-----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, K0p0/Yje0LKpu+IQWmgLhNqgTixy4kFCaennpJ3ZdoX8irY+8OJpWoZMH8ambaR0 IWjkkhGQD549Eaeo7qRn7Q== 0000799698-96-000015.txt : 19960808 0000799698-96-000015.hdr.sgml : 19960808 ACCESSION NUMBER: 0000799698-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960807 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: 96604968 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 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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) (770) 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 June 30, 1996: 7,860,920. CYTRX CORPORATION Form 10-Q Table of Contents Page PART I. FINANCIAL INFORMATION Item 1 Financial Statements: Condensed Consolidated Balance Sheets as of June 30, 1996 (unaudited) and December 31, 1995 3 Condensed Consolidated Statements of Operations (unaudited) for the Three Month and Six Month Periods Ended June 30, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Month Periods Ended June 30, 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 June 30, 1996 December 31, 1995 ------------- ----------------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 2,474,885 $16,645,570 Short-term investments 19,737,393 8,556,235 Receivables 356,567 91,077 Inventories (Note 2) 8,472 6,318 Other current assets 378,204 267,420 ---------- ----------- Total current assets 22,955,521 25,566,620 Property and equipment, net 5,008,674 5,137,764 Other assets 259,404 255,599 ---------- ---------- Total assets $28,223,599 $30,959,983 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 253,039 $ 266,125 Accrued liabilities 627,234 923,373 ---------- ---------- Total current liabilities 880,273 1,189,498 Commitments Stockholders' equity: Common stock, $.001 par value, 18,750,000 shares authorized; 7,929,671 and 7,915,308 shares issued at June 30, 1996 and December 31, 1995, respectively 7,930 7,915 Additional paid-in capital 62,584,836 62,514,691 Treasury Stock (68,750 and 58,750 shares at June 30, 1996 and December 31, 1995, respectively) (282,344) (242,343) Accumulated deficit (34,967,096) (32,509,778) ---------- ---------- Total stockholders' equity 27,343,326 29,770,485 ---------- ---------- Total liabilities and stockholders' equity $28,223,599 $30,959,983 ========== ========== See accompanying notes. 3 CYTRX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Month Period Ended June 30, Six Month Period Ended June 30, --------------------------------- ------------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Revenues: Net sales $ 479,894 $ 115,825 $ 817,419 $ 251,831 Investment income, net 316,595 444,052 620,567 951,321 License fees 50,000 - 50,000 - Other 15,667 15,811 33,452 36,275 --------- --------- --------- --------- 862,156 575,688 1,521,438 1,239,427 Expenses: Cost of sales 367,637 10,530 480,352 21,671 Research and development 553,357 1,894,151 1,540,576 3,574,333 Selling and marketing 170,248 33,120 337,080 59,668 General, administrative and business development 916,293 991,300 1,620,748 1,803,771 Realized loss on short-term investments, net - 992,244 - 1,102,621 Write-off of patent costs - - - 1,395,476 --------- --------- --------- --------- 2,007,535 3,921,345 3,978,756 7,957,540 --------- --------- --------- --------- Net loss $(1,145,379) $(3,345,657) $(2,457,318) $(6,718,113) ========= ========= ========= ========= Net loss per share $ (0.15) $ (0.42) $ (0.31) $ (0.85) (see Exhibit 11) ========= ========= ========= =========
See accompanying notes. 4 CYTRX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Month Period Ended June 30, --------------------------------- 1996 1995 ---------- ----------- Cash flows from operating activities: Net loss $(2,457,318) $(6,718,113) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 252,364 262,956 Write-off of patent costs - 1,395,476 Net change in assets and liabilities (691,458) 377,644 ---------- ---------- Total adjustments (439,094) 2,036,076 ---------- ---------- Net cash used by operating activities (2,896,412) (4,682,037) Cash flows from investing activities: (Increase) decrease in short-term investments (11,181,158) 25,096,284 Capital expenditures, net (123,274) (86,245) ---------- ---------- Net cash provided (used) by investing activities (11,304,432) 25,010,039 Cash flows from financing activities: Net proceeds from issuance of common stock 70,160 66,252 Purchase of treasury stock (40,001) - ---------- ---------- Net cash provided by financing activities 30,159 66,252 ---------- ---------- Net increase (decrease) in cash and cash equivalents (14,170,685) 20,394,254 Cash and cash equivalents at beginning of period 16,645,570 3,395,974 ---------- ---------- Cash and cash equivalents at end of period $ 2,474,885 $23,790,228 ========== ========== See accompanying notes. 5 CYTRX CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996 (Unaudited) 1. DESCRIPTION OF COMPANY AND BASIS OF PREPARATION CytRx Corporation and its subsidiaries are engaged in the development of pharmaceutical products. 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 products to enhance food animal growth. Proceutics provides high quality preclinical development services to the pharmaceutical industry. The accompanying condensed consolidated financial statements at June 30, 1996 and for the three month and six month periods ended June 30, 1996 and 1995 include the accounts of CytRx and its wholly-owned subsidiaries and 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 June 30, 1996 and December 31, 1995 are comprised of the following: June 30, 1996 December 31, 1995 ------------- ----------------- Finished goods $ 5,903 $ 4,068 Raw materials 2,569 2,250 ------ ------ $ 8,472 $ 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 June 30, 1996 the Company had cash and short-term investments of $22.2 million and net assets of $27.3 million, compared to $25.2 million and $29.8 million, respectively, at December 31, 1995. Working capital totalled $22.1 million at June 30, 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, revenues 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. Marketing and selling activities are not expected to begin until January 1997, unless Ivy receives FDA approval in 1996 to market certain additional products currently pending agency review. 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 and six month periods ended June 30, 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 Months Ended June 30, Six Months Ended June 30, -------------------------- ------------------------ (in thousands) 1996 1995 1996 1995 ---- ---- ---- ---- CytRx $ (694) $(2,673) $(1,055) $(5,389) Proceutics (150) - (559) - Vaxcel (217) (518) (513) (892) Vetlife (84) (155) (330) (437) ----- ----- ----- ----- Consolidated Net Loss $(1,145) $(3,346) $(2,457) $(6,718) ===== ===== ===== ===== Net sales were $480,000 during the three months ended June 30, 1996 compared to $116,000 in 1995 and $817,000 during the six months ended June 30, 1996 compared to $252,000 in 1995. Cost of sales during the six month period ended June 30, 1996 were $480,000 (59% of net sales) as compared to $22,000 (9% of net sales) in 1995. Selling and marketing expenses during the three months ended June 30, 1996 were $170,000 as compared to $33,000 during 1995; and $337,000 during the six months ended June 30, 1996 as compared to $60,000 during the same period in 1995. Each of these increases from 1995 is primarily attributable to the activities of Proceutics, which commenced formal operations in January 1996. Net sales for the first and second quarters of 1995 consist solely of Titermax sales. Investment income was $317,000 and $621,000 during the three months and six months ended June 30, 1996, as compared to $444,000 and $951,000 for the same periods in 1995. At December 31, 1994 the Company had $2.5 million in unrealized losses as a result of 1994's dramatic increase in interest rates. By taking advantage of strength in the bond market during the second quarter, CytRx reduced its unrealized losses by $1.4 million, recording non-cash charges of $1 million and $1.1 million during the three months and six months ended June 30, 1995, respectively. These charges are shown as a separate line item on the Condensed Consolidated Statements of Operations. Research and development expenditures in 1996 decreased by $1,341,000, or 71%, from 1995 for the three months ended June 30, and by $2,034,000, or 57%, for the six months ended June 30. 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 $75,000, or 8%, from 1995 for the three months ended June 30, and by $183,000 or 10%, for the six months ended June 30. This decrease is primarily due to cost reduction measures taken by CytRx, partially offset by higher administrative expenses associated with Proceutics. 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: August 6, 1996 By:/s/ Mark W. Reynolds Mark W. Reynolds Controller (Chief Accounting Officer) 11 EX-11 2 Exhibit 11 CYTRX CORPORATION COMPUTATION OF NET LOSS PER SHARE COMPUTATION OF LOSS PER SHARE - PRIMARY
Three Month Period Ended June 30, Six Month Period Ended June 30, --------------------------------- ------------------------------- 1996 1995 1996 1995 ---------- --------- --------- --------- Net loss $(1,145,379) $(3,345,657) $(2,457,318) $(6,718,113) --------- --------- --------- --------- Average number of common shares outstanding 7,864,216 7,902,403 7,862,090 7,899,660 Common shares issuable assuming exercise of stock options and warrants (1) - - - - --------- --------- --------- --------- Total 7,864,216 7,902,403 7,862,090 7,899,660 --------- --------- --------- --------- Net loss per share $ (0.15) $ (0.42) $ (0.31) $ (0.85) ========= ========= ========= ========= COMPUTATION OF LOSS PER SHARE - FULLY DILUTED Net loss $(1,145,379) $(3,345,657) $(2,457,318) $(6,718,113) --------- --------- --------- --------- Average number of common shares outstanding 7,864,216 7,902,403 7,862,090 7,899,660 Common shares issuable assuming exercise of stock options and warrants (1) - - - - --------- --------- --------- --------- Total 7,864,216 7,902,403 7,862,090 7,899,660 --------- --------- --------- --------- Net loss per share $ (0.15) $ (0.42) $ (0.31) $ (0.85) ========= ========= ========= =========
(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 6/30/96 and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JUN-30-1996 2474885 19737393 356567 0 8472 22955521 6652325 1643651 28223599 880273 0 0 0 7930 27335396 2822359 817419 1521438 480352 480352 3498404 0 0 (2457318) 0 (2457318) 0 0 0 (2457318) (.31) (.31)
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