UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
January 31, 2000 0-11088
- ------------------------------ ---------------------
For the quarterly period ended Commission file number
ALFACELL CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2369085
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 Belleville Avenue, Bloomfield, New Jersey 07003
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (973) 748-8082
--------------
NOT APPLICABLE
----------------------------------------
(Former name, former address, and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant has (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Shares of Common Stock, $.001 par value outstanding as of March 14, 2000:
17,516,559
<PAGE>
ALFACELL CORPORATION
(A Development Stage Company)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
January 31, 2000 and July 31, 1999
<TABLE>
<CAPTION>
ASSETS
------ January 31,
2000 July 31,
(Unaudited) 1999
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 859,537 $ 1,383,133
Other assets 88,053 146,708
------------ ------------
Total current assets 947,590 1,529,841
------------ ------------
Property and equipment, net of accumulated depreciation and amortization
of $994,263 at January 31, 2000 and $944,830 at July 31, 1999 149,374 198,807
------------ ------------
Total assets $ 1,096,964 $ 1,728,648
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 2,604 $ 6,727
Accounts payable 78,825 186,071
Accrued expenses 774,013 778,650
------------ ------------
Total current liabilities 855,442 971,448
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value
Authorized and unissued, 1,000,000 shares at January 31, 2000
and July 31, 1999 -- --
Common stock $.001 par value
Authorized 40,000,000 shares at January 31, 2000 and July 31, 1999;
Issued and outstanding 17,471,559 shares at January 31, 2000
and 17,286,594 shares at July 31, 1999 17,471 17,286
Capital in excess of par value 55,868,289 55,694,195
Deficit accumulated during development stage (55,644,238) (54,954,281)
------------ ------------
Total stockholders' equity 241,522 757,200
------------ ------------
Total liabilities and stockholders' equity $ 1,096,964 $ 1,728,648
============ ============
</TABLE>
See accompanying notes to financial statements
-2-
<PAGE>
ALFACELL CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Three months and six months ended January 31, 2000 and 1999,
and the Period from August 24, 1981
(Date of Inception) to January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended August 24, 1981
January 31, January 31, (Date of Inception)
to
2000 1999 2000 1999 January 31, 2000
------------ ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Sales $ -- $ -- $ -- $ -- $ 553,489
Investment income 11,267 47,394 26,220 108,792 1,334,240
Other income -- -- -- -- 60,103
------------ ------------ ------------ ------------ ------------
TOTAL REVENUE 11,267 47,394 26,220 108,792 1,947,832
------------ ------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of sales -- -- -- -- 336,495
Research and development 592,413 664,989 1,164,321 1,260,193 35,252,950
General and administrative 149,590 260,995 305,982 462,563 19,821,042
Interest:
Related parties -- -- -- -- 1,033,960
Others 839 319 1,728 693 1,903,477
------------ ------------ ------------ ------------ ------------
TOTAL COSTS AND EXPENSES 742,842 926,303 1,472,031 1,723,449 58,347,924
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) BEFORE
STATE TAX BENEFIT $ (731,575) $ (878,909) $ (1,445,811) $ (1,614,657) $(56,400,092)
STATE TAX BENEFIT 755,854 -- 755,854 -- 755,854
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 24,279 $ (878,909) $ (689,957) $ (1,614,657) $(55,644,238)
============ ============ ============ ============ ============
Loss per basic and diluted
common share $ .00 $ (.05) $ (.04) $ (.09) $ (7.10)
============ ============ ============ ============ ============
Weighted average number of shares
outstanding 17,374,655 17,260,356 17,352,397 17,256,238 7,841,030
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
ALFACELL CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Six months ended January 31, 2000 and 1999,
and the Period from August 24, 1981
(Date of Inception) to January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended August 24, 1981
January 31, (Date of Inception)
to
2000 1999 January 31, 2000
------------ ------------ ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss $ (689,957) $ (1,614,657) $(55,644,238)
Adjustments to reconcile net loss to
net cash used in operating activities:
Gain on sale of marketable securities -- -- (25,963)
Depreciation and amortization 49,433 50,641 1,373,528
Loss on disposal of property and equipment -- -- 18,926
Noncash operating expenses 78,008 94,741 5,450,480
Amortization of deferred compensation -- -- 11,442,000
Amortization of organization costs -- -- 4,590
Changes in assets and liabilities:
(Increase) decrease in other current assets 58,655 (33,191) (88,053)
Decrease in other assets -- -- 36,184
Increase in interest payable, related party -- -- 744,539
Increase (decrease) in accounts payable (15,062) (448,404) 364,905
Increase in accrued payroll and expenses, related parties -- -- 2,348,145
Increase (decrease) in accrued expenses (4,637) (394,623) 1,315,526
------------ ------------ ------------
Net cash used in operating activities (523,560) (2,345,493) (32,659,431)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of marketable equity securities -- -- (290,420)
Proceeds from sale of marketable equity securities -- -- 316,383
Purchase of property and equipment -- -- (1,369,261)
Patent costs -- -- (97,841)
------------ ------------ ------------
Net cash used in investing activities -- -- (1,441,139)
------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements. (continued)
-4-
<PAGE>
ALFACELL CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS, Continued
Six months ended January 31, 2000 and 1999,
and the Period from August 24, 1981
(Date of Inception) to January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended August 24, 1981
January 31, (Date of Inception)
to
2000 1999 January 31, 2000
--------- ------------ ----------------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from short-term borrowings $ -- $ -- $ 849,500
Payment of short-term borrowings -- -- (623,500)
Increase in loans payable - related party, net -- -- 2,628,868
Proceeds from bank debt and other long-term debt, net
of deferred debt costs -- -- 2,410,883
Reduction of bank debt and long-term debt (4,123) (4,476) (2,922,851)
Proceeds from issuance of common stock, net -- (765) 26,805,447
Proceeds from exercise of stock options and warrants, net 4,087 -- 5,464,760
Proceeds from issuance of convertible debentures -- -- 347,000
--------- ------------ ------------
Net cash provided (used) by financing activities (36) (5,241) 34,960,107
--------- ------------ ------------
Net increase (decrease) in cash and cash equivalents (523,596) (2,350,734) 859,537
Cash and cash equivalents at beginning of period 1,383,133 5,099,453 --
--------- ------------ ------------
Cash and cash equivalents at end of period $ 859,537 $ 2,748,719 $ 859,537
========= ============ ============
Supplemental disclosure of cash flow information -
interest paid $ 1,728 $ 693 $ 1,650,461
========= ============ ============
Noncash financing activities:
Issuance of convertible subordinated
debenture for loan payable to officer $ -- $ -- $ 2,725,000
========= ============ ============
Issuance of common stock upon the conversion of
convertible subordinated debentures, related party $ -- $ -- $ 2,945,000
========= ============ ============
Conversion of short-term borrowings to common stock $ -- $ -- $ 226,000
========= ============ ============
Conversion of accrued interest, payroll and expenses by
related parties to stock options $ -- $ -- $ 3,194,969
========= ============ ============
Repurchase of stock options from related party $ -- $ -- $ (198,417)
========= ============ ============
Conversion of accrued interest to stock options $ -- $ -- $ 142,441
========= ============ ============
Conversion of accounts payable to common stock $ 92,184 $ 16,631 $ 286,170
========= ============ ============
Conversion of notes payable, bank and accrued interest to
long-term debt $ -- $ -- $ 1,699,072
========= ============ ============
Conversion of loans and interest payable, related party
and accrued payroll and expenses, related parties to
long-term accrued payroll and other, related party $ -- $ -- $ 1,863,514
========= ============ ============
Issuance of common stock upon the conversion of
convertible subordinated debentures, other $ -- $ -- $ 127,000
========= ============ ============
Issuance of common stock for services rendered $ -- $ -- $ 2,460
========= ============ ============
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
ALFACELL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the Company's financial position as of January 31,
2000 and the results of operations for the three and six month periods ended
January 31, 2000 and 1999 and the period from August 24, 1981 (date of
inception) to January 31, 2000. The results of operations for the six months
ended January 31, 2000 are not necessarily indicative of the results to be
expected for the full year.
The Company is a development stage company as defined in the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No. 7.
The Company is devoting substantially all of its present efforts to establishing
a new business. Its planned principal operations have not commenced and,
accordingly, no significant revenue has been derived therefrom.
Effective August 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 ("SFAS 130"), Reporting Comprehensive Income. SFAS
130 establishes new rules for the reporting and display of comprehensive income
and its components. The net loss of $690,000 and $1,615,000, recorded for the
six months ended January 31, 2000 and 1999, respectively, is equal to the
comprehensive loss for those periods.
The Company has reported net losses since its inception. Also, the Company
has limited liquid resources. The report of the Company's independent auditors
on the Company's July 31, 1999 financial statements included an explanatory
paragraph which states that the Company's recurring losses and limited liquid
resources raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements at July 31, 1999 or January 31, 2000 do
not include any adjustments that might result from the outcome of this
uncertainty.
2. EARNINGS PER COMMON SHARE
"Basic" earnings (loss) per common share equals net income (loss) divided
by weighted average common shares outstanding during the period. "Diluted"
earnings (loss) per common share equals net income divided by the sum of
weighted average common shares outstanding during the period plus common stock
equivalents. The Company's Basic and Diluted per share
-6-
<PAGE>
ALFACELL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, continued
(Unaudited)
2. EARNINGS PER COMMON SHARE, continued
amounts are the same since the assumed exercise of stock options and warrants
are all anti-dilutive. The amount of options and warrants excluded from the
calculation was 5,862,965 and 6,083,679 at January 31, 2000 and 1999,
respectively.
3. CAPITAL STOCK
In August 1999, the Company issued 40,000 shares of common stock for
payment of services rendered. The fair value of the common stock in the amount
of $18,400 was charged to operations.
In September 1999, the Company issued 14,600 shares of common stock for
payment of legal services. The fair value of the common stock in the amount of
$8,176 was charged to operations.
In December 1999, the Company issued an aggregate total of 75,000 stock
options to its outside board of directors.
In January 2000, the Company issued 120,365 shares of common stock for
payment of services rendered. The fair value of the common stock in the amount
of $65,608 was charged to operations.
In January 2000, the Company issued 10,000 shares of common stock upon the
exercise of stock options by an unrelated party resulting in gross proceeds of
$4,300 to the Company.
4. SALE OF NET OPERATING LOSSES
New Jersey has enacted legislation permitting certain New Jersey
corporations to sell state tax loss carryforwards and research and development
credits (the "Tax Benefits"). Approximately $2.4 million of the Company's Tax
Benefits were approved for sale by the state, of which approximately $1 million
was allocated to be sold for the State Fiscal Year 2000 (July 1, 1999 to
-7-
<PAGE>
ALFACELL CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, continued
(Unaudited)
4. SALE OF NET OPERATING LOSSES, continued
June 30, 2000). In December 1999, the Company realized net proceeds of $755,854
from the sale of its allocated Tax Benefits. The Company will attempt to sell
the remaining balance of its Tax Benefits in the amount of approximately $1.4
million for the State Fiscal Year 2001 (July 1, 2000 to June 30, 2001), subject
to all existing laws of the State of New Jersey.
5. SUBSEQUENT EVENT
In February 2000, the Company sold an aggregate of 875,000 shares of common
stock to private investors at prices ranging from $0.50 to $1.00 per share
resulting in net proceeds of $625,000 to the Company. In addition, the private
investors were granted warrants to purchase an aggregate of 687,500 shares of
common stock at per share exercise prices ranging from $1.03 to $3.25. The
warrants will expire during the period commencing May 2003 and ending in May
2005.
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Information contained herein contains "forward-looking statements" which
can be identified by the use of forward-looking terminology such as "believes",
"expects", "may", "will", "should", or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy. No assurance can be given that the future results covered by the
forward-looking statements will be achieved. The matters set forth in Exhibit
99.1 to the Company's Annual Report on Form 10-K for the fiscal year ended July
31, 1999, which is incorporated herein by reference, constitute cautionary
statements identifying important factors with respect to such forward-looking
statements, including certain risks and uncertainties, that could cause actual
results to vary materially from the future results indicated in such
forward-looking statements. Other factors could also cause actual results to
vary materially from the future results indicated in such forward-looking
statements.
Results of Operations
Three and six month periods ended January 31, 2000 and 1999
Revenues. The Company is a development stage company as defined in the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 7. As such, the Company is devoting substantially all of its
present efforts to establishing a new business and developing new drug products.
The Company's planned principal operations of marketing and/or licensing of new
drugs have not commenced and, accordingly, no significant revenue has been
derived therefrom. The Company focuses most of its productive and financial
resources on the development of ONCONASE and as such has not had any sales in
the six months ended January 31, 2000 and 1999. Investment income for the six
months ended January 31, 2000 was $26,000 compared to $109,000 for the same
period last year, a decrease of $83,000. This decrease was due to lower balances
of cash and cash equivalents.
Research and Development. Research and development expense for the three
months ended January 31, 2000 was $592,000 compared to $665,000 for the same
period last year, a decrease of $73,000 or 11%. This decrease was primarily due
to a 38% decrease in costs in support of on-going clinical trials, primarily due
to the completion of the patient enrollment of the Phase III clinical trial for
malignant mesothelioma, a 94% decrease in costs related to the preclinical
research studies of ONCONASE, primarily due to the extension of the CRADA
agreement with the NCI without cost to the Company and an 80% decrease in costs
associated with the manufacture of clinical supplies of ONCONASE. These
decreases were offset by an increase in expenses in preparation of a Pre-NDA
meeting with the FDA and an 18% increase in rent expenses.
Research and development expense for the six months ended January 31, 2000
was $1,164,000 compared to $1,260,000 for the same period last year, a decrease
of $96,000 or 8%. This decrease was primarily due to a 42% decrease in costs in
support of on-going clinical trials, primarily due to the completion of the
patient enrollment of the Phase III clinical trial for
-9-
<PAGE>
malignant mesothelioma, an 87% decrease in costs related to the preclinical
research studies of ONCONASE, primarily due to the extension of the CRADA
agreement with the NCI without cost to the Company, and a 42% decrease in costs
associated with the manufacture of clinical supplies of ONCONASE. These
decreases were offset by an increase in expenses in preparation of a Pre-NDA
meeting with the FDA and a 19% increase in rent expenses.
General and Administrative. General and administrative expense for the
three months ended January 31, 2000 was $150,000 compared to $261,000 for the
same period last year, a decrease of $111,000 or 43%. This decrease was
primarily due to an 85% decrease in public relations expenses, a 46% reduction
in administrative personnel costs and a 62% decrease in consulting fees, offset
by a 20% increase in rent expenses.
General and administrative expense for the six months ended January 31,
2000 was $306,000 compared to $463,000 for the same period last year, a decrease
of $157,000 or 34%. This decrease was primarily due to a 45% reduction in
administrative personnel costs, an 82% decrease in public relations expenses and
a 29% decrease in consulting fees, offset by a 63% increase in legal fees and
20% increase in rent expenses.
Income Taxes. New Jersey has enacted legislation permitting certain New
Jersey corporations to sell state tax loss carryforwards and research and
development credits (the "Tax Benefits"). Approximately $2.4 million of the
Company's Tax Benefits were approved for sale by the state, of which
approximately $1 million was allocated to be sold for the State Fiscal Year 2000
(July 1, 1999 to June 30, 2000). In December 1999, the Company realized net
proceeds of $755,854 from the sale of its allocated Tax Benefits. The Company
will attempt to sell the remaining balance of its Tax Benefits in the amount of
approximately $1.4 million for the State Fiscal Year 2001 (July 1, 2000 to June
30, 2001), subject to all existing laws of the State of New Jersey.
Net Income (Loss). The Company has incurred net losses during each year
since its inception. The net income for the three months ended January 31, 2000
was $24,000 as compared to a net loss of $879,000 for the same period last year,
an increase of $903,000. The net income for the three months ended January 31,
2000 was primarily due to the result of the sale of the Company's Tax Benefits.
The net loss for the six months ended January 31, 2000 was $690,000 as compared
to $1,615,000 for the same period last year, a decrease of $925,000 or 57%,
primarily due to the result of the sale of the Company's Tax Benefits. The
cumulative loss from the date of inception, August 24, 1981 to January 31, 2000,
amounted to $55,644,000. Such losses are attributable to the fact that the
Company is still in the development stage and accordingly has not derived
sufficient revenues from operations to offset the development stage expenses.
-10-
<PAGE>
Liquidity and Capital Resources
Alfacell has financed its operations since inception primarily through
equity and debt financing, research product sales and interest income. During
the six months ended January 31, 2000, the Company had a net decrease in cash
and cash equivalents of $523,000, which resulted primarily from net cash used in
operating activities. Total cash resources as of January 31, 2000 were $860,000
compared to $1,383,000 at July 31, 1999.
The Company's current liabilities as of January 31, 2000 were $855,000
compared to $971,000 at July 31, 1999, a decrease of $116,000 or 12%. The
decrease was primarily due to the issuance of common stock in payment for
services rendered and a decrease in costs in support of on-going clinical trials
for ONCONASE, primarily due to the completion of the patient enrollment of the
Phase III clinical trial for malignant mesothelioma.
In February 2000, the Company sold an aggregate of 875,000 shares of common
stock to private investors at prices ranging from $0.50 to $1.00 per share
resulting in net proceeds of $625,000 to the Company. In addition, the private
investors were granted warrants to purchase an aggregate of 687,500 shares of
common stock at per share exercise prices ranging from $1.03 to $3.25. The
warrants will expire during the period commencing May 2003 and ending in May
2005.
Until the Company's operations generate significant revenues, cash reserves
will continue to fund operations. To date, a significant portion of the
Company's financing has been through private placements of common stock and
warrants, the issuance of common stock for stock options exercised and services
rendered, debt financing and financing provided by the Company's Chief Executive
Officer. The Company believes that its cash and cash equivalents as of January
31, 2000 will be sufficient to meet its anticipated cash needs through July
2000, after taking into account the approximately $650,000 in gross proceeds
received from the private placement of common stock and warrants, and exercise
of stock options in February 2000. The report of the Company's independent
auditors on the Company's July 31, 1999 financial statements included an
explanatory paragraph which states that the Company's recurring losses and
limited liquid resources raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements at July 31, 1999 or
January 31, 2000 do not include any adjustments that might result from the
outcome of this uncertainty.
The Company's continued operations will depend on its ability to raise
additional funds through various potential sources such as equity and debt
financing, collaborative agreements, strategic alliances, sale of tax loss
carryforwards and research and development tax credits and revenues from the
commercial sale of ONCONASE. There can be no assurance that such additional
funds will become available. The Company is in the process of analyzing the
Phase III data of its clinical trial for unresectable malignant mesothelioma in
preparation for a Pre-NDA meeting with the FDA and will continue to incur costs
in conjunction with such meeting. The Company is currently in discussion with
several potential strategic alliance partners for further
-11-
<PAGE>
development and marketing of ONCONASE and the other potential new products in
the Company's pipeline. However, there can be no assurance that any such
alliances will materialize. The ability of the Company to raise additional
capital through the sale of its securities will primarily be dependent on the
outcome of the Phase III clinical trial for unresectable malignant mesothelioma.
However, the ability to raise funding at that time may be dependent upon other
factors including without limitation, market conditions, and there can be no
assurance that such funds will be available.
New Jersey has enacted legislation permitting certain New Jersey
corporations to sell state tax loss carryforwards and research and development
credits (the "Tax Benefits"). Approximately $2.4 million of the Company's Tax
Benefits were approved for sale by the state, of which approximately $1 million
was allocated to be sold for the State Fiscal Year 2000 (July 1, 1999 to June
30, 2000). In December 1999, the Company realized net proceeds of $755,854 from
the sale of its allocated Tax Benefits. The Company will attempt to sell the
remaining balance of its Tax Benefits in the amount of approximately $1.4
million for the State Fiscal Year 2001 (July 1, 2000 to June 30, 2001), subject
to all existing laws of the State of New Jersey.
The Company's Common Stock was delisted from The Nasdaq SmallCap Market
effective at the close of business April 27, 1999 for failing to meet the
minimum bid price requirements set forth in the NASD Marketplace Rules. As of
April 28, 1999, the Company's Common Stock was traded on the OTC Bulletin Board
under the symbol "ACEL". Delisting of the Company's Common Stock from Nasdaq,
could have a material adverse effect on the Company including its ability to
raise additional capital, its stockholders= liquidity and the price of the
Company's Common Stock.
The market price of the Company's common stock is volatile, and the price
of the stock could be dramatically affected one way or another depending on
numerous factors. The market price of the Company's common stock could also be
materially affected by the results of the Phase III clinical trial for
unresectable malignant mesothelioma.
Year 2000 Impact
The Company has completed its year 2000 compliance without any interruption
to its business operations. To date, the Company has not encountered any
unforseen year 2000 problems. The Company estimates that it incurred
approximately $20,000 of costs related to its year 2000 compliance. It is
possible that the Company may encounter problems with vendors and suppliers
which could adversely affect the Company's financial condition, results of
operations or cash flow, although the Company is not aware of such instances to
date. The Company cannot accurately predict the occurrence and or outcome of any
such problems in the future, nor can the cost of such problems be estimated.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
-12-
<PAGE>
PART II. OTHER INFORMATION
Item 2. (c) Recent Sales of Unregistered Securities
In January 2000, the Company issued 120,365 shares of Common Stock for
payment of services rendered in a private transaction effected in accordance
with the exemption from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act") contained in Section 4(2) of the
Securities Act.
Item 5. Other Information
In February 2000, the Company sold an aggregate of 875,000 shares of common
stock to private investors at prices ranging from $0.50 to $1.00 per share
resulting in net proceeds of $625,000 to the Company. In addition, the private
investors were granted warrants to purchase an aggregate of 687,500 shares of
common stock at per share exercise prices ranging from $1.03 to $3.25. The
warrants will expire during the period commencing May 2003 and ending in May
2005.
Because the Company's common stock is no longer listed on The Nasdaq
SmallCap Market, the Company is no longer eligible to use a Form S-3
registration statement to register its shares under the Securities Act of 1933.
As a result, in February 2000, the Company filed a post-effective amendment to
two Form S-3 registration statements it had on file with the SEC withdrawing
such registration statements. These registration statements originally
registered the resale of approximately 7,652,840 shares of the Company's common
stock by certain of the Company's stockholders. The Company intends to file a
new registration statement on Form S-1 to register such shares in the near
future.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K).
<TABLE>
<CAPTION>
Exhibit No. or
Exhibit Incorporation
No. Item Title by Reference
--- ---------- ------------
<S> <C>
3.1 Certificate of Incorporation *
3.2 By-Laws *
3.3 Amendment to Certificate of Incorporation #
3.4 Amendment to Certificate of Incorporation +++
4.1 Form of Convertible Debenture **
10.1 Form of Stock and Warrant Purchase Agreements used in private
placements completed April 1996 and June 1996 ##
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Exhibit No. or
Exhibit Incorporation
No. Item Title by Reference
--- ---------- ------------
<S> <C>
10.2 Lease Agreement - 225 Belleville Avenue, Bloomfield, New Jersey ###
10.3 Form of Stock Purchase Agreement and Certificate used in
connection with various private placements ***
10.4 Form of Stock and Warrant Purchase Agreement and Warrant
Agreement used in Private Placement completed on March 21, 1994 ***
10.5 The Company's 1993 Stock Option Plan and Form of Option Agreement *****
10.6 Debt Conversion Agreement dated March 30, 1994 with Kuslima Shogen ****
10.7 Accrued Salary Conversion Agreement dated March 30, 1994 with Kuslima
Shogen ****
10.8 Accrued Salary Conversion Agreement dated March 30, 1994 with
Stanislaw Mikulski ****
10.9 Debt Conversion Agreement dated March 30, 1994 with John Schierloh ****
10.10 Option Agreement dated March 30, 1994 with Kuslima Shogen ****
10.11 Option Agreement dated March 30, 1994 with Kuslima Shogen ****
10.12 Amendment No. 1 dated June 20, 1994 to Option Agreement dated March 30, 1994
with Kuslima Shogen ****
10.13 Form of Amendment No. 1 dated June 20, 1994 to Option Agreement dated March
30, 1994 with Kuslima Shogen *****
10.14 Form of Amendment No. 1 dated June 20, 1994 to Option Agreement dated March
30, 1994 with Stanislaw Mikulski *****
10.15 Form of Stock and Warrant Purchase Agreement and Warrant
Agreement used in Private Placement completed on September 13,
1994 +
10.16 Form of Subscription Agreements and Warrant Agreement used in Private
Placements closed in October 1994 and September 1995 #
10.17 1997 Stock Option Plan ###
10.18 Separation Agreement with Michael C. Lowe dated as of
October 9, 1997 ++
10.19 Form of Subscription Agreement and Warrant Agreement used
in Private Placement completed on February 20, 1998 +++
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. or
Exhibit Incorporation
No. Item Title by Reference
--- ---------- ------------
<S> <C> <C>
10.20 Form of Warrant Agreement issued to the Placement Agent in connection with the +++
Private Placement completed on February 20, 1998
10.21 Placement Agent Agreement dated December 15, 1997 +++
27.1 Financial Data Schedule #####
99.1 Factors to Consider in Connection with Forward-Looking Statements ####
Previously filed as exhibit to the Company's Registration Statement on Form S-18 (File
No. 2-79975-NY) and incorporated herein by reference thereto.
Previously filed as exhibits to the Company's Annual Report on Form 10-K for the year
ended July 31, 1993 and incorporated herein by reference thereto.
*** Previously filed as exhibits to the Company's Quarterly Report on Form 10-QSB for
the quarter ended January 31, 1994 and incorporated herein by reference thereto.
**** Previously filed as exhibits to the Company's Quarterly Report on Form 10-QSB for
the quarter ended April 30, 1994 and incorporated herein by reference thereto.
***** Previously filed as exhibits to the Company's Registration Statement Form SB-2 (File No.
33-76950) and incorporated herein by reference thereto.
+ Previously filed as exhibits to the Company's Registration Statement on Form SB-2 (File No.
33-83072) and incorporated herein by reference thereto.
++ Previously filed as exhibits to the Company's Quarterly Report on Form 10-Q for
the quarter ended October 31, 1997 and incorporated herein by reference thereto.
+++ Previously filed as exhibits to the Company's Quarterly Report on Form 10-Q for
the quarter ended January 31, 1998 and incorporated herein by reference thereto.
# Previously filed as exhibits to the Company's Annual Report on Form 10-KSB for
the year ended July 31, 1995 and incorporated herein by reference thereto.
## Previously filed as exhibits to the Company's Registration Statement on Form SB-2
(File No. 333-11575) and incorporated herein by reference thereto.
### Previously filed as exhibits to the Company's Quarterly Report on Form 10-QSB
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
for the quarter ended April 30, 1997 and incorporated herein by reference thereto.
<S> <C>
#### Previously filed as exhibits to the Company's Annual Report on Form 10-K for the year
ended July 31, 1999 and incorporated herein by reference thereto.
##### Filed herewith.
</TABLE>
(b) Reports on Form 8-K.
None.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALFACELL CORPORATION
--------------------
(Registrant)
March 15, 2000 /s/ KUSLIMA SHOGEN
------------------
Kuslima Shogen, Chief
Executive Officer, Acting
Chief Financial Officer
(Principal Executive
Officer, Principal
Accounting Officer) and
Chairman of the Board
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Alfacell Corporation Balance Sheet as of January 31, 2000 and the Statements of
Operations for the six months ended January 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jul-31-2000
<PERIOD-END> Jan-31-2000
<CASH> 859,537
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 947,590
<PP&E> 1,143,637
<DEPRECIATION> 994,263
<TOTAL-ASSETS> 1,096,964
<CURRENT-LIABILITIES> 855,442
<BONDS> 0
0
0
<COMMON> 17,471
<OTHER-SE> 224,051
<TOTAL-LIABILITY-AND-EQUITY> 1,096,964
<SALES> 0
<TOTAL-REVENUES> 26,220
<CGS> 0
<TOTAL-COSTS> 1,470,303
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,728
<INCOME-PRETAX> (1,445,811)
<INCOME-TAX> 755,854
<INCOME-CONTINUING> (689,957)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (689,957)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
