UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
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BIOENVISION, INC.
(Exact name of registrant as specified in its charter)
Delaware 113375915
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State of Incorporation IRS Employer ID No.
590 Madison Avenue
New York, New York 10022
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Address of principal Executive Offices Zip Code
Registrant's Telephone Number (212) 521-4496
Check here whether the issuer (1) has filed all reports required
to be filed by Sections 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 March 31, 1999, the following shares of the Registrant's
common stock were issued and outstanding:
Voting common stock 7,243,897
Traditional Small Business Disclosure (check one): Yes X No
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INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . .4
CONDENSED CONSOLIDATED BALANCE SHEET . . . . . . . . .5
CONDENSED CONSOLIDATED INCOME STATEMENT. . . . . . . .6
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . .7
Note 1. NATURE OF BUSINESS AND SIGNIFICANT
ACCOUNTING POLICIES. . . . . . . . . . . . .9
Note 2. USE OF OFFICE SPACE. . . . . . . . . . . . 10
Note 3. EARNINGS PER SHARE . . . . . . . . . . . . 10
Note 4. LIQUIDITY . . . . . . . . . . . . . . . . .10
Note 5. GOODWILL. . . . . . . . . . . . . . . . . .11
Item 2. Management's Discussion And Analysis or Plan of
Operations. . . . . . . . . . . . . . . . . . . . . .12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 18
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 18
Item 3. Defaults upon Senior Securities. . . . . . . . . . . 18
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 18
Item 5. Other information. . . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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PART I - FINANCIAL INFORMATION
To the Board of Directors of Bioenvision, Inc.
Dover, DE
We have reviewed the accompanying balance sheet of Ascot Group
Inc., (a development stage company) as of March 31, 1999, and
the related statements of loss and retained earnings and cash
flows for the three months then ended, in accordance with
Statements on Standards for Accounting and Review Services issued
by the American Institute of Certified Public Accountants. All
information included in these financial statements is the
representation of the management of Ascot Group, Inc.
A review consists principally of inquiries of Company personnel
and analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements in order for them to be in conformity with generally
accepted accounting principles.
New York, New York
May 24, 1999
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Item 1. Financial Statements
BIOENVISION INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
As Of As Of
Mar. 31, 1999 June 30, 1998
(Unaudited) (Audited)
--------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $0 $0
Other Current Assets 0 0
_________ ________
Total Current Assets 0 0
Other Assets (Goodwill - Note 5) 7,014 0
_________ ________
TOTAL ASSETS $7,014 $0
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $0 $0
Accrued Expenses 115,988 12,450
_________ ________
Total Current Liabilities 115,988 12,450
Loan Payable 18,650 0
_________ ________
Total Liabilities 134,638 12,450
Stockholders' Equity
Common Stock, $.001 par value,
Authorized 25,000.000 Shares;
Issued and Outstanding
7,243,897 Shares 7,244 3,450
Additional Paid in Capital 45,170 30,550
Deficit Accumulated During the
Development Stage (180,038) (46,450)
_________ ________
Total Stockholders' Equity (127,624) (12,450)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $7,014 $0
</TABLE>
The accompanying notes and accountant's report are an integral
part of these financial statements.
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BIOENVISION, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF LOSS
(Unaudited)
<TABLE>
For the 3 Mos Ended For the 6 Mos Ended
March 31 March 31
1999 1998 1999 1998
--------------------------------------------
<S> <C> <C> <C> <C>
TOTAL REVENUES: $ 0 N/A 0 N/A
OPERATING EXPENSES:
Accounting 1,500 N/A 2,700 N/A
Legal 3,000 5,000
Rent 15,000 17,200
Consultants 95,250 0
Filing Fee 13 25
________ _______ ________ ________
NET LOSS (114,763) N/A (119,675) N/A
NET LOSS PER SHARE (.01) (.01)
Weighted Average
Number of Shares
Outstanding 7,243,897 7,243,897
</TABLE>
The accompanying notes and accountant's report are an integral
part of these financial statements.
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BIOENVISION, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS (unaudited)
<TABLE>
For the 3 mos For the 3 mos
Ended Ended
to to
Mar. 31, 1999 Mar. 31, 1998
________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (114,763) N/A
Adjustments to Reconcile Net Loss
to Net Cash Used in operating
Activities:
Changes in Assets and Liabilities
Decrease in Accounts Payable and
Accrued Expenses 112,263
___________ ___________
Total Adjustments (112,263) N/A
Net Cash Used in
Operating Activities ( 2,500)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Issuance of Stock 7,014
Increase in Loan Payable 2,500
Net Cash Provided
by Financing Activities 9,514
___________ ___________
Net Change in Cash 0 N/A
Cash at Beginning of Period 0
Cash at End of Period $ 0
Supplemental Disclosure of
Cash Flow Information
Cash Paid During the Period for
Interest Expense 0
Corporate Taxes $ 0
</TABLE>
The accompanying notes and accountant's report are an integral
part of these financial statements.
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BIOENVISION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
A. Description of Company
BIOENVISION, INC.,("the Company") is a for-profit corporation,
incorporated under the laws of the State of Delaware on August
16, 1996. The Company is a developmental stage, biopharmaceutical
company primarily engaged in the research and development of
products and technologies for the treatment of cancer. The
Company plans to acquire development and marketing rights to a
portfolio of platform technologies that have been developed in
the past, from which products will be derived and additional
products may be developed in the future. The company's primary
objective is to continue developing its existing technologies and
to commercialize products derived from such technologies.
On December 21, 1998, the Company entered into an agreement
whereby it agreed to purchase 100 percent of the issued and
outstanding stock of Bioenvision Inc., a company incorporated
under the laws of the State of Delaware. Bioenvision Inc., was
also a development stage company incorporated utilizing the name
Micar Systems, Inc., under laws of the State of Delaware.
Bioenvision Inc., was also a developmental stage company
incorporated utilizing the name Micar Systems, Inc., under the
laws of the State of Delaware on November 6, 1996. On November
22, 1996, its name was changed to Micar Enterprises, Inc. On
January 16, 1997 it changed its name to Redleaf Holdings Inc.,
and on July 3, 1998 it changed its name to Bioenvision, Inc. On
July 3, 1998, Bioenvision Inc., acquired Biotechnology and
Healthcare Ventures Limited (a company registered in Ireland).
On September 8, 1998, Bionevision Inc., acquired Eurobiotech
Group Inc., (a Delaware Corporation).
The December 21, 1998 acquisition agreement between the Company
and Bioenvision Inc., called for a 1 for 15 reverse split of the
Company's then outstanding shares. Ascot Group then issued
7,013,897 post-reverse split shares with a par value of $7,014 to
the shareholders of Bioenvision Inc., in exchange for 100 percent
of the issued and outstanding stock of Bioenvision Inc. After
the agreement, closed on January 4, 1999, the Company changed its
name to Bioenvision Inc., and the Company then had 7,243,897
shares of stock outstanding. See Note 5.
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B. Basis of Presentation
Financial statements are prepared on the accrual basis of
accounting. Accordingly, revenue is recognized when earned and
expenses when incurred.
C. Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company
considers all short-term investments with maturity of three
months or less to be cash equivalents.
D. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from these estimates. Significant estimates in the
financial statements include the assumption that the Company will
continue as a going concern. See Note 4.
NOTE 2 - USE OF OFFICE SPACE
The Company subleases 1,000 square feet of space for its
executive offices at Talbot House, High Street, Crowthorne,
Berks, UK which it receives from one of its shareholders at
$2,500 per month beginning January 1, 1999. The Company
uses 1,000 square feet of office space for executive offices at
590 Madison Avenue, New York, New York for $2,500 per month
beginning January 1, 1999. Both offices are sublet from Warren
Capital Ltd. The lease agreements run for the year ended
December 31, 1999.
NOTE 3 - EARNINGS PER SHARE
Net Loss per share $( 0.02)
NOTE 4 - LIQUIDITY
The Company's viability as a going concern is dependent upon
raising additional capital, and ultimately, having net income.
The Company's limited operating history, including its losses and
no revenues, primarily reflect the operations of its early stage.
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As a result, the Company had from time of inception to March 31,
1999 no revenue and a net loss from operations of $180,038.
As of March 31, 1999, the Company had a net capital deficiency
of $127,624.
The Company has incurred losses from operations and is not
generating cash from operations. Operations to date have been
funded principally by equity capital, a loan to the corporation,
and credit extended by vendors. The Company plans to continue to
fund its development expenses through additional capital raising
activities, including one or more offerings of equity and/or debt
through private placements and/or public offerings. The
company's ability to continue to develop its infrastructure
depends on its ability to raise other additional capital. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
The Company is still building its operational infrastructure.
Additional capital raised by the Company, if any, will be used
for this purpose and to fund its planned operations.
NOTE 5 - GOODWILL
In connection with the purchase of 100 percent of the issued and
outstanding stock of Bioenvision, Inc., the company exchanged
7,013,897 shares of its stock for 7,013,897 shares of Bioenvision
Inc.'s stock. This asset is valued at the par value of the stock
issued. The acquired company had no assets or liabilities at the
date of acquisition.
<PAGE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
RESULTS OF OPERATIONS
The Company on December 21, 1998 entered into an Acquisition
Agreement with Bioenvision Inc., a Delaware corporation, for the
purpose of acquiring ownership of the Company. The Company
acquired 7,013,897 shares of common stock, $0.01 par value, of
Bioenvision, Inc. The Company filed a Form 8-K to report the
execution of the Acquisition Agreement. The Company thereafter
on January 12, 1999 filed a Form 8-K/A to report the closing of
the Acquisition of Bioenvision and to also report that the
Company had decided to change its name form Ascot Group Inc., to
Bioenvision. An additional Form 8-K/A was filed on March 11,
1999 which incorporated the financial statements of Bioenvision
prior to the merger. The contents of both the Form 8-K and Form
8-K/A are incorporated by reference herein.
The acquisition of Bioenvision was consummated by the execution
of an Acquisition Agreement dated December 21, 1998. The shares
acquired by the Company represented one hundred (100%) percent of
all of Bioenvision's then currently issued and outstanding common
stock. The aggregate purchase price paid by the Company for the
Bioenvision common shares was 7,013,897 post-reverse split shares
of voting common stock of Ascot Group Inc., $0.001 par value.
These shares were issued to the sellers of the Bioenvision
shares subsequent to a 15 to 1 reverse split of the voting common
stock by the Company of its voting common stock. There was no
material relationship between the Company and Bioenvision prior
to the acquisition by the company of the Bioenvision shares.
Subsequent to the acquisition of the Bioenvision shares, the
Company changed its name to Bioenvision, Inc.
It is not guaranteed that the Company's acquisition of
Bioenvision will be beneficial to the Company and its
shareholders. The Company selected this business opportunity
based on management's business judgment.
The Company lacks funds and it may be necessary for the officers
and directors to either advance funds to the Company or to accrue
expenses until such time as the Company begins to generate
sufficient income to cover such expenses. Management intends to
hold expenses to a minimum and to obtain services on a
contingency basis when possible. The Company's directors will
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forego any compensation until such time as the Company begins to
generate sufficient income to cover such expenses. If the
Company engages outside advisors or consultants in search for
business opportunities, the Company may attempt to raise
additional funds. There is no assurance that the Company will be
able to obtain additional funding when and if needed, or that
such funding, if available, can be obtained on terms acceptable
to the Company. The Company has not entered into any loan
agreements or share placement agreements.
The Company's expenses to date have been administrative expenses
and research and development costs along with legal and
accounting costs related to the acquisition. The Company
has funded such expenses based upon funds advanced from its
officers and directors.
The Company's current employees work on a part-time basis.
Outside advisors or consultants will be used only if they can be
obtained for minimal cost or on a deferred payment basis.
Management is confident that it will be able to operate in this
manner in its efforts to develop the Company's business
opportunities during the next twelve months.
The Company is a reporting company and is obligated to file with
the Commission certain interim and periodic reports including an
annual report containing audited financial statements. The
Company intends to comply and fulfil its obligations under the
Exchange Act even if its obligation to file such reports is
suspended under applicable provisions of the Exchange Act.
MANAGEMENT
The Company is a development stage company which operates in the
biotechnology industry. The Bioenvision management, headed by
Christopher Wood, will utilize their experience and expertise in
that area to assist the Company with its operations and
development.
The directors of the Company, subsequent to the acquisition of
Bioenvision, are Christopher Wood, George Margetts, Stewart Smith
and Thomas Nelson. The Company's Chief Executive Officer is
Christopher Barry Wood, Chief Operating Officer is Stuart Smith
and the Chief Medical Officer is George Margetts. Combined, they
have in excess of 50 years experience within the pharmaceutical
industry working for companies such as Medeva Plc, Schering and
Sterling Winthrop.
<PAGE>
<PAGE>
Christopher B Wood, MD is the Company's President and Chief
Executive Officer. Dr. Wood was a specialist surgeon at the Royal
Postgraduate Medical School, London, England and has more than 15
years experience in the European Biotechnology sector. He has
taken two biotechnology companies from start up through
commercialisation, one of which, Medeva PLC, is traded on the
London Stock Exchange. Dr Wood holds MD from University of Wales
School of Medicine and the Fellowship of the Royal College of
Surgeons in Edinburgh.
George Margetts is the Company Chief Medical Officer.
Dr Margetts served as Chief Executive Officer, Managing Director
of Sterling Winthrop Group between 1984 and 1989 and as its
Medical Director between 1971 and 1989. Since that date he has
been Managing Director of Stegram Pharmaceutical Ltd. Dr Margetts
holds B.Pharm and M.Sc degrees from the University of London and
M.R.C.S, L.R.C.P, M.D and B.S degrees from University College
Hospital Medical School, London.
Thomas Nelson is the Company's Chief Financial Officer.
Mr Nelson served as the Director of Finance of the Management
Board of the Royal and Sun Alliance Insurance Group from 1996 -
1998. Prior thereto, Mr Nelson served as Group Finance Driector
of the Main Board of Sun Alliance Insurance Group from 1991 -
1996, and has served as Chairman of the UK Insurance Industry
Committee on European Regulatory, fiscal and accounting issues.
He has also worked with Deloittes in Paris and as a Consultant
with PA Consultants Management. Mr Nelson holds a BA degree from
Cambridge University.
Stuart Smith Ph.D is the Company's Chief Operating Officer.
Dr Smith has considerable experience in the biotechnology and
pharmaceutical fields holding senior positions at Schering and
British Biotech. Prior thereto, Dr.Smith worked in the
verterinary and public health fields, focusing on animal health
research and parasitology. Dr Smith holds a B.S degree with
honours in Biology and a Ph.D degree in Philosophy from the
University of Aberdeen.
Bioenvision is a development stage international bio-
pharmaceutical company with a primary focus on the diagnosis and
treatment of cancer. Bioenvision's aim is to manage the
convergence of groundbreaking science to create strong,
commercially successful cancer treatments. Bioenvision currently
has 4 platform technologies focused on cancer treatments. The
products which Bioenvision seeks to develop will be used to treat
a wide range of malignant diseases, from leukemia to breast and
prostate cancer. In the next 24 months, Bioenvision plans to
launch three important products to fight cancer. The Company's
lead product, a drug for the treatment of breast cancer currently
has a product license in Europe.
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Bioenvision holds marketing rights to a portfolio of four
platform technologies that have been developed over the past
fifteen years, from which twelve products have been derived and
additional products may be developed in the future.
Bioenvision's primary objective is to continue developing its
existing platform technologies and to commercialize products
derived from such technologies.
Bioenvision expects to begin marketing a product for the
treatment of post-menopausal breast cancer on a commercial scale
in the United States and Europe in the fourth quarter of 1999.
The potential U.S. market for that product is estimated
from the leading competitor companies sales to be approximately
$1.0 billion annually. In addition, three of the other products
and technologies to which Bioenvision has or will have rights are
presently being tested in clinical trials, and an additional
eight are in the pre-clinical stage of development. Bioenvision
has adopted an aggressive product development program and,
assuming the successful completion of FDA and EMEA clinical
trials, anticipates that by the end of 2002, five of such
products and technologies will have received regulatory approval
for certain disease indications in the United States or Europe,
and six will be emerging through the clinical trial process.
Bioenvision is also currently in discussions with several major
pharmaceutical and biotechnology companies to license or
co-market certain of the products in key territories.
Bioenvision's primary objective is to continue developing its
existing platform technologies and to commercialize products
derived from such technologies. Once a product or technology has
been launched into the market for a particular disease
indication, Bioenvision plans to work with numerous
collaborators, both pharmaceutical and clinical, in the oncology
community to extend the labeling of the drug to other
indications. In order to market its products effectively,
Bioenvision intends to establish a dedicated oncology sales
force for the North American market while establishing a joint
venture sales force in Europe.
The Company's lead product, Modrefen, has undergone extensive
experimental testing to confirm its mode of action on the newly
discovered second estrogen receptor, Erb. The tests have shown
that Modrefen modulates Erb specifically with little or no action
on Erb Management believe this action makes it the first
commercially available selective estrogen receptor modulator
(SERM) to specifically target the second receptor, which
distinguishes it from other SERMs.
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Clinical trials have begun with Modrefen for the treatment of
Cushings disease in dogs. This adrenal disorder is a relatively
common illness in certain types of dogs, and Modrefen has been
shown to be effective. The large scale clinical trials are a
prelude to plans to launch the product in veterinary practices in
the USA.
The Company is actively developing the purine nucleoside,
clofarabine, which it acquired under license from Southern
Research Institute, Birmingham, Alabama. A Phase I clinical trial
is close to completion at the M D Anderson Cancer Center,
Houston.
The Company's Gene Therapy program has seen significant
developments over the past few months. The clinical trial of
the albumin gene product in patients with hypoalbuminemia due to
cirrhosis of the liver have shown no toxic reactions to the
product. The Company believes that the platform
technology from which the albumin gene product has been developed
is of major importance in many areas of gene therapy.
In February 1999, the Company signed an agreement with the Royal
Free and University College Medical School to develop technology
that could be important in gene therapy for many human diseases.
The medical school is one of the leading medical and scientific
institutions in Great Britain. The work that the Company has
acquired under license relates to DNA Vectors and the use of
muscle element promotors to enhance the production of protein
from gene sequences. Early clinical trials, as well as
laboratory experiments, have shown that combining the muscle
elements with a known gene will induce skeletal muscle to produce
the gene product. This has been used to increase protein levels
in the blood in patients with low levels because of failure of
the liver to manufacture adequate amounts of the protein. This
technology has considerable potential in a wide range of human
diseases.
The Company has agreed to continue the pre-clinical development
of the technology and to expand the possible applications of the
invention. In addition, the Company will conduct clinical trials
in key therapeutic areas with the intention to commercially
develop products for clinical use in humans and veterinary
applications.
The license agreement allows the Company to specifically develop
products for the treatment of disorders associated with liver
dysfunction, diseases characterised by decreased production of
liver proteins, cancer and endocrine disorders that may effect
liver function.
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The Company's viability as a going concern is dependent upon
raising additional capital, and ultimately, having net income.
The Company requires additional capital principally to meet its
costs for the implementation of its business plan, for general
and administrative expenses and to fund research and development
into oncology focused products.
The Company does not have a working capital line of credit with
any financial institution. Therefore, future sources of liquidity
will be limited to the Company's ability to obtain additional
debt or equity funding.
There is no guarantee that the Company will be able to continue
its operations or that its acquisition of Bioenvision will ensure
that the Company will be a profitable one. The Company is a
development stage company and any investment in the Company is
considered risky.
YEAR 2000 DISCLOSURE
The Company is aware of the Year 2000 issue and has insured that
all of the Company's computer equipment is fully Year 2000
compatible. However as the Company's products are mostly being
developed in various research institutions, no guarantee can be
made that those institutions equipment is Year 2000 compatible.
This disclosure complies with the directives of the Securities
and Exchange Commission, specifically Staff Legal Bulletin No. 5
(CF/IM), regarding Year 2000 issues.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are currently no pending legal proceedings against the
company.
Item 2. Changes in Securities
On March 31, 1999 the Company had outstanding 7,243,897 shares of
common stock, $0.01 par value. The Company filed a Form 15c-211
with the NASD and its shares are currently listed as an OTC
issue, symbol "BIOV".
Item 3. Defaults upon Senior Securities
There has been no default in the payment of principal, interest,
sinking or purchase fund installment.
Item 4. Submission of Matters to a Vote of Security Holders
No matter has been submitted to a vote of security holders during
the period covered by this report.
Item 5. Other information
There is no other information to report which is material to the
company's financial condition not previously reported.
Item 6. Exhibits and Reports on Form 8-K
The Company hereby incorporates by reference the Form 8-K/A filed
with the SEC on January 12, 1999 and the Form 8-K/A filed on
March 11, 1999.
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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.
______________________
Bioenvision, Inc.
(Registrant)
/s/ Christopher Wood
President
Date: May 21, 1999
