U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange Act
of 1934
For the quarterly period ended MARCH 31, 1999
|_| Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from _______ to _______.
Commission File No. 0-21739
GENETIC VECTORS, INC.
---------------------
(Name of Small Business Issuer in Its Charter)
Florida 65-0324710
- ------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5201 N.W. 77TH AVENUE, SUITE 100, 33166
- ---------------------------------- -----
MIAMI, FLORIDA (Zip Code)
(Address of Principal Executive
Offices)
(305) 716-0000
--------------
(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, and (2) has
been subject to such filing requirements for the past 90 days. Yes |_| No |X|
There were 2,574,843 shares of Common Stock outstanding as of June 7,
1999.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS.
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
Page
----
Balance Sheet 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 7
2
<PAGE>
MARCH 31, 1999
- --------------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents 67,369
Accounts receivable 2,453
Inventory 24,744
Prepaid expenses 23,198
Deferred loan costs (net of $18,525 of
accumulated amortization) 92,625
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 210,389
EQUIPMENT AND IMPROVEMENTS, NET 387,674
PATENTS AND LICENSE AGREEMENT (NET OF $28,877 OF
ACCUMULATED AMORTIZATION) 218,087
RESTRICTED CASH EQUIVALENTS 46,130
- --------------------------------------------------------------------------------
862,280
- --------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities 245,658
Notes payable 452,155
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 697,813
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
COMMON STOCK, $.001 PAR VALUE, 10,000,000
SHARES AUTHORIZED, 2,349,843 SHARES ISSUED AND 2,350
OUTSTANDING
ADDITIONAL PAID-IN CAPITAL 6,674,670
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (6,512,553)
- --------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 164,467
- --------------------------------------------------------------------------------
862,280
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
3
<PAGE>
GENETIC VECTORS, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
CUMULATIVE
FROM
JANUARY 1,
1992
(INCEPTION) FOR THE FOR THE
THROUGH THREE THREE
MARCH 31, MONTHS MONTHS
1999 ENDED ENDED
MARCH 31, MARCH 31,
1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE:
SALES 58,189 7,654 -
GRANT INCOME 149,147 - 35,897
- -------------------------------------------------------------------------------------------------
TOTAL REVENUE 207,336 7,654 35,897
- -------------------------------------------------------------------------------------------------
COST AND EXPENSES:
RESEARCH AND DEVELOPMENT 2,670,187 132,089 204,773
SELLING, GENERAL AND ADMINISTRATIVE 4,112,282 256,641 215,547
DEPRECIATION AND AMORTIZATION 207,770 19,903 14,829
- -------------------------------------------------------------------------------------------------
TOTAL EXPENSES 6,990,239 408,633 435,149
INTEREST, NET 270,351 1,872 39,530
- -------------------------------------------------------------------------------------------------
NET (LOSS) (6,512,553) (399,108) (359,722)
WEIGHTED AVERAGE NUMBER OF 2,349,843 2,339,634
COMMON SHARES OUTSTANDING.
NET (LOSS) PER COMMON SHARE ($0.17) ($0.15)
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
4
<PAGE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (UNAUDITED)
CUMULATIVE FOR THE FOR THE
FROM THREE THREE
JANUARY 1, MONTHS ENDED MONTHS ENDED
1992 MARCH 31, MARCH 31,
(INCEPTION) 1999 1998
THROUGH
MARCH 31,
1999
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES:
NET LOSS (6,512,553) (399,108) (359,727)
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH USED IN
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 207,770 19,903 14,829
AMORTIZATION OF LOAN COSTS 18,525 -- --
WRITE-OFF OF ACQUIRED 71,250 -- --
TECHNOLOGY
CONSULTING SERVICES PROVIDED
FOR COMMON STOCK 6,000 -- --
STOCK OPTIONS AND WARRANTS
GRANTED FOR SERVICES 340,572 -- --
(INCREASE) IN ACCOUNTS (2,453) 1,167 --
RECEIVABLE
(INCREASE) IN INVENTORY (24,744) (11,244) --
(INCREASE) IN PREPAID EXPENSES (23,198) (346) --
(INCREASE) IN OTHER ASSETS -- -- (8,843)
(INCREASE) IN RESTRICTED CASH (46,130) -- --
EQUIVALENTS
INCREASE IN ACCOUNTS PAYABLE
AND ACCRUED LIABILITIES 378,481 45,508 (47,227)
- --------------------------------------------------------------------------------
TOTAL ADJUSTMENTS 926,073 54,988 (41,241)
- --------------------------------------------------------------------------------
NET CASH USED IN OPERATING (5,586,480) (344,120) (400,963)
ACTIVITIES
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES:
PURCHASE OF EQUIPMENT AND (566,567) (590) (27,260)
IMPROVEMENTS
PATENT COSTS (261,964) -- (1,366)
- --------------------------------------------------------------------------------
NET CASH USED IN INVESTING (828,531) (590) (28,626)
ACTIVITIES
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES: -- -- --
INCREASE DUE TO PARENT 413,518 -- --
PROCEEDS FROM NOTES PAYABLE 487,155 302,155 --
PAYMENT ON NOTES PAYABLE (35,000) -- --
NET PROCEEDS FROM ISSUANCE OF 5,097,450 -- --
COMMON STOCK
CAPITAL CONTRIBUTION 500,000 -- --
OFFERING REFUND 25,500 -- --
OFFERING COSTS (6,243) -- --
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED ON)
FINANCING ACTIVITIES 6,482,380 302,155 --
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 67,369 (42,555) (429,589)
CASH AT BEGINNING OF PERIOD 109,924 2,102,467
- --------------------------------------------------------------------------------
CASH AT END OF PERIOD 67,369 67,369 1,672,878
5
<PAGE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (UNAUDITED)
CUMULATIVE FOR THE FOR THE
FROM THREE THREE
JANUARY 1, MONTHS ENDED MONTHS ENDED
1992 MARCH 31, MARCH 31,
(INCEPTION) 1999 1998
THROUGH
MARCH 31,
1999
- --------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES: -- -- --
CASH PAID FOR INTEREST -- -- --
CONVERSION OF DUE TO PARENT IN 413,518 -- --
EXCHANGE FOR STOCK
CONVERSION OF ACCRUED WAGES FOR 132,822 -- --
STOCK
- --------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
6
<PAGE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
GENETIC VECTORS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited financial
statements include all adjustments (consisting only of normal recurring
accruals) which are necessary for a fair presentation of the results for the
periods presented. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been omitted. It is suggested that these
financial statements be read in conjunction with the Company's Annual Report for
the year ended December 31, 1998. The results of operations for the three months
ended March 31, 1999 are not necessarily indicative of the results to be
expected for the full year.
2. EARNINGS PER SHARE
The following reconciles the components of the earnings per share (EPS)
computation.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE THREE MONTHS
ENDED MARCH 31, 1999 ENDED MARCH 31, 1998
------------------------------------------------------------------------
LOSS SHARES PER SHARE LOSS SHARE PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Loss per
common
share - ($399,108) 2,349,843 ($0.17) ($359,722) 2,340,107 ($0.15)
basic
- -----------------------------------------------------------------------------------------------------
Effect of
Dilutive:
-- -- -- -- -- --
Securities
Options -- -- -- -- -- --
Warrants -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------
Loss per
common
share,
assuming
dilution ($399,108) 2,349,843 ($0.17) ($359,722) 2,340,107 ($0.15)
</TABLE>
Net loss per share of common stock is based on the weighted average number of
common shares outstanding during each period. Diluted loss per share of common
stock is computed on the basis of the weighted average number of common shares
and diluted options and warrants outstanding. Dilutive options and warrants
having an anti-dilutive effect are excluded from the calculation.
7
<PAGE>
ITEM 2 MANAGEMENT'S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS.
- ------------------------------------------------------------------
INTRODUCTORY STATEMENTS
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS. This Quarterly Report
contains forward-looking statements, including statements regarding, among other
things, (a) the growth strategies of Genetic Vectors, Inc. (the "COMPANY"), (b)
anticipated trends in the Company's industry, (c) the Company's future financing
plans and (d) the Company's ability to obtain financing and continue operations.
In addition, when used in this Quarterly Report, the words "believes,"
"anticipates," "intends," "in anticipation of," and similar words are intended
to identify certain forward-looking statements. These forward-looking statements
are based largely on the Company's expectations and are subject to a number of
risks and uncertainties, many of which are beyond the Company's control. Actual
results could differ materially from these forward-looking statements as a
result of changes in trends in the economy and the Company's industry,
reductions in the availability of financing and other factors. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
statements contained in this Quarterly Report will in fact occur. The Company
does not undertake any obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
As previously reported in its Form 10-KSB ("FORM 10-KSB") for the year
ended December 31, 1998, the Company needed to raise additional capital to
continue operations beyond the end of April 1999. On December 31, 1998, the
Company had cash and cash equivalents of $109,924. In addition and as reported
in the Form 10-KSB, the Company obtained $388,500 in loans since December 31,
1998 in three separate transactions. The terms of these loans are described in
the Form 10-KSB. Substantially all of these proceeds have been expended by the
Company. On May 10, 1999, the Company obtained a $225,000 equity investment from
the sale of 225,000 shares of the Company's common stock. The equity investor
paid $1.00 per share for the 225,000 shares of the Company's common stock, or
$4.75 per share less than the closing price of $5.75 per share on May 10, 1999.
The Company projects that the proceeds of the equity investment will be
completely exhausted before the end of June 1999. In the absence of additional
capital, the Company will be required to significantly curtail or cease its
business activities before the end of June 1999. The Company has no commitment
for any additional capital and no assurances can be given that the Company will
be successful in raising any new capital. The Company's inability to raise new
capital will have a material adverse effect on the Company's ability to continue
to research and develop its proposed products and to market and sell its
existing product, and will have a material adverse effect on its operations and
financial condition and on its ability to continue as a going concern. See
"Management's Plan of Operations and Discussion and Analysis - Liquidity and
Capital Resources." THE COMPANY'S ABILITY TO CONTINUE ITS BUSINESS ACTIVITIES
BEYOND JUNE 30, 1999 IS COMPLETELY DEPENDENT ON OBTAINING ADDITIONAL CAPITAL.
As reported in the Company's Form 10-KSB, the Company included unaudited
financial statements in the Form 10-KSB because the Company's auditors could
only render a disclaimer of opinion in connection with the Company's financial
8
<PAGE>
statements. A disclaimer of opinion is rendered when the auditor is unable to
express an opinion because of a serious limitation on the scope of the
examination. The Company's extreme cash shortage and lack of commitments for any
new capital are the principal reasons why its auditors could only render a
disclaimer of opinion. Instead of incurring the extra cost of obtaining a
disclaimer of opinion, the Company elected to file the Form 10-KSB with
unaudited financial statements. The Company intends to complete the audit and
file audited financial statements only if the Company obtains significant
additional capital. No assurance can be given that the Company will obtain such
capital.
Also as reported in the Form 10-KSB, the Company received a total of
$538,500 in loans dating back to November 2, 1998 in five separate loan
transactions. Interest became payable on two of these loans (a total of
$150,000) on April 1, 1999, on two other loans (a total of $288,500) on April
19, 1999 and on the remaining loan (a total of $100,000) on June 1, 1999. The
Company is in default on these loans for failing to pay the required interest
payments. Three of these loans (a total of $388,500) are secured by
substantially all of the Company's assets. The Company's ability to pay any
interest or to repay such loans is completely dependent on the Company's ability
to raise additional capital from external sources. The Company's failure to
raise such capital and to pay all accrued but unpaid interest and subsequently
to repay the loans upon maturity may result in the foreclosure on the Company's
assets. This would have a material adverse effect on the Company's business,
financial condition and results of operations and would jeopardize the Company's
ability to continue as a going concern.
During the three-month period ended March 31, 1999, the Company did not
generate significant revenues. As a result, the Company intends to continue to
report its plan of operations.
PLAN OF OPERATION
ADDITIONAL FUND RAISING ACTIVITIES. The Company will need to raise
additional capital to continue operations beyond the end of June 1999. In the
absence of such additional capital, the Company will be required to
significantly curtail or cease its business activities. The plan of operation
described in this Quarterly Report assumes that the Company will be successful
in raising additional capital. The failure to raise additional capital will,
among other things, cause deviations from the plan of operation described in
this Quarterly Report. It will also jeopardize the Company's ability to continue
its business activities.
SUMMARY OF ANTICIPATED PRODUCT RESEARCH AND DEVELOPMENT. Subject to the
qualifications above, the Company will continue its product research and
development and continue to implement what the Company believes to be a feasible
plan for product development. The Company is outsourcing production of the
EpiDNA Picogram Assay Kit and manufacturing its second product the DNAMAX kit in
house. The major components of the plan of operations are as follows:
9
<PAGE>
1999 o Continued research in applications of Genetic Vectors' nucleic
acid labeling technology.
o Initiation of EasyID DNA probe product development for quality
assurance in the food and beverage industry.
o Completion of first DNA labeling product for test marketing in
the molecular biology research market.
o Research in the application of automated techniques of DNA
analysis for EpiDNA.
SIGNIFICANT PLANT OR EQUIPMENT PURCHASES. The Company does not currently
anticipate any significant plant or equipment purchases during the next twelve
months.
CHANGES IN THE NUMBER OF EMPLOYEES. The Company currently has six
employees. As shown in the following chart, if the Company is successful in
raising significant new capital, the Company anticipates hiring sixteen
additional personnel during the remainder of 1999. If the Company is successful
in raising significant new capital, then the Company anticipates hiring
additional personnel in 2000 in connection with its research and development and
product development plan. The Company believes that these personnel will be
adequate to accomplish the tasks set forth in its plan.
PROPOSED PERSONNEL ADDITION PLAN 1999 2000
- -------------------------------- ---- ----
MANAGEMENT
Executive Personnel 2 0
Administrative Personnel 1 1
Director - Sales and Marketing 1 0
Salespersons 3 6
Technical Info/Inside Sales 1 2
Scientific Supervisors 1 0
Technicians 2 0
TOTAL PROPOSED NEW EMPLOYEES 11 9
==== ====
TOTAL EMPLOYEES AT END OF YEAR 17 26
==== ====
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company remains largely a development stage company. The Company did
not generate significant revenues during the three months ended March 31, 1999
and had no cost of sales for the same period. The Company's expenditures far
exceed its revenues.
10
<PAGE>
Research and development expenses for the three months ended March 31,
1999 decreased by $72,684 over the comparable period in the prior year. This
decrease is largely attributable to A DECREASE IN THE R&D BUDGET.
Selling, general and administrative expenses increased $41,094 in the
three months ended March 31, 1999 over the comparable period in 1998. This
increase is primarily attributable to the expenses incurred in connection with
the launch of the Company's products.
Interest income for the three months ended March 31, 1999 decreased by
$37,658 because the Company had less cash invested during the current period
than in the comparable period in the prior year. Interest income was
attributable to interest earned on certificates of deposit and money market
accounts which represented the investment of the net proceeds of the Company's
initial public offering and the proceeds from the issuance of debentures.
LIQUIDITY AND CAPITAL RESOURCES. The net cash used by the Company in
operating activities aggregated $344,120. This was largely attributable to
operating expenses and research and development activities. The Company's net
cash provided in financing activities aggregated $302,155 during the three
months ended March 31, 1999, consisting mainly of proceeds from loan
transactions.
As discussed throughout the Form 10-KSB, the Company has experienced
extreme cash shortages since the end of November 1998 through the date of this
Quarterly Report. As of March 31, 1999, the Company had total cash and cash
equivalents of $67,369. On May 10, 1999, the Company obtained an additional
$225,000 from the sale of 225,000 shares of the Company's common stock. The
equity investor paid $1.00 per share for the 225,000 shares of common stock, or
$4.75 per share less than the closing price of $5.75 per share on May 10, 1999.
The Company anticipates that the proceeds of this equity investment will be
completely exhausted before the end of June 1999. The Company had total
stockholders' equity of $164,467 as of March 31, 1999. The Company needs
additional capital to continue operations beyond the end of June 1999. The
Company has no commitments for additional capital and no assurances can be given
that the Company will be able to raise any such capital.
YEAR 2000 COMPUTER ISSUES. Computer programs have typically abbreviated
dates by eliminating the first two digits of the year under the assumption that
these two digits would be 19. As the year 2000 approaches, these systems may not
be able to recognize current dates which may cause computer system failure or
miscalculations by computer programs. The Company does not believe it will not
be materially affected by the Year 2000 problem. The Company's conclusion is
based on a survey of the computer equipment currently in use by the Company. All
such equipment was acquired by the Company within the last three years and was
Year-2000-compliant when acquired. The Company has not expended a material
amount of costs in this assessment. Moreover, the Company remains largely a
research and development company and therefore its exposure to the Year 2000
problems of its customers and suppliers is minimal. However, the Company is
exposed to the risk that one or more of its suppliers could experience Year 2000
problems that may impact their ability to supply materials to the Company. To
date, the Company is not aware of any Year 2000 problems of its suppliers that
11
<PAGE>
would have a material adverse impact on the Company's operations. Nonetheless,
the inability of suppliers to convert their computer systems to avoid any Year
2000 problems could jeopardize the supply of materials to the Company and
therefore have a material adverse effect on the Company's operations. The effect
of non-compliance by suppliers is not determinable at this time. The Company's
Year 2000 risks are considered minimal and no contingency plans are believed to
be necessary. As a result, the Company believes the potential consequences of
Year-2000 problems will not have a material effect on the Company.
CERTAIN BUSINESS RISK FACTORS
The Company is subject to various risks which may have a material adverse
effect on its business, financial condition and results of operations. Certain
risks are discussed below:
ABILITY TO REPAY INDEBTEDNESS; EXISTING DEFAULTS ON INDEBTEDNESS. As
reported in the Form 10-KSB, the Company received a total of $538,500 in loans
dating back to November 2, 1998 in five separate loan transactions. Interest
became payable on two of these loans (a total of $150,000) on April 1, 1999, on
two other loans (a total of $288,500) on April 19, 1999 and on the remaining
loan (a total of $100,000) on June 1, 1999. The Company is in default on these
loans for failing to pay the required interest payments. Three of these loans (a
total of $388,500) are secured by substantially all of the Company's assets. The
Company's ability to pay any interest or to repay such loans is completely
dependent on the Company's ability to raise additional capital from external
sources. The Company's failure to raise such capital and to pay all accrued but
unpaid interest and subsequently to repay the loans upon maturity may result in
the foreclosure on the Company's assets. This would have a material adverse
effect on the Company's business, financial condition and results of operations
and would jeopardize the Company's ability to continue as a going concern.
LIMITED OPERATING HISTORY AND EXPECTATION OF FUTURE LOSSES. The Company
was organized in 1991 and is in the development stage. To date, the Company has
generated very limited revenues from the sale of its product. Further, the
Company has devoted most of its efforts to research and development and the
development of a business strategy. From its inception through March 31, 1999,
the Company has incurred cumulative losses of approximately $6.5 million. The
Company expects to incur substantial losses for the foreseeable future due, in
part, to research and development and manufacturing, distributing and marketing
its product. There can be no assurance that the Company will not encounter
substantial delays and unexpected expenses related to research, development,
production and marketing or other unforeseen difficulties, which may cause
additional losses.
NO AUDITED STATEMENTS FOR DECEMBER 31, 1998. In connection with the
preparation of its financial statements for the year ended December 31, 1998,
the Company's auditors informed the Company that they could only render a
disclaimer of opinion because of the Company's severe cash shortage. To preserve
cash, the Company elected not to incur the cost necessary to complete the audit
and included unaudited financial statements in its Form 10-KSB.
FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FUNDING. The Company
had cash and cash equivalents of only $67,369 as of March 31, 1999. On May 10,
1999, the Company obtained a $225,000 equity investment from the sale of 225,000
12
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shares of the Company's common stock. The equity investor paid $1.00 per share
for the 225,000 shares of common stock, of $4.75 per share less than the closing
price of $5.75 per share on May 10, 1999. The Company projects that such funds
will be completely exhausted before the end of June 1999. In the absence of
additional capital, the Company will be required to significantly curtail or
cease its business activities. The Company has no commitment for any additional
capital and no assurance can be given that the Company will be successful in
obtaining any additional capital. The Company's ability to continue its business
activities is completely dependent on such additional capital and its failure to
obtain such capital will have a material adverse effect on the Company's
business, financial condition and results of operation and will jeopardize the
Company's ability to continue its business activities.
UNCERTAIN MARKET ACCEPTANCE AND DEPENDENCE ON A LIMITED NUMBER OF
PRODUCTS. The Company currently has two products, the Picogram Assay and the
DNAMAX Kit and another product line under development, the EasyID product line.
As such, the Company is highly dependent on a limited number of products and the
Company's long-term success may depend on the market acceptance of these
products. Market acceptance of the Company's products will depend, in part, on
the Company's ability to demonstrate the superiority of its products with
respect to existing techniques, including the products' accuracy, ease of use,
reliability and cost-effectiveness and on the effectiveness of the Company's
marketing efforts. These efforts have been adversely affected by the Company's
working capital shortage. No assurance can be given that the Company will gain
market acceptance for its products. Failure to gain market acceptance for either
of these product lines will have a material adverse effect on the Company's
business, financial condition and results of operations.
TECHNOLOGICAL UNCERTAINTY AND EARLY STAGE OF PRODUCT DEVELOPMENT. The
science and technology of the Picogram Assay, the DNAMAX and EasyID are rapidly
evolving. Although the Company has conducted limited marketing of its initial
product, other proposed products are in the early development stage. These
products will require significant further research, development and testing and
are subject to the risks of failure inherent in the development of products
based on innovative technologies. These risks include the possibility that any
or all of the proposed products are found to be ineffective, unsafe, or
otherwise fail to receive necessary regulatory clearances, if any, that the
proposed products, though effective, are uneconomical to market, that third
parties hold proprietary rights that preclude the Company from marketing them,
or that third parties market a superior or equivalent product. Accordingly, the
Company is unable to predict whether its research and development activities
will result in any commercially viable products.
LIMITED MANUFACTURING AND MARKETING CAPABILITY. The Company's experience
in manufacturing has been limited to the production of small amounts of kits of
its initial products for use in research and development and early
commercialization of its initial products. No assurance can be given that the
Company will ultimately be able to obtain or produce sufficient quantities of
such product at commercially reasonable costs.
13
<PAGE>
The Company has limited experience in marketing its products and no
assurance exists that the Company can market its products in an effective
manner. The Company intends to market its products in the United States, Europe
and Asia through a network of independent distributors supported by a direct
sales force, but no sales force is yet in place, and no distribution agreements
have been entered into. The Company's ability to market its product in Europe
and Asia and other areas will depend on the Company's ability to fund such
efforts as well as the Company's ability to develop strategic alliances with
marketing partners. There can be no assurance that the Company will enter into
such alliances with other companies on favorable terms or at all.
RISK OF PRODUCT LIABILITY CLAIMS. The nature of the Company's business
exposes it to risk from product liability claims. The Company maintains product
liability insurance for its products with limits of $1 million per occurrence
and $2 million in the aggregate per year. Such insurance coverage is, however,
becoming increasingly expensive and there can be no assurance that the Company's
insurance will be adequate to cover future product liability claims, or that the
Company will be successful in maintaining adequate product liability insurance
at acceptable rates. In addition, due to the Company's working capital shortage,
there can be no assurance that the Company will be able to fund the premiums for
its existing insurance. Any losses that the Company may suffer from future
liability claims, and any adverse publicity from product liability litigation,
may have a material adverse effect on the Company's business, financial
condition and results of operations.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS. The Company's
success will depend in part on its ability to obtain and maintain patent
protection for its products, preserve its trade secrets, and operate without
infringing the proprietary rights of other parties. Because of the substantial
length of time and expense associated with bringing new products through
development to the marketplace, the biotechnology industry places considerable
importance on obtaining and maintaining patent and trade secret protection for
new technologies, products and processes. Legal standards relating to the scope
of claims and the validity of patents in the biotechnology field are uncertain
and evolving. There can be no assurance that patent applications to which the
Company holds ownership or license rights will result in the issuance of
patents, that any patents issued or licensed to the Company will not be
challenged and held to be invalid, or that any such patents will provide
commercially significant protection to the Company's technology, products and
processes. In addition, there can be no assurance that others will not
independently develop substantially equivalent proprietary information not
covered by patents to which the Company has rights or obtain access to the
Company's know-how or that others will not be issued patents which may prevent
the sale of one or more of the Company's products, or require licensing and the
payment of significant fees or royalties by the Company to third parties in
order to enable the Company to conduct its business. Defense and prosecution of
patent claims can be expensive and time consuming, regardless of whether the
outcome is favorable to the Company, and can result in the diversion of
substantial financial, management, and other resources from the Company's other
activities. An adverse outcome could subject the Company to significant
liability to third parties, require the Company to obtain licenses from third
parties, or require the Company to cease any related research and development
activities or product sales. In addition, the laws of certain countries may not
14
<PAGE>
protect the Company's intellectual property. No assurance can be given that any
licenses required under any such third-party patents or proprietary rights would
be made available on commercially reasonable terms, if at all. In addition, due
to the Company's working capital shortage, there can be no assurance that the
Company will be able to continue its existing patent applications.
The Company's success is also dependent upon the skills, knowledge, and
experience of its scientific and technical personnel. To help protect its
rights, the Company plans to require all of its employees, consultants, advisors
and collaborators to enter into confidentiality agreements that prohibit the
disclosure of confidential information to anyone outside the Company and require
disclosure and in most cases assignment to the Company of their ideas,
developments, discoveries and inventions. There can be no assurance, however,
that these agreements will provide adequate protection for the Company's trade
secrets, know-how or other proprietary information in the event of any
unauthorized use or disclosure.
DEPENDENCE ON KEY PERSONNEL; INEXPERIENCE OF MANAGEMENT. The Company's
ability to successfully manage its growth will substantially depend on its
ability to attract and retain additional qualified management personnel. Because
of the Company's extreme cash shortage, its ability to attract or retain
qualified personnel has been hindered. This cash shortage has caused the Company
to pay only one-half of its employees' salaries during portions of December
1998, January 1999 February 1999 and March 1999 and a portion of April 1999. On
April 23, 1999, the Company paid the unpaid salary for some of its employees for
December 1998 through April 16, 1999. On December 9, 1998, the Company issued
the non-management employees' options to purchase an aggregate of 4,393 shares
of Common Stock at an exercise price of $5.00 per share or approximately $2.25
less than the closing price on that date. The Company recently repurchased
options to purchase 2,344 shares from its employees for an aggregate purchase
price of $5,274. The Company is currently accruing one-half of its employees
salaries which it may pay when and if sufficient additional capital is received.
The Company also intends to issue additional stock options to its non-executive
employees for March 1999 at a price to be determined. Currently, none of the
Company's administrative staff has any experience in running a large company or
a company whose securities are publicly held, apart from the Company. There can
be no assurance that the demands placed on Company personnel by the cash
shortage or the growth of the Company's business and the need for close
monitoring of the Company's operations and financial performance through
appropriate and reliable administrative and accounting procedures and controls
will be met, or that the Company will otherwise manage its growth successfully;
the failure to do so could have a material adverse effect on the Company's
business, results of operations and financial condition. There is significant
competition for qualified personnel, and there can be no assurance that the
Company will be successful in recruiting, retaining or training the management
personnel it requires. The Company has designated Mead M. McCabe, Jr. as its
principal financial officer. The Company currently has no officer with previous
experience in managing the financial and accounting functions of a publicly-held
company.
15
<PAGE>
PART II
Other Information.
- ------------------
Item 1. Legal Proceedings.
- --------------------------
The Company is not aware of any legal proceedings involving the Company.
Item 2. Changes in Securities and Use of Proceeds.
- ------- ------------------------------------------
USE OF PROCEEDS
1. Effective date of registration statement: December 20, 1996;
Commission File Number 333-5530-A.
2. The Offering commenced on December 20, 1996.
3. The Offering did not terminate before any securities were sold.
(i) The Offering did not terminate before the sale of all
securities registered.
(ii) The managing underwriter was Shamrock Partners, Ltd.
(iii) Securities registered:
(a) Common Stock ($0.001 par value)
(b) Underwriter warrants to purchase an aggregate of 50,000
shares of Common Stock. Those warrants became
exercisable on December 21, 1997 and expire on December
19, 2001.
(iv) Securities sold (all sold for account of the issuer):
AGGREGATE AGGREGATE
OFFERING OFFERING
PRICE OF PRICE OF
AMOUNT AMOUNT AMOUNT AMOUNT
TITLE REGISTERED REGISTERED SOLD SOLD
------------------------------------------------------------------------------
1. Common Stock 575,000 $5,750,000 $575,000 $5,750,000
2. Common Stock pursuant
to Underwriter Warrants 50,000 750,000 - 0 - - 0 -
3. Underwriter Warrants 50,000 500 50,000 500
16
<PAGE>
(v) Underwriting discounts $517,500
and commissions:
Finder's fees: -0-
Expenses paid for 217,139
Underwriters:
Other expenses: 445,610
---------
Total Expenses $1,180,249
(vi) Net Proceeds of $4,569,751
Offering Before
Referral
Refund of Offering $19,257
Costs:
Net Proceeds of $4,589,008
Offering:
(vii) Uses of Net Proceeds:
DIRECT OR INDIRECT
PAYMENTS TO DIRECTORS,
OFFICERS, GENERAL
PARTNERS OF THE ISSUER
OR THEIR ASSOCIATES; TO
PERSONS OWNING TEN
PERCENT OR MORE OF ANY DIRECT OR INDIRECT
CLASS OF EQUITY PAYMENT TO OTHERS
SECURITIES OF THE
ISSUER; AND TO
AFFILIATES OF THE ISSUER
---------------------------- -------------------
Construction of plant,
building
and facilities:
Purchase and installation -- 503,421
of machinery and equipment:
Purchase of real estate: -- --
Acquisition of other -- --
business(es):
Repayment of indebtedness: -- --
Working capital: $30,000 848,452
17
<PAGE>
TEMPORARY INVESTMENTS (SPECIFY)
Certificate of Deposit: $46,130
OTHER PURPOSES (SPECIFY)
Research and Development and $1,776,874
patent protection --
expenditures:
Expansion of Manufacturing
facilities: $109,000 $394,180
Sales and marketing -- $180,600
capabilities:
Management Salaries $596,345 --
Investor Relations -- $104,006
Total 735,345 3,853,663
SALES OF UNREGISTERED SECURITIES. On January 19, 1999, the Company
borrowed $163,500 from a private investor ("LOAN NO. 1"). The terms of Loan No.
1 provided for an annual interest rate of 12% which will increase 1% for each
month that any portion of the loan remains unpaid after January 19, 2000, up to
the maximum rate permitted by law. Accrued interest is payable monthly beginning
on April 19, 1999. The Company has not paid any interest on this loan and
therefore is in default. The outstanding principal balance must be repaid by
January 19, 2000. The loan is secured by substantially all of the Company's
assets. In addition, the Company issued the private investor warrants to
purchase 50,000 shares of Common Stock at an exercise price of $0.01 per share.
These warrants are immediately exercisable. The closing price of the Common
Stock on January 19, 1999 was $5.125. The Company is obligated to grant the
private investor warrants to purchase 150,000 shares at an exercise price of
$5.50 per share upon the repayment of the loan or the closing on the sale of
Company securities in an aggregate amount of $1,500,000. Such additional
warrants become exercisable on the fifth anniversary of the grant. The proceeds
of this loan have already been expended by the Company to fund its working
capital needs. This offering was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "ACT"), and Rule 506
promulgated thereunder.
On March 9, 1999, the Company borrowed an additional $125,000 ("LOAN NO.
2") from the same private investor which had made Loan No. 1. The terms of Loan
No. 2 provided for an annual interest rate of 12% which will increase 1% for
each month that any portion of the loan remains unpaid after January 19, 2000,
up to the maximum rate permitted by law. Accrued interest is payable monthly
beginning on April 19, 1999. The Company has not paid any interest on this loan
and therefore is in default. The outstanding principal balance must be repaid by
January 19, 2000. The loan is secured by substantially all of the Company's
assets. In addition, the Company issued the private investor warrants to
purchase 50,000 shares of Common Stock at an exercise price of $0.01 per share.
These warrants are immediately exercisable. The closing price of the Common
18
<PAGE>
Stock on March 9, 1999 was $7.875. Substantially all of the proceeds of this
loan have been expended by the Company to fund its working capital needs. This
offering was exempt from registration pursuant to Section 4(2) of the Act and
Rule 506 promulgated thereunder.
In connection with Loan No. 1 and Loan No. 2, the Company granted warrants
to purchase 16,350 shares of Common Stock on January 19, 1999 and 12,500 shares
of Common Stock on March 9, 1999 at an exercise price of $5.50 per share to a
consultant for helping the Company locate the financing. These warrants are
immediately exercisable. The closing price of the Common Stock was $5.125 and
$7.875 on January 19, 1999 and March 9, 1999, respectively. This offering was
exempt from registration pursuant to Section 4(2) of the Act.
On April 19, 1999, the Company borrowed an additional $100,000 ("LOAN NO.
3") from a private investor. This loan has an annual interest rate of 12%.
Accrued interest is payable quarterly, commencing on June 1, 1999. The Company
has not paid any interest on this loan and therefore is in default. The loan is
secured by substantially all of the Company's assets. In addition, the Company
issued the private investor warrants to purchase 25,000 shares of Common Stock
at an exercise price of $3.50 per share. These warrants are immediately
exercisable. The closing price of the Common Stock on April 23, 1999 was $6.00.
Substantially all of the proceeds of this loan have been expended by the Company
to fund its working capital needs. This offering was exempt from registration
pursuant to Section 4(2) of the Act and Rule 506 promulgated thereunder.
On May 10, 1999, the Company issued 225,000 shares of Common Stock to a
private investor in exchange for $225,000. The Company expects that the proceeds
from this offering will be completely expended before the end of June 1999. This
offering was exempt from registration pursuant to Section 4(2) of the Act and
Rule 506 promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
- -----------------------------------------
As reported in the Form 10-KSB, the Company received a total of $538,500
in loans dating back to November 2, 1998 in five separate loan transactions.
Interest became payable on two of these loans (a total of $150,000) on April 1,
1999, on two other loans (a total of $288,500) on April 19, 1999 and on the
remaining loan (a total of $100,000) on June 1, 1999. The Company is in default
on these loans for failing to pay the required interest payments. Three of these
loans (a total of $388,500) are secured by substantially all of the Company's
assets. The Company's ability to pay any interest or principal is completely
dependent on the Company's ability to raise additional capital from external
sources. The Company's failure to raise such capital and to pay all accrued but
unpaid interest and subsequently to repay the loans upon maturity may result in
the foreclosure on the Company's assets. This would have a material adverse
effect on the Company's business, financial condition and results of operations
and would jeopardize the Company's ability to continue as a going concern.
As of June 15, 1999, the Company owed $26,417.50 in interest on these
loans, with interest accruing at a rate of $177.04 per day.
19
<PAGE>
<TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------------------------------------------
(A) EXHIBITS.
<CAPTION>
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
--- ----------- -------- ----
<S> <C> <C> <C>
3.1 Articles of Incorporation of the Company, as amended Incorporated by reference to Exhibit No. 3.1
to Registrant's Registration Statement (the
"REGISTRATION STATEMENT") on Form SB-2
(Registration Number 333-5530-A).
3.2 By-laws of the Company Registration Statement Incorporated by reference to Exhibit No. 3.2 to the
Registration Statement.
4.1 Form of Common Stock certificate Incorporated by reference to Exhibit No. 4.1 to the
Registration Statement.
4.2 Form of Underwriters' Warrant Incorporated by reference to Exhibit No. 4.2 to the
Registration Statement.
4.3 Form of 1996 Incentive Plan Incorporated by reference to Exhibit No. 4.3 to the
Registration Statement.
10.1 License Agreement dated September 7, 1990 between the Incorporated by reference to Exhibit No. 10.1 to the
University of Miami and its School of Medicine and Registration Statement.
ProVec, Inc.
10.2 Assignment of License Agreement dated January 20, 1992 Incorporated by reference to Exhibit No. 10.2 to the
between ProVec, Inc. and EpiDNA, Inc. Registration Statement.
10.3 Agreement between University of Miami and its School Incorporated by reference to Exhibit No. 10.3 to the
of Medicine and the Company dated August 21, 1996 Registration Statement.
10.4 Employment Agreement dated August 15, 1996 between Incorporated by reference to Exhibit No. 10.4 to the
Mead M. McCabe, Sr. and the Company Registration Statement.
10.5 Stock Option Addendum to Employment Agreement dated Incorporated by reference to Exhibit No. 10.5 to the
August 15, 1996 between Mead M. McCabe, Sr. And the Registration Statement.
Company
10.6 Employment Agreement dated August 15, 1996 between Incorporated by reference to Exhibit No. 10.6 to the
Mead M. McCabe, Jr. and the Company Registration Statement.
10.7 Stock Option Addendum to Employment Agreement dated Incorporated by reference to Exhibit No. 10.7 to the
August 15, 1996 between Mead M. McCabe, Jr. and the Registration Statement.
Company
10.8 Consulting Agreement dated June 19, 1996 between James Incorporated by reference to Exhibit No. 10.10 to the
A. Joyce and the Company Registration Statement.
20
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
--- ----------- -------- ----
10.9 Letter Agreement dated December 16, 1994 among Nyer Incorporated by reference to Exhibit No. 10.11 to the
Medical Group, Inc., the Company, Mead M. McCabe, Sr. Registration Statement.
And Mead M. McCabe, Jr.
10.10 Investors Finders Agreement dated June 9, 1994 among Incorporated by reference to Exhibit No. 10.12 to the
Nyer Medical Group, Inc., and the Company and Gulf Registration Statement.
American Trading Company
10.11 Industrial Real Estate Lease dated June 12, 1997 among Incorporated by reference to Exhibit No. 10.13 to the
the Company and Jetex Group, Inc. Company's Quarterly Report on Form 10-QSB for the
Quarter ended June 30, 1997
10.12 Letter from University of Miami dated April 8, 1998 Incorporated by reference to Exhibit No. 10.12 to the
Company's Annual Report on Form 10-KSB for the Fiscal
Year ended December 31, 1997
10.13 Promissory Note dated as of November 2, 1998 in the Incorporated by reference to Exhibit 10.13 to the
Original Principal Amount of $50,000 given by the Company Company's Annual Report on Form 10-KSB for the Fiscal
to Ms. Patricia A. Gionone Year ended December 31, 1998
10.14 Common Stock Purchase Warrant No. W-2 dated as of Incorporated by reference to Exhibit 10.14 to the
November 2, 1998 granted by the Company to Ms. Patricia Company's Annual Report on Form 10-KSB for the Fiscal
A. Gionone Year ended December 31, 1998
10.15 Promissory Note dated as of November 2, 1998 in the Incorporated by reference to Exhibit 10.15 to the
Original Principal Amount of $100,000 given by the Company's Annual Report on Form 10-KSB for the Fiscal
Company to Jerome P. Seiden Irrevocable Trust Dated Year ended December 31, 1998
April 22, 1998
10.16 Common Stock Purchase Warrant No. W-1 dated as of Incorporated by reference to Exhibit 10.16 to the
November 2, 1998 granted by the Company to Jerome P. Company's Annual Report on Form 10-KSB for the Fiscal
Seiden Irrevocable Trust Dated April 22, 1998 Year ended December 31, 1998
10.17 Common Stock Purchase Warrant No. W-5 dated as of Incorporated by reference to Exhibit 10.17 to the
September 3, 1998 granted by the Company to Sterling Company's Annual Report on Form 10-KSB for the Fiscal
Technology Partners, Ltd. Year ended December 31, 1998
10.18 Common Stock Purchase Warrant No. W-4 dated as of Incorporated by reference to Exhibit 10.18 to the
January 19, 1999 granted by the Company to Sterling Company's Annual Report on Form 10-KSB for the Fiscal
Technology Partners, Ltd. Year ended December 31, 1998
10.19 Common Stock Purchase Warrant No. W-7 dated as of Incorporated by reference to Exhibit 10.19 to the
March 9, 1999 granted by the Company to Sterling Company's Annual Report on Form 10-KSB for the Fiscal
Technology Partners, Ltd. Year ended December 31, 1998
21
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
--- ----------- -------- ----
10.20 Common Stock Purchase Warrant No. W-3 dated as of Incorporated by reference to Exhibit 10.20 to the
January 19, 1999 granted by the Company to Capital Company's Annual Report on Form 10-KSB for the Fiscal
Research, Ltd. Year ended December 31, 1998
10.21 Promissory Note dated as of January 19, 1999 in the Incorporated by reference to Exhibit 10.21 to the
Original Principal Amount of $163,500 given by the Company's Annual Report on Form 10-KSB for the Fiscal
Company to Capital Research, Ltd. Year ended December 31, 1998
10.22 Pledge and Security Agreement dated as of January 19, Incorporated by reference to Exhibit 10.22 to the
1999 between the Company and Capital Research, Ltd. Company's Annual Report on Form 10-KSB for the Fiscal
Year ended December 31, 1998
10.23 Registration Rights Agreement dated as of January 19, Incorporated by reference to Exhibit 10.23 to the
1999 between the Company and Capital Research, Ltd. Company's Annual Report on Form 10-KSB for the Fiscal
Year ended December 31, 1998
10.24 Promissory Note dated as of March 9, 1999 in the Original Incorporated by reference to Exhibit 10.24 to the
Principal Amount of $125,000 given by the Company to Company's Annual Report on Form 10-KSB for the Fiscal
Capital Research, Ltd. Year ended December 31, 1998
10.25 Common Stock Purchase Warrant No. W-6 dated as of Incorporated by reference to Exhibit 10.25 to the
March 9, 1999 granted by the Company to Capital Research, Company's Annual Report on Form 10-KSB for the Fiscal
Ltd. Year ended December 31, 1998
10.26 Registration Rights Agreement dated as of March 9, 1999 Incorporated by reference to Exhibit 10.26 to the
between the Company and Capital Research, Ltd. Company's Annual Report on Form 10-KSB for the Fiscal
Year ended December 31, 1998
11. Statement re: computation of earnings Not applicable
18. Letter on change in accounting principles Not applicable
19. Reports furnished to Security holders Not applicable
22. Published report regarding matters submitted to vote Not applicable
23. Consents of experts and counsel Not applicable
24. Power of Attorney Not applicable
27. Financial Data Schedule Provided herewith
</TABLE>
(B) REPORTS ON FORM 8-K.
None.
22
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: June 24, 1999 GENETIC VECTORS, INC.
By: /s/ Mead M. McCabe, Jr.
--------------------------------
Mead M. McCabe, Jr.
President
23
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
--- ----------- -------- ----
3.1 Articles of Incorporation of Incorporated by reference
the Company, as amended to Exhibit No. 3.1 to
Registrant's Registration
Statement (the
"REGISTRATION STATEMENT")
on Form SB-2 (Registration
Number 333-5530-A).
3.2 By-laws of the Company Incorporated by reference
to Exhibit No. 3.2 to the
Registration Statement.
4.1 Form of Common Stock Incorporated by reference
certificate to Exhibit No. 4.1 to the
Registration Statement.
4.2 Form of Underwriters' Warrant Incorporated by reference
to Exhibit No. 4.2 to the
Registration Statement.
4.3 Form of 1996 Incentive Plan Incorporated by reference
to Exhibit No. 4.3 to the
Registration Statement.
10.1 License Agreement dated Incorporated by reference
September 7, 1990 between the to Exhibit No. 10.1 to the
University of Miami and its Registration Statement.
School of Medicine and ProVec,
Inc.
10.2 Assignment of License Incorporated by reference
Agreement dated January 20, to Exhibit No. 10.2 to the
1992 between ProVec, Inc. and Registration Statement.
EpiDNA, Inc.
10.3 Agreement between University Incorporated by reference
Miami and its School of to Exhibit No. 10.3 to the
of Medicine and the Registration Statement.
Company dated
August 21, 1996
10.4 Employment Agreement dated Incorporated by reference
August 15, 1996 between Mead to Exhibit No. 10.4 to the
M. McCabe, Sr. and the Company Registration Statement.
10.5 Stock Option Addendum to Incorporated by reference
Employment Agreement dated to Exhibit No. 10.5 to the
August 15, 1996 between Mead Registration Statement.
M. McCabe, Sr. and the Company
10.6 Employment Agreement dated Incorporated by reference
August 15, 1996 between Mead to Exhibit No. 10.6 to the
M. McCabe, Jr. and the Company Registration Statement.
10.7 Stock Option Addendum to Incorporated by reference
Employment Agreement dated to Exhibit No. 10.7 to the
August 15, 1996 between Mead Registration Statement.
M. McCabe, Jr. and the Company
10.8 Consulting Agreement dated Incorporated by reference
June 19, 1996 between James A. to Exhibit No. 10.10 to the
Joyce and the Company Registration Statement.
10.9 Letter Agreement dated Incorporated by reference
December 16, 1994 among Nyer to Exhibit No. 10.11 to the
Medical Group, Inc., the Registration Statement.
Company, Mead M. McCabe, Sr.
and Mead M. McCabe, Jr.
24
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
--- ----------- -------- ----
10.10 Investors Finders Agreement Incorporated by reference
dated June 9, 1994 among Nyer to Exhibit No. 10.12 to the
Medical Group, Inc., and the Registration Statement.
Company and Gulf American
Trading Company
10.11 Industrial Real Estate Lease Incorporated by reference
dated June 12, 1997 among the to Exhibit No. 10.13 to the
Company and Jetex Group, Inc. Company's Quarterly Report
on Form 10-QSB for the
Quarter ended June 30, 1997
10.12 Letter from University of Incorporated by reference
Miami dated April 8, 1998 to Exhibit No. 10.12 to the
Company's Annual Report on
Form 10-KSB for the Fiscal
Year ended December 31, 1997
10.13 Promissory Note dated as of Incorporated by reference
November 2, 1998 in the to Exhibit 10.13 to the
Original Principal Amount of Company's Annual Report
on $50,000 given by the on Form 10-KSB for the
Company to Ms. Patricia A. Fiscal Year ended
Gionone December 31, 1998
10.14 Common Stock Purchase Incorporated by reference
Warrant No. W-2 dated to Exhibit 10.13 to the
as of November 2, 1998 Company's Annual Report
granted by the Company on Form 10-KSB for the
to Ms. Patricia A. Gionne Fiscal Year ended
December 31, 1998
10.15 Promissory Note dated as of Incorporated by reference
November 2, 1998 in the to Exhibit 10.15 to the
Original Principal Amount of Company's Annual Report on
$100,000 given by the Company Form 10-KSB for the Fiscal
to Jerome P. Seiden Year ended December 31, 1998
Irrevocable Trust Dated
April 22, 1998
10.16 Common Stock Purchase Warrant Incorporated by reference
No. W-1 dated as of to Exhibit 10.16 to the
November 2, 1998 granted by Company's Annual Report on
the Company to Jerome P. Form 10-KSB for the Fiscal
Seiden Irrevocable Trust Year ended December 31, 1998
Dated April 22, 1998
10.17 Common Stock Purchase Incorporated by reference
Warrant No. W-5 dated as of to Exhibit 10.17 to the
September 3, 1998 granted Company's Annual Report
by the Company by Sterling on Form 10-KSB for the Fiscal
Technology Partners, Ltd. Year ended December 31, 1998
10.18 Common Stock Purchase Incorporated by reference
Warrant No. W-4 dated to Exhibit 10.18 to the
as of January 19, 1999 Company's Annual Report
granted by the Company to on Form 10-KSB for the Fiscal
Sterling Technology Year ended December 31, 1998
Partners, Ltd.
10.19 Common Stock Purchase Incorporated by reference
Warrant No. W-7 dated to Exhibit 10.19 to the
as of March 9, 1999 Company's Annual Report
granted by the Company on Form 10-KSB for the
to Sterling Technology Fiscal Year ended
Partners, Ltd. December 31, 1998
10.20 Common Stock Purchase Incorporated by reference
No. W-3 dated as of to Exhibit 10.20 to the
January 19, 1999 Company's Annual Report
granted by the Company on Form 10-KSB for the
to Capital Research, Ltd. Fiscal Year ended
December 31, 1998
25
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION PAGE
--- ----------- -------- ----
10.21 Promissory Note dated as Incorporated by reference
January 19, 1999 in the to Exhibit 10.21 to the
to the Original Principal Company's Annual Report on
Amount of $163,500 given Form 10-KSB for the Fiscal
by the Company to Capital Year ended December 31, 1998
Research, Ltd.
10.22 Pledge and Security Incorporated by reference
Agreement dated as of to Exhibit 10.22 to the
January 19, 1999 between Company's Annual Report
the Company and Capital on Form 10-KSB for the
Research, Ltd. Fiscal Year ended
December 31, 1998
10.23 Registration Rights Incorporated by reference
Agreement dated as of to Exhibit 10.23 to the Company's
January 19, 1999 between Annual Report on Form 10-KSB
the Company and Capital for the Fiscal Year ended
Research, Ltd. December 31, 1998
10.24 Promissory Note dated as Incorporated by reference to
of March 9, 1999 in the Exhibit 10.24 to the Company's
Original Principal Amount Annual Report on Form 10-KSB
of $125,000 given by the for the Fiscal Year ended
Company to Capital Research, December 31, 1998
Ltd.
10.25 Common Stock Purchase Incorporated by reference to
Warrant No. W-6 dated Exhibit 10.25 to the Company's
as of March 9, 1999 Annual Report on form 10-KSB
granted by the Company for the Fiscal Year ended
to Capital Research, Ltd. December 31, 1998
10.26 Registration Rights Incorporated by reference to
Agreement dated as of Exhibit 10.26 to the Company's
March 9, 1999 between Annual Report on Form 10-KSB
the Company and Capital for the Fiscal Year ended
Research, Ltd. December 31, 1998
11. Statement re: computation of Not applicable
earnings
18. Letter on change in accounting Not applicable
principles
19. Reports furnished to Security Not applicable
holders
22. Published report regarding Not applicable
matters submitted to Vote
23. Consents of experts and counsel Not applicable
24. Power of Attorney Not applicable
27. Financial Data Schedule Provided herewith
26
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001017157
<NAME> GENETIC VECTORS, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 67,369
<SECURITIES> 0
<RECEIVABLES> 2,453
<ALLOWANCES> 0
<INVENTORY> 24,744
<CURRENT-ASSETS> 210,389
<PP&E> 566,567
<DEPRECIATION> (178,893)
<TOTAL-ASSETS> 862,280
<CURRENT-LIABILITIES> 697,813
<BONDS> 0
0
0
<COMMON> 2,350
<OTHER-SE> 862,280
<TOTAL-LIABILITY-AND-EQUITY> 862,280
<SALES> 7,654
<TOTAL-REVENUES> 7,654
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 408,633
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (399,108)
<INCOME-TAX> 0
<INCOME-CONTINUING> (399,108)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (399,108)
<EPS-BASIC> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
