 7,859,962 7,896,887 Common shares issuable assuming exercise of stock options and warrants 0(1) 0(1) --------- --------- Total shares 7,859,962 7,896,887 ========= ========= Net loss per share $(0.17) $(0.43) ========= ========= COMPUTATION OF LOSS PER SHARE - FULLY DILUTED Net loss $(1,311,939) $(3,372,456) ========= ========= Average number of common shares outstanding 7,859,962 7,896,887 Common shares issuable assuming exercise of stock options and warrants 0(1) 0(1) --------- --------- Total shares 7,859,962 7,896,887 ========= ========= Net loss per share $(0.17) $(0.43) ========= ========= (1) Stock options and warrants outstanding are excluded from the computation of net loss per share since their effect would be anti-dilutive. 12 EX-27 3
5 This schedule contains summary financial information extracted from Form 10-Q for the period ended 3/31/96 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1996 MAR-31-1996 2982373 20214691 247631 0 9906 23977940 6597116 1555394 29276348 792065 0 0 0 7920 28476363 29276348 337525 675265 112715 112715 1874489 0 0 (1311939) 0 (1311939) 0 0 0 (1311939) (.17) (.17)
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