<PAGE>
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 Quarter Ended June 30, 1999
or
[ ] Transition report pursuant to Section 13 or 15(d) of Securities Exchange
Act of 1934
Commission file number 1-14430
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MAXIM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0279983
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(State of incorporation) (I.R.S. Employer Identification No.)
8899 University Center Lane, Suite 400, San Diego, CA 92122
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(Address of principal executive offices) (Zip Code)
(858) 453-4040
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(Registrant's telephone number, including area code)
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
--- ---
As of August 13, 1999, the registrant had 10,203,600 shares of Common Stock,
$.001 par value, outstanding.
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MAXIM PHARMACEUTICALS, INC.
(A Development Stage Company)
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
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<S> <C>
Item 1. Financial Statements
Balance Sheets - June 30, 1999 (unaudited) and September 30, 1998................1
Statements of Operations (unaudited) - Three Months and Nine Months
Ended June 30, 1999 and 1998 and from Inception (October 23, 1989) to
June 30, 1999....................................................................2
Statements of Cash Flows (unaudited) Nine Months Ended June 30, 1999
and 1998 and from Inception (October 23, 1989) to June 30, 1999 .................3
Notes to Financial Statements....................................................4
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................................5
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................7
PART II - OTHER INFORMATION
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Item 2. Changes in Securities and Use of Proceeds.....................................8
Item 4. Submission of Matters to a Vote of Security Holders...........................8
Item 6. Exhibits and Reports on Form 8-K..............................................8
SIGNATURE .................................................................................9
</TABLE>
<PAGE>
BALANCE SHEETS
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
<TABLE>
<CAPTION>
JUNE 30, 1999 SEPTEMBER 30, 1998
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(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,995,731 $ 11,217,429
Short-term investments in marketable securities 3,830,083 21,031,568
Accrued interest and other current assets 2,225,945 2,491,308
------------ ------------------
Total current assets 8,051,759 34,740,305
Investments in marketable securities 1,900,000 3,519,554
Patents and licenses, net 2,166,523 1,839,167
Property and equipment, net 1,581,675 1,693,402
Deposits and other assets 1,205,656 229,157
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Total assets $ 14,905,613 $ 42,021,585
------------ ------------------
------------ ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,118,940 $ 9,014,831
Accrued expenses 1,830,571 374,652
Note payable 104,359 176,784
Current portion of long-term debt 479,962 361,675
------------ ------------------
Total current liabilities 10,533,83 9,927,942
Long-term debt, less current portion 1,028,799 977,213
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares authorized; -- --
none issued or outstanding
Common stock, $.001 par value, 35,000,000 shares authorized;
10,203,600 and 9,885,576 shares issued and outstanding at
June 30, 1999 and September 30, 1998, respectively 10,204 9,886
Additional paid-in capital 75,089,237 73,807,327
Deficit accumulated during the development stage (71,751,737) (42,686,624)
Deferred compensation (4,722) (14,159)
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Total stockholders' equity 3,342,982 31,116,430
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Total liabilities and stockholders' equity $ 14,905,613 $ 42,021,585
------------ ------------------
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</TABLE>
See Notes to Financial Statements
1
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended October 23, 1989
June 30 June 30 (inception) to
1999 1998 1999 1998 June 30, 1999
---------------- ---------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Research and collaboration revenue $ 707,300 $ - $ 890,300 $ - $ 4,017,051
Operating expenses:
Research and development 9,617,430 6,075,063 27,046,189 12,477,924 62,547,261
Business development
and marketing 435,332 543,043 1,327,827 857,664 3,253,936
General and administrative 704,164 615,808 2,323,239 1,965,047 14,334,182
---------------- ---------------- ------------------ ------------------ -----------------
Total operating expenses 10,756,926 7,233,914 30,697,255 15,300,635 80,135,379
Other income (expense):
Investment income 133,802 546,414 834,469 1,731,416 4,296,826
Interest expense (35,526) (22,016) (112,545) (59,049) (2,183,017)
Other income (expense) 19,918 - 19,918 - (171,246)
Gain on sale of subsidiary - - - - 2,288,474
---------------- ---------------- ------------------ ------------------ -----------------
Total other income (expense) 118,194 524,398 741,842 1,672,367 4,231,037
---------------- ---------------- ------------------ ----------------- -----------------
Discontinued operations:
Loss from operation of discontinued
diagnostic division - - - - (347,608)
Gain on sale of diagnostic division - - - - 483,162
---------------- ---------------- ------------------ ----------------- -----------------
Net loss $ (9,931,432) $ (6,709,516) $ (29,065,113) $(13,628,268) $ (71,751,737)
---------------- ---------------- ------------------ ----------------- -----------------
Net loss per share of common stock $ (0.97) $ (0.72) $ (2.90) $ (1.51)
---------------- ---------------- ------------------ ----------------
Weighted average shares outstanding 10,200,976 9,312,288 10,036,609 9,045,800
---------------- ---------------- ------------------ ----------------
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENTS OF CASH FLOWS
Maxim Pharmaceuticals, Inc. (A Development Stage Company)
<TABLE>
<CAPTION>
Nine Months Ended
June 30 October 23, 1989
----------------------------------- (inception) to
1999 1998 June 30, 1999
--------------- ---------------- ----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (29,065,113) $ (13,628,268) $ (71,751,737)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 498,181 277,312 1,949,634
Amortization of premium on investments 193,612 83,693 479,557
Stock options issued as compensation 156,746 42,928 684,928
Stock contributions to 401(k) plan 52,039 -- 78,646
Net book value of disposed assets 2,922 481 210,286
Loss on write-off of patents -- -- 262,262
Gain on sale of subsidiary -- -- (2,288,474)
Loss on write-off of receivable from related party -- -- 147,803
Other -- -- 51,701
Gain on sale of diagnostic division -- -- (483,162)
Loss on write-off of purchased research
and development -- -- 2,646,166
Cumulative effect of reorganization -- -- 1,152,667
Changes in operating assets and liabilities:
Accrued interest and other current assets 265,363 (1,509,249) (2,033,458)
Deposits and other assets (976,499) 357,737 (1,353,459)
Accounts payable (895,891) 3,549,792 8,118,939
Accrued expenses 1,455,919 (286,588) 1,851,781
--------------- ---------------- ----------------
Net cash used in operating activities (28,312,721) (11,112,162) (60,275,920)
INVESTING ACTIVITIES:
Purchases of marketable securities (7,889,573) (28,505,436) (69,371,690)
Maturities of marketable securities 26,517,000 15,754,050 63,162,050
Additions to patents and licenses (477,969) (159,923) (3,185,756)
Purchases of property and equipment (238,763) (586,624) (2,950,044)
Cash acquired in acquisition of business -- -- 985,356
Proceeds from sale of diagnostic division -- -- 496,555
--------------- ---------------- ----------------
Net cash provided (used) by investing activities 17,910,695 (13,497,933) (10,863,529)
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock
and warrants 1,082,881 35,234,886 66,204,721
Proceeds from issuance of notes payable and
long-term debt 444,434 504,160 6,432,077
Payments on notes payable and long-term debt (346,987) (180,669) (3,641,402)
Proceeds from issuance of notes payable to
related parties -- -- 4,982,169
Payments on notes payable to related parties -- -- (1,329,885)
Net proceeds from issuance of preferred stock -- -- 487,500
--------------- ---------------- ----------------
Net cash provided by financing activities 1,180,328 35,558,377 73,135,180
--------------- ---------------- ----------------
Net increase (decrease) in cash and cash equivalents (9,221,698) 10,948,282 1,995,731
Cash and cash equivalents at beginning of period 11,217,429 447,523 --
--------------- ---------------- ----------------
Cash and cash equivalents at end of period $ 1,995,731 $ 11,395,805 $ 1,995,731
--------------- ---------------- ----------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MAXIM PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY)
1. PRINCIPLES OF INTERIM PERIOD REPORTING
Maxim Pharmaceuticals, Inc. (the "Company") has not earned
significant revenues from planned principal operations. Accordingly,
the Company's activities have been accounted for as those of a
"Development Stage Enterprise" as set forth in Financial Accounting
Standards Board Statement No. 7 ("SFAS 7".)
In the opinion of the Company, the unaudited financial statements contain
all of the adjustments, consisting only of normal recurring adjustments
and accruals, necessary to present fairly the financial position of the
Company as of June 30, 1999 and September 30, 1998, and the results of
operations for the three months and nine months ended June 30, 1999 and 1998
and from inception (October 23, 1989) to June 30, 1999. The results of
operations for the three months and nine months ended June 30, 1999 are
not necessarily indicative of the results to be expected in subsequent
periods or for the year as a whole. For further information, refer to
the financial statements and footnotes thereto in our Annual Report on Form
10-K/A for the year ended September 30, 1998.
2. NET LOSS PER SHARE OF COMMON STOCK
In accordance with Financial Accounting Standards Board Statement No. 128,
Earnings per Share ("SFAS 128"), net loss per share of common stock is
computed by dividing the net loss by the weighted average number of shares
of common stock outstanding during the period. Dilutive loss per share,
calculated by including the additional common stock issuable upon exercise
of outstanding options and warrants in the weighed average share
calculation, is not presented as these securities are antidilutive.
3. LINE OF CREDIT AGREEMENT
At January 1, 1999, $983,619 in outstanding advances under an amended
line of credit with a bank converted to a term loan payable in 48 equal
installments, including interest at prime plus 0.25%. The loan is secured
by all assets of the Company.
4. STOCKHOLDERS' EQUITY
During the nine months ended June 30, 1999 the Company issued 85,544 and
228,127 shares of common stock upon the exercise of warrants and options,
respectively.
5. SUBSEQUENT EVENT - PRIVATE PLACEMENT
On July 20, 1999 the Company sold 206,874 shares of Series A Convertible
Preferred Stock in a private transaction at a price of $97.25 per share. The
Company received net proceeds of approximately $18.4 million after
placement fees and other issuance costs. Each share of preferred stock
is convertible into 10 shares of the Company's common stock at a fixed
price of $9.725 per share of common stock, and 2,068,740 shares of
common stock are issuable upon conversion of all of the preferred stock.
The preferred stock has a dividend of 12% payable in cash or in
additional shares of preferred stock at the option of the holder. The
Company may call for a mandatory conversion of the preferred stock into
common stock after 90 days. The preferred shares were issued in a private
transaction and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
The Company is obligated under the terms of this transaction to file a
registration statement within 30 days of the sale of the preferred stock
to allow resale of the common stock issuable upon conversion of
such shares. If such registration statement is not effective within 90
days after the closing of the sale of the preferred stock, the dividend rate
on the preferred stock will increase to 15% until such registration statement
becomes effective.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MAXIM PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY)
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS
INCLUDE STATEMENTS REGARDING CASH REQUIREMENTS. SUCH STATEMENTS ARE ONLY
PREDICTIONS, AND THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED OR PROJECTED IN SUCH FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO DIFFERENCES INCLUDE RISKS
ASSOCIATED WITH CLINICAL TRIALS AND PRODUCT DEVELOPMENT, REGULATORY
APPROVAL AND GOVERNMENT REGULATION OF THE COMPANY'S PRODUCTS, THE NEED FOR
ADDITIONAL FUNDS AND THE UNCERTAINTY OF ADDITIONAL FUNDING AND DEPENDENCE
ON COLLABORATIVE PARTNERS. THESE FACTORS AND OTHERS ARE MORE FULLY
DESCRIBED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 1998.
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30,
1999 AND 1998
RESEARCH AND COLLABORATION REVENUE - Research revenue consisting of
collaborative support and marketing fees for rights related to the Company's
Maxamine clinical trials totaled $707,000 for the quarter ended June 30,
1999. Research revenue for the nine month period ended June 30, 1999
totaled $890,000. There were no such revenues earned in the prior year.
RESEARCH AND DEVELOPMENT EXPENSES - For the quarter ended June 30, 1999,
research and development expenses were $9,617,000, an increase of
$3,542,000, or 58%, over the same period in the prior year. This
increase was primarily attributable to increased activity related to
clinical trials of Maxamine, including clinical trial site and contract
research organization costs, hiring additional clinical and development
personnel, and other clinical costs. These clinical trials include a Phase
III clinical trial in malignant melanoma commenced in the United States in
July 1997, an international Phase III malignant melanoma clinical trial
commenced in November 1997, a global Phase III clinical trial in acute
myelogenous leukemia commenced in February 1998, and a European Phase II
clinical trial in hepatitis C commenced in May 1999.
For the nine months ended June 30, 1999, research and development
costs were $27,046,000, an increase of $14,568,000, or 117%, over the
same period of the prior year. The increase resulted from the Phase III
clinical trial efforts described above.
BUSINESS DEVELOPMENT AND MARKETING AND GENERAL AND ADMINISTRATIVE EXPENSES -
Business development and marketing expenses for the quarter ended June 30,
1999 were $435,000, a decrease of $108,000, or 20%, from the same quarter
of the prior year. This decrease was due to certain market research
expenses incurred in the prior year's quarter that were completed prior
to the current quarter. For the quarter ended June 30, 1999, general
and administrative expenses were $704,000, an increase of $88,000, or 14%,
over the same period in the prior year due to general expenses associated
with the Company's expanded operations.
Business development costs for the nine month period ended June 30, 1999
totaled $1,328,000, an increase of $470,000, or 55%, over the same period
of the prior year. This increase was due to additional personnel and other
resources devoted to preparation for the potential market launch of
Maxamine, including corporate partnering efforts, market evaluations and
third-party reimbursement evaluations. General and administrative
expenses for the nine month period ended June 30, 1999 were $2,323,000, an
increase of $358,000, or 18% over the same period of the prior year. This
increase resulted from the expanded activities described above.
OTHER INCOME (EXPENSE) - Investment income was $134,000 for the quarter
ended June 30, 1999, a decrease of $413,000, or 76%, from the same
period in the prior year. This decrease is a result of a reduction in
the principal balance of interest-bearing investments used to finance
the operations of the Company. Interest expense for the quarter ended
June 30, 1999 was $36,000, an increase of $14,000, or 61%, over the same
period of the prior year.
-5-
<PAGE>
This increase was primarily attributable to interest incurred on additional
advances made under the Company's line of credit agreement used to finance
qualified equipment purchases.
Investment income totaled $834,000 for the nine month period ended June 30,
1999, compared to $1,731,000 for the same period of the prior year. The
decrease of $897,000, or 52%, resulted from the reduction in principal
balance on interest-bearing securities described above. Interest
expense for the nine month period ended June 30, 1999 totaled $113,000, an
increase of $53,000, or 91%, over the same period of the prior year as a
result of the interest incurred on the additional advances also described
above.
NET LOSS - Net loss for the quarter ended June 30, 1999 totaled $9,931,000,
an increase of $3,222,000, or 48%, over the prior year. The increase was
due to the expansion of research and development and general corporate
activities described above. Net loss per share of common stock for the
three month period ended June 30, 1999 was $0.97, a 35% increase over the
loss of $0.72 per share for the same period of the prior year, due to
the increase in net loss for the year offset partially by an increase
in the number of shares of common stock outstanding.
Net loss for the nine months ended June 30, 1999 totaled $29,065,000, an
increase of $15,437,000, or $113%, over the same period of the prior year.
Net loss per share of common stock for the nine month period was $2.90, a
92% increase over the loss of $1.51 per share for the same period of the
prior year, due to the increase in net loss for the year offset partially
by an increase in the number of shares of common stock outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The Company, as a development stage enterprise, anticipates incurring
substantial additional losses over at least the next several years due to,
among other factors, the need to expend substantial amounts on its
ongoing and planned clinical trials, other research and development
activities, and business development and general corporate expenses
associated with these activities. The Company has financed its operations
primarily through the sale of its equity securities, including an initial
public offering in July 7, 1996 and an international follow-on public
offering in October 1997 which provided net proceeds to the Company of
approximately $22.3 million (including amounts received on the exercise of
warrants) and $34.7 million, respectively.
As of June 30, 1999, the Company had cash, cash equivalents and investments
totaling approximately $7.7 million. On July 26, 1999, the Company
completed a private placement which provided net proceeds to the
Company of approximately $18.4 million, resulting in total cash, cash
equivalents and investments of $26.6 million on an as-adjusted basis. For
the nine months ended June 30, 1999, net cash used in the Company's
operating activities was approximately $28.3 million. The Company's cash
requirements may fluctuate in future periods as it conducts additional
research and development activities including clinical trials, other
research and development activities, and efforts associated with the
commercial launch of any products that are approved for sale by
government regulatory bodies. Among the activities that may result in an
increase in cash requirements are three Phase III cancer clinical trials
and two Phase II clinical trials of Maxamine currently underway. The
Company plans to pursue the issuance of additional equity securities, and
to pursue corporate marketing alliances and collaborative agreements to
meet its cash requirements.
The Company's cash requirements may vary materially from those now
planned because of the results and scope of clinical trials and other
research and development activities, the time required to obtain regulatory
approvals, the cost of filing, prosecuting, defending and enforcing
patent claims and other intellectual property rights, the ability of the
Company to establish marketing alliances and collaborative arrangements
and the cost of the Company's internal marketing activities. As a result of
these factors, it is difficult to predict accurately the timing and amount
of the Company's cash requirements. In order to successfully commercialize
any of its products, the Company expects that it will ultimately be
required to seek additional funds through public or private financings or
collaborative arrangements with corporate partners. The issuance of
additional equity securities could result in substantial dilution to the
Company's stockholders. There can be no assurance that additional funding
will be available on terms acceptable to the Company, if at all. The
failure to fund its capital requirements would have a material adverse
effect on the Company's business, financial condition and results of
operations. The Company has never paid a cash dividend and does not
contemplate the payment of cash dividends in the foreseeable future.
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IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is related to computer software utilizing two
digits rather than four to define the appropriate year. As a result,
any of the Company's computer programs or any of the Company's suppliers
or vendors that have date sensitive software may incur system failures
or generate incorrect data if "00" is recognized as 1900 rather than 2000.
The Company has determined that the computer systems utilized internally
in its daily operations are Year 2000 compliant. The Company is in the
process of verifying whether its major suppliers, service providers
and financial institutions are Year 2000 compliant and expects to complete
this review by September 30, 1999. The total cost of this process is
expected to be less than $50,000. Although the Company has no material
systems that interface directly with third party systems, there can be no
assurance that the systems and networks of its key suppliers and service
providers will not be affected by the Year 2000 issues, which could have
an adverse effect on the Company's business, operating results and
financial condition. In particular, the Company has engaged several
third parties to retain and maintain all of the clinical, statistical
and other information related to the Company's clinical trials. These
third parties have indicated that they are aggressively working to
identify and remediate any Year 2000 issues they may have, and that
they expect to have any necessary remediation completed by December 1999.
However, in the event these third parties' Year 2000 compliance efforts are
unsuccessful, data relating to the Company's clinical trials could be
destroyed or corrupted, which could have a material adverse effect on the
Company's business, operating results and financial condition. In an
effort to minimize the potential risks of the failure of such third
parties' Year 2000 efforts, the Company intends to archive data, both in
electronic and paper formats, through December 1999, after which paper
backup will be used. The Company's archival records will be updated on a
monthly basis
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company invests its excess cash in interest-bearing
investment-grade securities that are held for the duration of the term
of the respective instrument. The Company does not utilize
derivative financial instruments, derivative commodity instruments or
other market risk sensitive instruments, positions or transactions in
any material fashion. Accordingly, management believes that, while
the investment-grade securities the Company holds are subject to changes
in the financial standing of the issuer of such securities, it is not
subject to any material risks arising from changes in interest rates,
foreign currency exchange rates, commodity prices, equity prices or other
market changes that affect market risk sensitive instruments.
-7-
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PART II-OTHER INFORMATION
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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) During the quarter ended June 30, 1999, the Company issued 2,083 shares of
Common Stock upon exercise of warrants at a price per share of $3.00. The
Company issued such shares in reliance on the exemption provided by Section
4(2) of the Securities Act of 1933, as amended.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of Stockholders of the Company held on June 24, 1999, the
following matter was voted on and approved: To amend the Company's Certificate
of Incorporation to increase the number of authorized shares of Common Stock
from 20 million to 35 million shares. 8,423,084 shares of Common Stock, or
91.69% of the shares voting, voted in favor of the foregoing matter. 196,599
shares of Common Stock, or 2.14% of the shares voting, voted against the
foregoing matter and 566,943, or 6.17% of the shares voting, abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
10.28 Secured Promissory Note dated April 7,
1999 between Larry G. Stambaugh and the
Registrant.
10.29 Secured Promissory Note dated April 14,
1999 between Larry G. Stambaugh and the
Registrant.
10.30 Secured Promissory Note dated April 7,
1999 between Kurt R. Gehlsen and the
Registrant.
10.31 Secured Promissory Note dated April 7,
1999 between Dale A. Sander and the
Registrant.
27.1 Financial Data Schedule
-8-
<PAGE>
B.) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1999.
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.
Maxim Pharmaceuticals, Inc.
Date: August 13, 1999 /s/ Dale A. Sander
-----------------------------------
Dale A. Sander
Chief Financial Officer
(Principal Accounting Officer and Officer
duly authorized to sign this report on
behalf of the registrant)
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<PAGE>
EXHIBIT 10.28
SECURED PROMISSORY NOTE
PRINCIPAL AMOUNT: $110,000.00 DATE: April 7, 1999
SAN DIEGO, CA
1. PROMISE TO PAY. LARRY G. STAMBAUGH, ("Borrower") at 17947 Corazon Place,
San Diego, CA 92127, hereby promises to pay, in lawful money of the United
States of America, to the order of MAXIM PHARMACEUTICALS, INC., ("Lender")
a Delaware Corporation, at 8899 University Center Lane, Suite 400, San
Diego, CA 92122, the principal amount of One Hundred and Ten Thousand
($110,000) dollars together with interest thereon from the date hereof at
the rate of 7 percent (7%) percent per annum.
2. PAYMENT. Borrower will pay outstanding principal plus all accrued unpaid
interest by April 7, 2000. Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing.
Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to any unpaid collection
costs and late charges, and any remaining amount to principal.
3. SECURITY. To secure the payment on the obligations under this Note,
Borrower hereby grants to Lender a security interest in all options to
purchase, or any shares acquired thereunder, common stock of Maxim
Pharmaceuticals, Inc. granted to Borrower, as more fully set forth in the
Exhibit A hereto (the "Options"). Notwithstanding the granting by the
Borrower of the security interest as provided herein (a) Borrower
acknowledges his obligation to repay the Secured Promissory Note in
accordance with its terms and provisions, and (b) Lender shall have full
recourse against Borrower for all amounts due under this Secured Promissory
Note. The Borrower may elect to sell common stock underlying the Options if
the value of the remaining Options equals or exceeds the obligations under
this.
<PAGE>
4. PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier
than it is due at any time without notice and without penalty.
5. DEFAULT. Borrower will be in default (a) five (5) days after written notice
of failure by Borrower to make any payment in connection with this loan
within ten (10) days after due; or (b) immediately when a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment
for the benefit of creditors, or any proceeding is commenced either by
Borrower or (unless dismissed within 60 days) against Borrower under any
bankruptcy or insolvency laws.
6. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued interest immediately due. In
such event, subject to any limits under applicable law, Borrower shall also
pay Lender's reasonable attorney's fees and legal expenses whether or not
there is a lawsuit, including attorney's fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other
sums provided by law. This Note has been delivered to Lender and accepted
by lender in the State of California. If there is a lawsuit, Borrower
agrees upon Lender's request to submit to the jurisdiction of the courts of
San Diego County, the State of California. This Note shall be governed by
and construed in accordance with the laws of the State of California.
7. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights
or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed
by law, waive any applicable statute of limitations, presentment, demand
for payment, protest and notice of dishonor.
8. NOTICES. All notices required to be given hereunder shall be given in
writing and shall be effective when actually delivered or three days after
deposited in the mail, first class, postage prepaid, addressed to the party
to whom the notice is to be given at the address shown above.
<PAGE>
IN WITNESS WHEREOF, the Undersigned has caused this Secured Promissory Note to
be duly executed as of the day and year first above written.
BORROWER:
/S/ LARRY G. STAMBAUGH
- ------------------------
LARRY G. STAMBAUGH
<PAGE>
EXHIBIT 10.29
SECURED PROMISSORY NOTE
PRINCIPAL AMOUNT: $18,000.00 DATE: April 14, 1999
SAN DIEGO, CA
1. PROMISE TO PAY. LARRY G. STAMBAUGH, ("Borrower") at 17947 Corazon
Place, San Diego, CA 92127, hereby promises to pay, in lawful money of the
United States of America, to the order of MAXIM PHARMACEUTICALS, INC.,
("Lender") a Delaware Corporation, at 8899 University Center Lane, Suite 400,
San Diego, CA 92122, the principal amount of Eighteen Thousand ($18,000)
dollars together with interest thereon from the date hereof at the rate of 7
percent (7%) percent per annum.
2. PAYMENT. Borrower will pay outstanding principal plus all accrued
unpaid interest by April 14, 2000. Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will
be applied first to accrued unpaid interest, then to any unpaid collection
costs and late charges, and any remaining amount to principal.
3. SECURITY. To secure the payment on the obligations under this Note,
Borrower hereby grants to Lender a security interest in all options to purchase,
or any shares acquired thereunder, common stock of Maxim Pharmaceuticals, Inc.
granted to Borrower, as more fully set forth in the Exhibit A hereto (the
"Options"). Notwithstanding the granting by the Borrower of the security
interest as provided herein (a) Borrower acknowledges his obligation to repay
the Secured Promissory Note in accordance with its terms and provisions, and (b)
Lender shall have full recourse against Borrower for all amounts due under this
Secured Promissory Note. The Borrower may elect to sell common stock underlying
the Options if the value of the remaining Options equals or exceeds the
obligations under this.
<PAGE>
4. PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier
than it is due at any time without notice and without penalty.
5. DEFAULT. Borrower will be in default (a) five (5) days after
written notice of failure by Borrower to make any payment in connection with
this loan within ten (10) days after due; or (b) immediately when a receiver
is appointed for any part of Borrower's property, Borrower makes an
assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or (unless dismissed within 60 days) against Borrower
under any bankruptcy or insolvency laws.
6. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued interest immediately due. In
such event, subject to any limits under applicable law, Borrower shall also
pay Lender's reasonable attorney's fees and legal expenses whether or not
there is a lawsuit, including attorney's fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other
sums provided by law. This Note has been delivered to Lender and accepted by
lender in the State of California. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of San
Diego County, the State of California. This Note shall be governed by and
construed in accordance with the laws of the State of California.
7. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any
other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive any applicable statute of limitations, presentment,
demand for payment, protest and notice of dishonor.
8. NOTICES. All notices required to be given hereunder shall be given
in writing and shall be effective when actually delivered or three days after
deposited in the mail, first class, postage prepaid, addressed to the party
to whom the notice is to be given at the address shown above.
<PAGE>
IN WITNESS WHEREOF, the Undersigned has caused this Secured Promissory Note
to be duly executed as of the day and year first above written.
BORROWER:
/S/ LARRY G. STAMBAUGH
- -----------------------
LARRY G. STAMBAUGH
<PAGE>
EXHIBIT 10.30
SECURED PROMISSORY NOTE
PRINCIPAL AMOUNT: $150,000 DATE: April 7, 1999
SAN DIEGO, CA
1. PROMISE TO PAY. KURT R. GEHLSEN, PH.D., ("Borrower") at 3333 Lone
Hill Lane, Encinitas, CA 92024, hereby promises to pay, in lawful money of
the United States of America, to the order of MAXIM PHARMACEUTICALS, INC.,
("Lender") a Delaware Corporation, at 8899 University Center Lane, Suite 400,
San Diego, CA 92122, the principal amount of One Hundred and Fifty Thousand
($150,000) dollars together with interest thereon from the date hereof at the
rate of 7 percent (7%) percent per annum.
2. PAYMENT. Borrower will pay outstanding principal plus all accrued
unpaid interest by April 7, 2000. Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will
be applied first to accrued unpaid interest, then to any unpaid collection
costs and late charges, and any remaining amount to principal.
3. SECURITY. To secure the payment on the obligations under this Note,
Borrower hereby grants to Lender a security interest in all options to
purchase, or any shares acquired thereunder, common stock of Maxim
Pharmaceuticals, Inc. granted to Borrower, as more fully set forth in the
Exhibit A hereto (the "Options"). Notwithstanding the granting by the
Borrower of the security interest as provided herein (a) Borrower
acknowledges his obligation to repay the Secured Promissory Note in
accordance with its terms and provisions, and (b) Lender shall have full
recourse against Borrower for all amounts due under this Secured Promissory
Note. The Borrower may elect to sell common stock underlying the Options if
the value of the remaining Options equals or exceeds the obligations under
this.
<PAGE>
4. PREPAYMENT. Borrower may pay all or a portion of the amount owed
earlier than it is due at any time without notice and without penalty.
5. DEFAULT. Borrower will be in default (a) five (5) days after written
notice of failure by Borrower to make any payment in connection with this
loan within ten (10) days after due; or (b) immediately when a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment
for the benefit of creditors, or any proceeding is commenced either by
Borrower or (unless dismissed within 60 days) against Borrower under any
bankruptcy or insolvency laws.
6. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued interest immediately due. In
such event, subject to any limits under applicable law, Borrower shall also
pay Lender's reasonable attorney's fees and legal expenses whether or not
there is a lawsuit, including attorney's fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other
sums provided by law. This Note has been delivered to Lender and accepted by
lender in the State of California. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of San
Diego County, the State of California. This Note shall be governed by and
construed in accordance with the laws of the State of California.
7. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any
other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive any applicable statute of limitations, presentment,
demand for payment, protest and notice of dishonor.
8. NOTICES. All notices required to be given hereunder shall be given in
writing and shall be effective when actually delivered or three days after
deposited in the mail, first class, postage prepaid, addressed to the party
to whom the notice is to be given at the address shown above.
<PAGE>
IN WITNESS WHEREOF, the Undersigned has caused this Secured Promissory Note
to be duly executed as of the day and year first above written.
BORROWER:
/S/ KURT R. GEHLSEN
- -------------------
KURT R. GEHLSEN, PH.D.
<PAGE>
EXHIBIT 10.31
SECURED PROMISSORY NOTE
PRINCIPAL AMOUNT: $50,000 DATE: April 7, 1999
SAN DIEGO, CA
1. PROMISE TO PAY. DALE A. SANDER, ("Borrower") at 13155 Winstanley Way,
San Diego, California 92130 hereby promises to pay, in lawful money of the
United States of America, to the order of MAXIM PHARMACEUTICALS, INC.,
("Lender") a Delaware Corporation, at 8899 University Center Lane, Suite 400,
San Diego, CA 92122, the principal amount of Fifty Thousand ($50,000) dollars
together with interest thereon from the date hereof at the rate of 7 percent
(7%) percent per annum.
2. PAYMENT. Borrower will pay outstanding principal plus all accrued unpaid
interest by April 7, 2000. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to any unpaid collection costs and late
charges, and any remaining amount to principal.
3. SECURITY. To secure the payment on the obligations under this Note,
Borrower hereby grants to Lender a security interest in all options to purchase,
or any shares acquired thereunder, common stock of Maxim Pharmaceuticals, Inc.
granted to Borrower, as more fully set forth in the Exhibit A hereto (the
"Options"). Notwithstanding the granting by the Borrower of the security
interest as provided herein (a) Borrower acknowledges his obligation to repay
the Secured Promissory Note in accordance with its terms and provisions, and (b)
Lender shall have full recourse against Borrower for all amounts due under this
Secured Promissory Note. The Borrower may elect to sell common stock underlying
the Options if the value of the remaining Options equals or exceeds the
obligations under this.
<PAGE>
4. PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier
than it is due at any time without notice and without penalty.
5. DEFAULT. Borrower will be in default (a) five (5) days after written
notice of failure by Borrower to make any payment in connection with this loan
within ten (10) days after due; or (b) immediately when a receiver is appointed
for any part of Borrower's property, Borrower makes an assignment for the
benefit of creditors, or any proceeding is commenced either by Borrower or
(unless dismissed within 60 days) against Borrower under any bankruptcy or
insolvency laws.
6. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued interest immediately due. In such
event, subject to any limits under applicable law, Borrower shall also pay
Lender's reasonable attorney's fees and legal expenses whether or not there is a
lawsuit, including attorney's fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
will pay any court costs, in addition to all other sums provided by law. This
Note has been delivered to Lender and accepted by lender in the State of
California. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of San Diego County, the State of
California. This Note shall be governed by and construed in accordance with the
laws of the State of California.
7. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive any applicable statute of limitations, presentment, demand for
payment, protest and notice of dishonor.
8. NOTICES. All notices required to be given hereunder shall be given in
writing and shall be effective when actually delivered or three days after
deposited in the mail, first class, postage prepaid, addressed to the party to
whom the notice is to be given at the address shown above.
<PAGE>
IN WITNESS WHEREOF, the Undersigned has caused this Secured Promissory Note to
be duly executed as of the day and year first above written.
BORROWER:
/S/ DALE A. SANDER
- -------------------
DALE A. SANDER
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 1,995,731
<SECURITIES> 3,830,083
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,051,759
<PP&E> 2,249,798
<DEPRECIATION> 668,123
<TOTAL-ASSETS> 14,905,613
<CURRENT-LIABILITIES> 10,533,832
<BONDS> 1,028,799
0
0
<COMMON> 10,204
<OTHER-SE> 3,332,778
<TOTAL-LIABILITY-AND-EQUITY> 14,905,613
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,046,189
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 112,545
<INCOME-PRETAX> (29,065,113)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,065,113)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,065,113)
<EPS-BASIC> (2.90)
<EPS-DILUTED> (2.90)
</TABLE>
