As Filed with the Securities and Exchange Commission on May 14, 1998
File No. 000-23425
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g) OF THE SECURITIES ACT OF 1934
BURZYNSKI RESEARCH INSTITUTE, INC.
-------------------------------------
(Name of small business issuer in its Charter)
Delaware 76-0136810
- ------------------------------------ ----------------
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer
Identification No.)
12000 Richmond Avenue, Houston, Texas
- ---------------------------------------------
77082-2431
- ----------
(Address of Principal Executive Offices)
(Zip Code)
(281) 597-0111
----------------------
(Issuer's Telephone No.)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so Registered Each Class is to be
---------------------- ------------------------
Registered
------
None N/A
- --------------------------- -----------------------------
Securities to be Registered under Section 12(g) of the Act:
Common Stock, $.001 par value
-----------------------------------------------------
(Title of Class)
(Title of Class)
1
3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Company is primarily engaged as a research and development facility
of drugs currently being tested for the use in the treatment of cancer, and
provides consulting services. The Company is currently conducting
approximately 74 FDA approved clinical trials. The Company holds the
exclusive right in the United States, Canada and Mexico to use, manufacture,
develop, sell, distribute, sublicense and otherwise exploit all the rights,
titles and interest in antineoplaston drugs used in the treatment of cancer,
once the drug is approved for sale by the United States Federal Drug
Administration. The Company receives the majority of its funding from
Stanislaw Burzynski, M.D., Ph.D. (Dr. Burzynski), who is President, Chairman
of the Board and owner of over 80% of the Company's outstanding stock.
RESULTS OF OPERATIONS
- -----------------------
Research and development costs were approximately $1,782,000 and
$1,789,000 for the three months and $4,311,000 and $5,256,000 for the nine
months ended November 30, 1997 and 1996, respectively. The decreases of
$7,000 or .4% for the three months and $945,000 or 18.0% for the nine months
was due to the following: (1) decrease in repair and maintenance cost of
$37,000 and $121,000 for the three months and nine months, respectively; (2)
increase in salary costs of $80,000 and $45,000 for the three months and nine
months, respectively; (3) increase in chemicals and production materials of
$3,000 for the three months and a decrease of $797,000 for the nine months;
(4) decrease in water production cost of $40,000 and $66,000 for the three
months and nine months, respectively; and (4) decrease in other research and
development cost of $13,000 and $6,000 for the three months and nine months,
respectively.
General and administrative expenses were approximately $197,000 and
$625,000 for the three months and $581,000 and $1,002,000 for the nine months
ended November 30, 1997 and 1996, respectively. The decrease of $428,000 or
68.5% for the three months and $421,000 or 42.0% was due to the following: (1)
decrease in legal fees of $394,000 and $433,000 for the three months and nine
months, respectively; and (2) decrease in other G&A expenses of $34,000 for
the three months and an increase of $12,000 for the nine months, respectively.
FINANCIAL CONDITION
- --------------------
The Company had net losses of approximately $2,039,000 and $2,458,000 for
the three months and $5,071,000 and $6,402,000 for the nine months ended
November 30, 1997 and 1996, respectively. The decrease in the net loss from
1996 to 1997 is mostly attributable to the decrease in the chemical and
production cost in research and development and the decrease in legal fees in
general and administrative. As of November 30, 1997 the Company has a total
stockholders' deficit of $1,219,332.
The Company's operations have been funded entirely by Dr. Burzynski.
Effective March 1, 1997 the Company entered into a research funding agreement
with Dr. Burzynski according to the agreement the Company agrees to undertake
all scientific research in connection with the development of new or improved
antineoplastons for the treatment of cancer. The Company will hire such
personnel as is required to fulfill this obligation. Dr. Burzynski agrees to
fund in its entirety all basic research, which the Company undertakes in
connection with the development of other antineoplastons or refinements to
existing antineoplastons for the treatment of cancer. Dr. Burzynski agrees to
pay the expenses to conduct the clinical trials for the Company. Dr.
Burzynski agrees to provide the Company such laboratory and research space as
the Company needs at the Trinity Drive facility in Stafford, Texas and such
office space as are necessary at Trinity Drive facility and at 12000 Richmond
Avenue facility. Dr. Burzynski may fulfill his obligation in part by
providing such administrative staff as is necessary for the Company to manage
its business. Dr. Burzynski agrees to pay the full amount of the monthly and
annual budget or expenses for the operation of the Company, together with such
other unanticipated but necessary expenses which the Company incurs. In the
event the research results in the approval of any additional patents, Dr.
Burzynski shall own all such patents, but shall license to the Company the
patents based on the same terms, conditions and limitations as is in the
current license between the parties. Dr. Burzynski shall have unlimited and
free access to all equipment which the Company owns, so long as such use in
not in conflict with the Company's use of such equipment, including without
limitation to all equipment used in manufacturing of antineoplastons used in
the clinical trials. The amounts which Dr. Burzynski is obligated to pay
under the agreement shall be reduced dollar for dollar by the following: (1)
any income which the Company receives for services provided to other companies
for research and/or development of other products, less such identifiable
marginal or additional expenses necessary to produce such income, or (2) the
net proceeds of any stock offering or private placement which the Company
receives during the term of the agreement up to a maximum of $1,000,000 in a
given Company fiscal year. The initial term of the agreement is one year, and
will be automatically renewed for three additional one year terms, unless one
party notifies the other party at least ninety days prior to the expiration of
the term of the agreement of its intention not to renew the agreement. The
agreement shall automatically terminate in the event that Dr. Burzynski owns
less than fifty percent of the outstanding shares of the Company, or is
removed as President and or Chairman of the Board of the Company, unless Dr.
Burzynski notifies the Company in writing his intention to continue the
agreement notwithstanding this automatic termination provision. There is no
assurance that Dr. Burzynski will be able to fulfill his part of this research
funding agreement.
It is the Company's intention to seek additional capital through the sale
of securities. The proceeds from such sales will be used to fund the
Company's operating deficit until it achieves positive operating cash flow.
There can be no assurance that the Company will be able to raise such
additional capital.
IMPACT OF THE YEAR 2000 ISSUE
- ----------------------------------
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Company has not assessed the impact of the year 2000 issue. The
Company plans to assess this issue during 1998 and to formulate a plan to deal
with the issue.
BURZYNSKI RESEARCH INSTITUTE, INC. AND S.R. BURZYNSKI, M.D., PH.D., CLINICAL
TRIALS (THE COMPANY)
Phase II clinical studies sponsored by the Company and approved by the
FDA started in 1994, when four studies began. At that time in addition to
individuals enrolled in these studies a number of patients were receiving
antineoplastons at Burzynski Clinic in the State of Texas outside clinical
trials. On February 23, 1996, the FDA requested that all patients desiring to
continue antineoplaston treatment by admitted to a Phase II Study of
Antineoplastons A10 and AS2-1 in Patients with Refractory Malignancies,
according to Protocol CAN-1, under IND 43,742. The FDA's action resulted in
the formation of 6 cohorts of patients, while the largest group being those
suffering from primary brain tumors.
In order to systematically test antineoplastons in different types of
cancer the company is currently sponsoring 72 Phase II clinical trials with
Antineoplastons A10 and AS2-1 in various types of cancer approved by the FDA.
Each trial provides for the admission of 40 patients, except one, in which 133
patients have already been accrued.
The main efforts are concentrated on treatment of primary malignant brain
tumors. As of March 1998, four of the clinical trials in brain tumors have
reached a milestone described in the clinical study protocols, and proved the
activity of Antineoplaston A10 and AS2-1 in various types of brain tumors.
The study according to Protocol CAN-1 has been completed and three additional
studies, according to Protocols BT-9, and BT-18, have reached an end point.
At least 4 patients in each of these studies were classified as objective
responders.
The Phase II Study according to Protocol CAN-1 included 36 evaluable
patients. Complete and partial responses were obtained in patients diagnosed
with glioblastoma multiforme, astrocytoma, oligodendroglioma, mixed glioma,
medulloblastoma, and malignant meningioma. The treatment with Antineoplastons
A10 and AS2-1 resulted in 44.5% of objective responses and 33.3% cases of
stable disease. Most of the surviving patients have now been alive for over
four years since the pathology diagnoses of their tumors were established.
Two patients, one suffering from oligodendroglioma and another from low grade
astrocytoma, have now been alive for approximately 12 years since pathology
diagnosis. The largest group of 14 patients involved in the study had
glioblastoma multiforme. Five of the cases were classified as complete and
partial responses, four obtained sterilization and five development
progression of the disease. One of the glioblastoma patients is now alive and
completely free from tumor for approximately six years after her pathology
diagnosis.
The Phase II study of Antineoplastons A10 and AS2-1 in patients with
brain tumors conducted according to Protocol BT-9 accrued 11 patients. There
were 8 evaluable patients. Five patients obtained partial response (62.5% of
evaluable patients) and two patients (25%) have had stable disease. One
patient developed progressive disease (12.5%).
The Phase II study of antineoplastons A10 and AS2-1 in patients with brain
stem glioma accrued 15 patients. One patient was non-evaluable. There were
14 evaluable patients. Complete and partial responses were obtained in four
patients (28.6% of evaluable patients). Five patients (35.7%) have had stable
disease. Five patients developed progressive disease (35.7%).
The Phase II study of Antineoplastons A10 and AS2-1 in adult patients
with mixed glioma conducted according to Protocol BT-18 accrued 12 patients.
There were 9 evaluable patients and 3 patients were non-evaluable. Complete
responses were obtained in 3 patients (33.3% of evaluable patients), one
patient obtained partial response (11.1%), and two patients (22.3%) have had
stable disease. Three patients developed progressive disease (33.3%).
F - 9
--ooOoo--
C 0 N T E N T S
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Page
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Report of Independent Auditors F - 2
Combined Balance Sheet F - 3
Combined Statements of Operations F - 4
Combined Statements of Stockholders' Deficit F - 5
Combined Statements of Cash Flows F - 6
Notes to Combined Financial Statements F - 7-9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Burzynski Research Institute, Inc.
Houston, Texas
The accompanying combined condensed balance sheet of Burzynski Research
Institute, Inc. as of November 30, 1997, and the related combined condensed
statements of operations for the three months and nine months ended November
30, 1997 and 1996, and the combined condensed statements of cash flows for the
nine months ended November 30, 1997 and 1996, and the combined condensed
statements of stockholders' deficit for the nine months ended November 30,
1997 and 1996 were not audited by us and, accordingly, we do not express an
opinion on them.
/s/ Seitz & DeMarco, P.C.
- ------------------------------
Certified Public Accountants
Houston, Texas
April 28, 1998
<PAGE>
BURZYNSKI RESEARCH INSTITUTE, INC.
COMBINED CONDENSED BALANCE SHEETS
November 30, February 28,
1997 1997
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 2,705 $
15,716
Total current assets 2,705
15,716
Property and equipment, net of accumulated depreciation
and amortization 483,204 653,799
Other assets 9,032 9,032
Total assets $ 494,941 $
678,547
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 164,000 $ 164,000
Current maturities of long-term debt 2,796
2,796
Current portion of capital lease obligations 65,066
65,066
Accounts payable 950,383 793,428
Accrued liabilities 433,243 468,716
Total current liabilities 1,615,488
1,494,006
Long-term debt, less current maturities 7,677
10,280
Capital lease obligation, less current portion 91,108
137,495
Commitments and contingencies (Note B) -
- -
Total liabilities 1,714,273 1,641,781
Stockholders' equity (deficit)
Common stock, $.001 par value; 200,000,000 shares authorized,
131,289,444 shares issued and outstanding 131,289
131,289
Additional paid-in capital 29,666,260
24,851,023
Retained deficit (31,016,881) (25,945,546)
Total stockholders' equity (deficit) (1,219,332)
(963,234)
Total liabilities and stockholders' equity $ 494,941
$ 678,547
The accompanying notes are an integral part of these combined financial
statements
<PAGE>
BURZYNSKI RESEARCH INSTITUTE, INC.
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
November 30, November 30, November 30,
November 30,
1997 1997 1997 1996
Revenue
Other income $ - $ - $
31 $ -
Total revenue - -
31 -
Operating expenses
Research and development 1,781,904 1,788,628
4,310,705 5,255,516
General and administrative 197,005
625,427 581,490 1,001,999
Depreciation 53,018 39,342
161,071 118,026
Total operating expenses 2,031,927
2,453,397 5,053,266 6,375,541
Net loss before provision for tax (2,031,927)
(2,453,397) (5,053,235) (6,375,541)
Provision for tax 7,000 4,283
18,100 26,183
Net loss $ (2,038,927) $ (2,457,680) $
(5,071,335) $ (6,401,724)
Earnings per share information:
Net loss per share $ (0.0155) $ (0.0186)
$ (0.0385) $ (0.0485)
The accompanying notes are an integral part of these combined financial
statements
<PAGE>
BURZYNSKI RESEARCH INSTITUTE, INC.
COMBINED CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
(UNAUDITED)
Common Stock Additional
Number of Paid-In Retained
Shares Amount Capital Deficit
Total
Balance at February 29, 1996 131,289,444 $
131,289 $ 17,273,782 $ (17,992,506) $
(587,435)
FDA clinical trial expenses paid
directly by S.R. Burzynski M.D., Ph.D.
5,898,761 5,898,761
Net loss
(6,401,724) (6,401,724)
Balance at November 30, 1996 131,289,444 $
131,289 $ 23,172,543 $ (24,394,230) $
(1,090,398)
Balance at February 28, 1997 131,289,444 $
131,289 $ 24,851,023 $ (25,945,546) $
(963,234)
FDA clinical trial expenses paid
directly by S.R. Burzynski M.D., Ph.D.
4,815,237 4,815,237
Net loss
(5,071,335) (5,071,335)
Balance at November 30, 1997 131,289,444 $
131,289 $ 29,666,260 $ (31,016,881) $
(1,219,332)
The accompanying notes are an integral part of these combined financial
statements
<PAGE>
BURZYNSKI RESEARCH INSTITUTE, INC.
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
November 30, November 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (5,071,335) $ (6,401,724)
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation 161,071 118,026
(Increase) decrease in
Other current assets -
(16,000)
Increase (decrease) in
Accounts payable 156,955
574,913
Accrued liabilities (35,473)
(42,964)
NET CASH USED BY OPERATING ACTIVITIES (4,788,782)
(5,767,749)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 13,710
-
Purchases of property and equipment (4,186)
(53,708)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 9,524
(53,708)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (2,603)
(2,419)
Payments on capital lease obligations (46,387)
(66,525)
Additional paid-in capital 4,815,237
5,898,761
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,766,247
5,829,817
NET INCREASE (DECREASE) IN CASH (13,011)
8,360
CASH AT BEGINNING OF YEAR 15,716
5,945
CASH AT END OF YEAR $ 2,705 $
14,305
The accompanying notes are an integral part of these combined financial
statements
<PAGE>
BURZYNSKI RESEARCH INSTITUTE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOVEMBER 30, 1997
NOTE A. BASIS OF PRESENTATION:
The combined financial statements of Burzynski Research Institute, Inc. (the
Company) include the accounts of Burzynski Research Institute, Inc., a
Delaware corporation; and those of S.R. Burzynski, M.D., Ph.D. (Dr. Burzynski)
related to the conduct of FDA approved clinical trials for antineoplaston
drugs used in the treatment of cancer and other diseases. Accounts related to
Dr. Burzynski's medical practice have not been included in these financial
statements.
The accompanying unaudited combined condensed financial statements at November
30, 1997 have been prepared in accordance with generally accepted accounting
principles for interim financial information. Certain disclosures and
information normally included in financial statements have been condensed or
omitted. In the opinion of management of the Company, these financial
statements contain all adjustments necessary for a fair presentation of
financial position as of November 30, 1997 and results of operations for the
three months and nine months ended November 30, 1997 and 1996, and cash flows
for the nine months ended November 30, 1997 and 1996. All such adjustments
are of a normal recurring nature. The results of operations for interim
periods are not necessarily indicative of the results to be expected for a
full year. These statements should be read in conjunction with the financial
statements and footnotes thereto included in the Company's registration
statement on Form 10-SB for the year ended February 28, 1997.
NOTE B. GOING CONCERN:
The accompanying unaudited condensed financial statements at November 30,
1997 have been prepared in conformity with generally accepted accounting
principles which contemplate the continuance of the Company as a going
concern. The Company has suffered losses from operations, has a working
capital deficit, and a total stockholders' deficit. Effective March 1, 1997
the Company entered into an agreement with Stanislaw R. Burzynski M.D., Ph.D.
in which Dr. Burzynski agreed to fund the basic research costs, FDA related
costs and provide research and lab space for one year. Also, it is the
intention of the directors and management to seek additional capital through
the sale of securities. The proceeds from such sales will be used to fund the
Company's operating deficit until it achieves positive operating cash flow.
There can be no assurance that the Company will be able to raise such
additional capital, or that Dr. Burzynski will be able to fund the research
costs.
NOTE C. RESEARCH FUNDING AGREEMENT:
Effective March 1, 1997 the Company ("BRI") entered into a research funding
agreement with Stanislaw R. Burzynski M.D., Ph.D.("SRB"). The research
funding agreement states that SRB is the inventor and original patent holder
of certain drug products known as "antineoplastons" and BRI owns the rights to
exploit "antineoplastons" for the treatment of cancer in the United States,
Canada and Mexico. It also states that none of the drug formulations are
currently approved for interstate marketing by the U.S. Food and Drug
Administration, ("FDA") but SRB is currently the principal investigator of
approximately 74 FDA approved clinical trials, the purpose of the clinical
trials is to obtain said FDA approval; and it is mutually advantageous that
basic science research continue to develop, refine and improve
antineoplastons. BRI is willing to undertake such research but does not
currently have sufficient funds to conduct the research, and SRB is willing to
fund such research until a permanent source of financing is obtained.
The parties agreed to the following:
1. BRI agrees to undertake all scientific research in connection with
the development of new or improved antineoplastons for the treatment of cancer
and other diseases. BRI will hire such personnel as is required to fulfill
its obligations under the agreement.
2. SRB agrees to fund in its entirety all basic research which BRI
undertakes in connection with the development of other antineoplastons or
refinements to existing antineoplastons for the treatment of cancer.
3. As FDA approval of antineoplastons will benefit both parties, SRB
agrees to pay the expenses to conduct the clinical trials for BRI.
4. SRB agrees to provide BRI such laboratory and research space as BRI
needs at the Trinity Drive facility in Stafford, Texas and such office space
as is necessary at Trinity Drive and at 12000 Richmond Avenue facility.
5. SRB may fulfill its obligations in part by providing such
administrative staff as is necessary for BRI to manage its business.
6. SRB agrees to pay the full amount of the monthly and annual budget
or expenses for the operation of BRI, together with such other unanticipated
but necessary expenses which BRI incurs. Payments from SRB to BRI of the
monthly budget shall be made in two equal installments on the first and
fifteenth of each month.
7. In the event the research described in the agreement results in the
approval of any additional patents, SRB shall own all such patents, but shall
license to BRI the patents based on the same terms, conditions and limitations
as is in the current license between the parties.
8. SRB shall have unlimited and free access to all equipment which BRI
owns, so long as such use is not in conflict with BRI's use of such equipment,
including without limitation to all equipment used in manufacturing of
antineoplastons used in the clinical trials.
9. The amounts which SRB is obligated to pay under the agreement shall
be reduced dollar for dollar by the following:
a. Any income which BRI receives for services provided to other companies
for research and/or development of other products, less such identifiable
marginal or additional expenses necessary to produce such income (such as
purchase of chemicals, products or equipment solely necessary to engage in
such other research and development activity).
b. The net proceeds of any stock offering or private placement
which BRI receives during the term of the agreement up to a maximum of
$1,000,000 in a given BRI fiscal year.
10. The initial term of the agreement is one year. The agreement will be
automatically renewable for three additional one year terms, unless one party
notifies the other party at least ninety days prior to the expiration of the
term of the agreement of its intention not to renew the agreement.
11. The agreement shall automatically terminate in the event that SRB
owns less than fifty percent of the outstanding shares of BRI, or is removed
as President and or Chairman of the Board of BRI, unless SRB notifies BRI in
writing his intention to continue the agreement notwithstanding this automatic
termination provision.
NOTE D. INCOME TAXES:
The actual provision for income tax for the three months and the nine months
ended November 30, 1997 and 1996, differ from the amounts computed by applying
the U.S. federal income tax rate of 34% to the pretax income as a result of
the following:
Three months Nine months
1997 1996 1997
---------------------------------- ---------
1996
- ----
Expected expense (benefit) $ (690,855) $ (834,155) $(1,718,100)
$(2,167,684)
Taxed directly to Dr. Burzynski 689,825 686,819
1,720,960 2,099,393
Change in valuation allowance 1,030 147,336
(2,860) 68,291
State franchise tax 7,000 4,283 18,100
------------- ------------ --------------
26,183
- ---------------
Provision for income tax $ 7,000 $ 4,283 $
============ ============ =
18,100 $ 26,183
= ===================
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, hereunto duly authorized.
Burzynski Research Institute, Inc.
By: /s/Stanislaw R. Burzynski
---------------------------
Stanislaw R. Burzynski, President,
Chairman of the Board and Director
Date: May 14, 1998
Pursuant to the requirements of the Securities Act of 1934, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/Stanislaw R. Burzynski Date: May 14, 1998
- ---------------------------
Stanislaw R. Burzynski
President, Chairman of the Board and Director
Tadeusz Burzynski Date: May 14, 1998
Senior Vice President and Director
By: /s/Stanislaw R. Burzynski
-----------------------------
Stanislaw R. Burzynski, Attorney-in-Fact
Dean Mouscher Date: May 14, 1998
Secretary
By: /s/Stanislaw R. Burzynski
-----------------------------
Stanislaw R. Burzynski, Attorney-in-Fact
Barbara Burzynski Date: May 14, 1998
Director
By: /s/Stanislaw R. Burzynski
-----------------------------
Stanislaw R. Burzynski, Attorney-in-Fact
Michael H. Driscoll Date: May 14, 1998
Director
By: /s/Stanislaw R. Burzynski
-----------------------------
Stanislaw R. Burzynski, Attorney-in-Fact
Carlton Hazelwood Date: May 14, 1998
Director
By: /s/Stanislaw R. Burzynski
-----------------------------
Stanislaw R. Burzynski, Attorney-in-Fact
