<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM 10-QSB/A
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to _____________________
Commission file number 000-25571
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AXONYX INC.
(Exact name of registrant as specified in its charter)
NEVADA 86-0883978
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
825 THIRD AVENUE, 40TH FLOOR, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
(212) 688-4770
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ___ No _X_
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 12,566,002 shares of Common
Stock as of August 11, 1999.
This amended Form 10-Q is being filed as a result of the fourth quarter
adjustment described in Note 1 to the financial statements included in the
Company's annual report on Form 10-KSB for the year ending December 31, 1999
filed on March 13, 2000.
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AXONYX INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1999 (unaudited)
Statements of Operations (unaudited)
Statements of Cash Flows (unaudited)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Plan of Operation
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AXONYX INC.
(a development stage company)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
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(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,008,000 $ 1,558,000
Stock subscription receivable -- 750,000
Other 20,000 4,000
----------- -----------
Total current assets 2,028,000 2,312,000
Equipment, net 9,000 1,000
Other assets 7,000 --
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$ 2,044,000 $ 2,313,000
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LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 121,000 $ 119,000
Deferred revenue 228,000 --
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349,000 119,000
Convertible notes payable and accrued interest 219,000 210,000
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Total liabilities 568,000 329,000
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value, 5,000,000 shares authorized; none issued
Common Stock - $.001 par value, 25,000,000 shares authorized; 12,479,426 12,000 12,000
and 12,210,002 shares issued and outstanding, respectively
Additional paid-in capital 5,186,000 3,363,000
Unearned compensation - stock/options (825,000) (41,000)
Deficit accumulated during development stage (2,897,000) (1,350,000)
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Total stockholders' equity 1,476,000 1,984,000
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$ 2,044,000 $ 2,313,000
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</TABLE>
See notes to the financial statements
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AXONYX INC.
(a development stage company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
January 9,
1997
(inception)
Three months ended Six months ended through
June 30, 1999 June 30, 1999 June 30,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 22,000 $ 22,000 $ 22,000
Costs and expenses:
Research and development 194,000 $ 94,000 714,000 $ 180,000 1,549,000
General and administrative 504,000 51,000 873,000 111,000 1,378,000
------------ ------------ ------------ ------------ ------------
698,000 145,000 1,587,000 291,000 2,927,000
------------ ------------ ------------ ------------ ------------
Loss from operations (676,000) (145,000) (1,565,000) (291,000) (2,905,000)
Interest income/(expense)-net 9,000 -- 18,000 -- 8,000
------------ ------------ ------------ ------------ ------------
Net loss $ (667,000) $ (145,000) $ (1,547,000) $ (291,000) $ (2,897,000)
============ ============ ============ ============ ============
Net loss per common share $ (0.05) $ (0.01) $ (0.13) $ (0.03)
Weighted average shares
basic and diluted 12,365,559 10,000,000 12,343,426 10,000,000
</TABLE>
See notes to the financial statements
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AXONYX INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
January 9,
1997
(inception)
Six months ended through
June 30, June 30,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(1,547,000) $ (291,000) $(2,897,000)
Adjustments to reconcile net loss to cash used in
operating activities:
Amortization 376,000 59,000 582,000
Cost of services paid with common stock 455,000 695,000
Depreciation 1,000 -- 2,000
Changes in:
other assets (23,000) (3,000) (23,000)
accrued expenses, interest, and deferred revenue 239,000 48,000 368,000
----------- ----------- -----------
Net cash used in operating activities (499,000) (187,000) (1,273,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (9,000) -- (11,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible notes payable 125,000 200,000
Net proceeds from issuance of common stock and warrants 958,000 70,000 3,144,000
Cost of merger -- -- (52,000)
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Net cash provided by financing activities 958,000 195,000 3,292,000
NET INCREASE IN CASH AND CASH EQUIVALENTS 450,000 8,000 2,008,000
Cash and cash equivalents at beginning of period 1,558,000 23,000 --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,008,000 $ 31,000 $ 2,008,000
=========== =========== ===========
</TABLE>
See notes to the financial statements
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AXONYX INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(1) FINANCIAL STATEMENT PRESENTATION
The unaudited financial statements of Axonyx Inc. (the "Company") herein have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC) and, in the opinion of management, reflect all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the results of operations for the interim periods presented. Certain
information and footnote disclosure normally included in the financial
statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations. However, management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements and
notes thereto should be read in conjunction with the financial statements and
the notes thereto for the year ended December 31, 1998 included in the Company's
Form 10-SB filing. The results for the interim periods are not necessarily
indicative of the results for the full fiscal year.
(2) NEW AGREEMENTS:
Effective as of May 17, 1999, Axonyx Inc. entered into a Development Agreement
and Right to License (the "Development Agreement") with Applied Research Systems
ARS Holding N.V., a wholly owned subsidiary of Ares Serono International, SA
("Ares Serono"). Under the Development Agreement, the Company granted an
exclusive right to license its patent rights and know-how regarding its amyloid
inhibitory peptide (AIP) and prion inhibitory peptide (PIP) technology to Ares
Serono. Ares Serono paid Axonyx a nonrefundable fee for the right to license of
$250,000. The right to license has a one year term, renewable for an additional
one-year term upon payment of an additional $500,000. In addition Ares Serono
undertakes to conduct research on the AIP and PIP technology during the term of
the Development Agreement. The parties also agreed to the basic licensing terms
that will form the basis for the license agreement between the parties if Ares
Serono exercises its right to license.
On June 18, 1999 the Company issued 200,000 shares of restricted common stock to
Infusion Capital Investment Corporation ("ICIC") pursuant to a Consulting
Agreement under which ICIC and its affiliates undertook to perform certain
investor relations and corporate development services on behalf of the Company.
100,000 shares out of the 200,000 shares of common stock issued to ICIC were
placed in an escrow account pursuant to an Escrow Agreement dated June 11, 1999
by an between the Company, ICIC and Atlas, Pearlman, Trop & Borkson, the escrow
agent. The 100,000 shares of restricted common stock held in the escrow account
will be released to ICIC on December 11, 1999 unless the Company decides not to
extend ICIC's retention under the Consulting Agreement for an additional six
months. The shares issued to ICIC were valued at fair value.
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(3) PRIVATE PLACEMENT:
In May 1999 the Company commenced a private placement of up to 200 units for
$25,000 per unit. Each unit consists of 4,000 shares of common stock and 2,000
common stock purchase warrants to purchase one share of common stock at a price
of $11.00. The warrants expire August 1, 2004. Through June 30, 1999, the
Company had sold 8 units. Between June 30 and August 11, the Company sold an
additional 25 units.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Since the commencement of operations of its predecessor in January 1997,
the Company's efforts have been principally devoted to research and development
of its licensed pharmaceutical compounds, corporate consolidation, and raising
capital.
For the three months ended June 30, 1999, the Company realized revenue in
the amount of $22,000, representing a portion of a $250,000 fee from Ares Serono
pursuant to the Development Agreement and Right to License.
For the three months ended June 30, 1999 the Company incurred a loss from
operations of $676,000 compared to a loss from operations of $145,000 for the
three months ended June 30, 1998. The Company incurred a loss from operations of
$1,565,000 for the six months ended June 30, 1999 compared to a loss from
operations of $291,000 for the six months ended June 30, 1998. The increase is
due to additional research and development activities and an increase in general
and administrative expenses. The Company expects to incur additional losses for
the foreseeable future.
For the three months ended June 30, 1999 the Company incurred research and
development costs of $194,000 compared to $94,000 for the three months ended
June 30, 1998. The Company incurred research and development costs of $714,000
for the six month period ended June 30, 1999 compared to $180,000 for the six
months ended June 30, 1998. The increase is a result of charges associated with
the grant of options to certain scientists and to NYU, and to a lesser extent,
to an additional scientist and consultants being engaged.
For the period ended June 30, 1999 the Company incurred general and
administrative costs of $504,000 compared to $51,000 for the three months ended
June 30, 1998. The Company incurred general and administrative costs of $873,000
for the six months ended June 30, 1999 compared to $111,000 for the six months
ended June 30, 1998. The increase is due to hiring employees, the recognition of
fair value of options issued to consultants and advisors, an overall increase in
costs due to the Company's activities associated with patent support and
marketing and the Company's research and development activities.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K.
The following exhibits are filed as part of this report:
27.1 Financial Data Schedule
(b) Reports on 8-K
A Form 8-K was filed on June 1, 1999 concerning the Ares Serono
Development Agreement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized.
AXONYX INC.
By: /s/ Marvin S. Hausman, M.D.
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Marvin S. Hausman, M.D.
President and Chief Executive Officer
By: /s/ Michael M. Strage
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Michael M. Strage
Treasurer and Principal Financial and
Accounting Officer
