UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period from _______________ TO _______________.
000-28371
(Commission File Numbers)
ENDOVASC LTD., INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
NEVADA 2834
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
</TABLE>
15001 Walden Road, Suite 201
Montgomery, Texas 77356
(Address of principal executive offices)
(409) 448-2222
(Registrants' telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES [ X ] NO[ ]
As of March 31, 2000, 14,444,335 shares of Common Stock, par value $.001
per share, of Endovasc Ltd., Inc. were issued and 12,439,335 shares were
outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
For the Three Months Ended on March 31,
2000 and 1999 For the Nine Months Ended
on March 31, 2000 and 1999
For the Period from Inception, June 30, 1996 to March 31, 2000
UNAUDITED
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
March 31, 2000 and 1999
<TABLE>
<CAPTION>
Assets March 31
2000 1999
Current Assets
<S> <C> <C>
Cash $19,992 $36,071
Prepaid expenses 453,345 11,715
Total Current Assets 473,337 47,786
Property & equipment-net 10,273 9,096
Deposits 2,900 2,900
Total Assets 486,510 59,782
Liabilities and Stockholders' Deficit
Current Liabilities
Current maturities of long-term debt 44,073 260,933
Note payable shareholder 44,000 95,247
Accounts payable 311,317 48,434
Accrued liabilities 189,366 288,962
Total Current Liabilities 588,756 693,576
Long term debt, net of current maturities 27,573 80,611
Convertible debentures 137,500 380,000
Total Liabilities 753,829 1,154,187
Stockholders' deficit
Common stock, $.001 par value, 100,000,000
Shares authorized, 14,444,335 shares issued
And 12,439,335 shares outstanding 14,444 7,585
Additional paid in capital 3,223,571 1,261,364
Deficit accumulation during development stage (3,491,423) (2,346,443)
Treasury stock (16,911) (16,911)
Total Stockholders' Deficit (270,319) (1,094,405)
Total Liabilities and Stockholders' Deficit $483,510 $59,782
-------- -------
</TABLE>
UNAUDITED
<PAGE>
ENDOVASC LTD., INC.
(a development stage corporation)
statement of operations
For the Three Months Ended on March 31, 2000 and 1999 and
For the Period from Inception, June 30, 1996 to March 31, 2000
<TABLE>
<CAPTION>
Inception
March 31, to
2000 1999 3/31/00
<S> <C> <C> <C>
Revenue $10,000 $0 $33,554
Operating Expenses
Research and Development Cost 172,529 131,127 1,666,729
Operating, general and administrative Cost 66,871 22,065 1,558,142
Interest expense 3,417 18,751 232,998
Total Cost and Operating Expenses 242,817 171,943 3,457,869
Net Loss (232,817) ($171,943) (3,491,423)
Retained Earnings Dec 31 (3,258,606) (2,174,500)
Retained Earnings Mar. 31 ($3,491,423) ($2,346,443)
Net [Loss] per Share $.02 $.03
</TABLE>
UNAUDITED
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
For the nine Months Ended on March 31, 2000 and 1999
<TABLE>
<CAPTION>
March 31,
2000 1999
<S> <C> <C>
Revenue $24,283 $5,000
Operating Expenses
Research and Development Cost 467,396 210,159
Operating, general and administrative Cost 241,047 88,647
Interest expense 30,526 72,443
Total Cost and Operating Expenses 738,969 371,249
Net Loss ($714,686) ($366,249)
Retained earnings June 30 (2,776,737) (1,980,194)
Retained Earnings Mar. 31 ($3,491,423) ($2,346,443)
Net [loss] per share $.08 $.05
</TABLE>
UNAUDITED
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN
STOCKHOLDERS EQUITY For the Three
Months Ended on March 31, 2000
<TABLE>
<CAPTION>
CAPITAL STOCK
Number Dollar Paid in Treasury Accum.
Shares Amount Capital Stock Deficit
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at Dec 31, 1999 12,907,256 $12,907 $2,476,936 ($16,911) ($3,258,606)
Issue of Common Stock for
Services in this period
Issue of common stock for debt
in this period
Conversion of debentures to 0 0 0 0 0
common stock
Net (loss) for the period
ending March 31, 2000 (232,817)
Balance at March 31, 2000 14,444,335 $14,444 $3,223,571 ($16,911) ($3,491,423)
</TABLE>
UNAUDITED
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
For the Three Months Ended on March 31,
2000 and 1999 and For the Period from
Inception, June 30, 1996 to March 31, 2000
<TABLE>
<CAPTION>
Inception
March 31, to
2000 1999 03/31/00
<S> <C> <C> <C>
Cash flows used in operation activities ($88,287) ($46,594) ($1,407,790)
Cash flows used in investing activities (1,237) 0 (21,534)
Cash flow:
Proceeds from sales of equity securities 0 0 302,332
Proceeds from sales of common stock 0 0 336,501
Purchase of treasury stock 0 0 (16,911)
Proceeds from sale of convertible debt 0 0 630,500
Issuance-Repayment of notes payable (3,650) 71,513 71,646
Proceeds from advances from shareholders 40,000 0 125,248
Net Cash Provided by Financing Activities 36,350 71,513 1,449,316
Cash and Cash Equivalents beginning of period 73,166 11,152 0
Cash and Cash Equivalents end of period $19,992 $36,071 $19,992
Non-cash investing and financing activity:
Common stock issued upon conversion
Common stock issued for services and patent rights
Common stock issued for equity securities $0 $0 $302,332
</TABLE>
UNAUDITED
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
Note 1 - Interim Financial Statements
The accompanying unaudited financial statements have been prepared in
accordance with Principals for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-B instruction.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principals for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period March 31, 2000 and 1999 are not
necessarily indicative of the results that may be expected for.
A summary of the Company's significant accounting policies and other
information necessary to understand the interim financial statement is presented
in the Company's audited financial statement for the years ended June 30, 1999
and 1998. Accordingly the Company's Audited financial statements should be read
in connection with these financial statements.
Note 2 - Income Taxes
The difference between the 34% federal statutory income tax rate and
amounts shown in accompanying interim financial statement is primarily
attributable to an increase in the valuation allowance applied against the tax
benefit from utilization of net operating loss carry forwards.
Note 3 - Stockholders' Equity
During the quarter ended March 31, 2000 the Company issued Shares of common
stock and had other increases to stockholders' equity as follows:
<TABLE>
<CAPTION>
Common Paid-In
Stock Capital Total
<S> <C> <C> <C>
Common stock issued for debt $300 $149,700 $150,000
Common stock issued as payment of services $1,237 $596,935 $598,172
Conversion of debentures to common stock $1,537 $746,635 $748,172
</TABLE>
<PAGE>
Note 4 - Convertible Debentures
At March 31, 2000 the Company owed amounts under a Series B convertible
debenture totaling $130,500. These debenture bare interest at a stated rate of
8% per year. These debentures mature in July 2001 and are convertible to shares
of the Company's common stock at a conversion price per share equal to 75% of
the average closing bid price of the common stock for the three days immediately
preceding the date of conversion.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The statements contained in this Report that are not historical are
forward-looking statements, including statements regarding the Company's
expectations, intentions, beliefs or strategies regarding the future. Forward-
looking statements include the Company's statements regarding liquidity,
anticipated cash needs and availability and anticipated expense levels. All
forward-looking statements included in this Report are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statement. It is important to note
that the Company's actual results could differ materially from those in such
forward-looking statements. Additionally, the following discussion and analysis
should be read in conjunction with the Financial Statements and notes thereto
appearing elsewhere in this Report.
The Company is in the development stage and has had limited operating
revenues since its inception on June 10, 1996. From June 30, 1996 through March
31, 2000, the Company had an accumulated deficit of $1,407,790. During its
fiscal nine months ended March 31, 2000, the Company entered into an exclusive
world-wide license agreement with Stanford University for the patent rights to a
patent application SUN-142-PRV, a novel use of nicotine as an agent for
promoting growth of new blood vessels (angiogenesis) into areas of blood-starved
tissue, a condition called ischemia. Pursuant to the license agreement, the
Company obtained a 10-year exclusive right of novel use of nicotine in
angiogenesis. Stanford will continue research and development for the Company's
research products under the licensing agreement, subject to pending agreements.
Management anticipates this action will result in the Company saving
approximately $500,000 in initial research cost due to Stanford's allocation of
research facility and investigational scientists. As a result of the Company's
decision in February 2000 to enter into the Stanford agreement and research
alliance with Stanford, the Company's technology portfolio was significantly
enhanced.
In October 1999, the Company presented pre-clinical data to the U. S. Food
and Drug Administration (FDA) in preparation of its Investigational New Drug
(IND) filing for Liprostin(TM), its liposomal prostaglandin E-1 (PGE-1) drug for
indications of critical limb ischemia (CLI). The FDA reviewed the Company's data
and responded with a waiver of Phase I & II clinical trials, if the Company so
elected to proceed directly to a Phase III trial for the product. At this time,
the Company has not decided whether or not this waiver will be accepted or
whether it will proceed on a conventional Phase I study, which it was prepared
to do prior to the FDA`s pre-submission IND meeting. In addition, the Company
completed its FDA-required certified good manufacturing practice ("cGMP")
development of Liprostin(TM) at the Collaborative BioAlliance manufacturing
facility in Stoney Brook, New York. Clinical trial production levels of
Liprostin(TM) are expected to be in place by the end of the third quarter 2000
as the Company's clinical studies begin in full swing.
During the nine months ended March 31, 2000, the Company's net revenues
increased to $24,283 compared with revenues of $5,000 for the same period in
1999. All revenues during this period were from sales of research and
development services provided by the Company to third parties.. At March 31,
2000, the Company had agreements with two device manufacturers for original
research and development of the proprietary use of Liprostin(TM) in the
treatment of various vascular diseases by application of medicinal coatings to
vascular stents for elimination or reduction of new tissue growth in and around
the stents, a condition known as restenosis
<PAGE>
During the third quarter of 1999 and 2000, costs and operating expenses
were $371,249 and $738,696, respectively. The increase in costs and operating
expenses for the year is primarily due to an increase in research and
development, facilities, and overhead as rent and other costs increased.
Cash flows used in operations activities for the quarter increased $97,972
or 33% to $286,373 during the first nine months of 2000, compared to $188,460
for the same period in 1999, primarily due to the increased cost of scientific
personnel, materials and prototype manufacturing during the third quarter.
Research and development expenses totaled $467,396 during the fiscal nine
month's of March 2000, an increase of $257,237. These expenses were related to
the cost of new equipment, materials, labor and travel connected to the
production scale-up for the Liprostin(TM) product under contract with
Collaborative BioAlliance, Inc. in Stoney Brook, New York and the on-going,
in-house projects for medicinally coated vascular stents.
Liquidity and Capital Resources
The Company had a working capital deficit on March 31, 2000, of $714,686
and cash, and cash equivalents for the nine months ending March 31, 2000 of
$19,992, compared to $366,249 and $36,071 for the nine months ending March 31,
1999. Financing activities provided cash $188,748 which was provided by the sale
of Regulation D, Rule 504 convertible debentures in the first quarter 2000.
The Company requires significant additional funds to enable it to continue
its Liprostin(TM) product development and to complete its Food and Drug
Administration required clinical trials. In May 2000, the Company completed a
$4.5 million financing commitment related to the private placement and sale of
its convertible preferred stock in three (3) $1.5 million traunches. Pursuant to
the commitment the Company received $1.5 million on May 10, 2000, with $3
million remaining in the "take-down".
The Company continues to actively pursue additional financing,
collaborations with firms, and other arrangements aimed at increasing its
capital resources. Failure to acquire such funds may adversely impact the
scheduled marked introduction of Liprostin(TM) and possibly adversely effect the
Company's operations. In order to continue as a going concern, the Company must
raise additional funds as noted above and ultimately achieve profit from its
operation.
<PAGE>
PART II
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three month
period ended March 31, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused the project to be signed on its behalf by the
undersigned thereto duly authorized.
ENDOVASC LTD., INC.
May 18, 2000
By: /s/ DAVID P. SUMMERS
--------------------
David P. Summers,
Chief Executive Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2000.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> jun-30-2000
<PERIOD-END> mar-31-2000
<CASH> 19,992
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 473,337
<PP&E> 10,273
<DEPRECIATION> 0
<TOTAL-ASSETS> 486,510
<CURRENT-LIABILITIES> 588,756
<BONDS> 0
0
0
<COMMON> 14,444
<OTHER-SE> 3,223,571
<TOTAL-LIABILITY-AND-EQUITY> 483,510
<SALES> 0
<TOTAL-REVENUES> 10,000
<CGS> 0
<TOTAL-COSTS> 242,817
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (232,817)
<INCOME-TAX> (232,817)
<INCOME-CONTINUING> (232,817)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (232,817)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
