<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 0-28782
--------------------------------
NEOTHERAPEUTICS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Colorado 93-0979187
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Technology Drive, Suite I-821
Irvine, California 92618
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: (714) 788-6700
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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common stock as of the latest practicable date:
Class Outstanding at April 29, 1997
----- -----------------------------
Common Stock, no par value 5,361,807
<PAGE> 2
NEOTHERAPEUTICS, INC.
(A Development-Stage Enterprise)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Statement regarding financial information.............................................. 3
Condensed Consolidated Balance Sheets as of March 31, 1997 and
December 31, 1996................................................................. 4
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1997 and 1996 and for the period from inception (June 15,
1987) to March 31, 1997........................................................... 5
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and 1996 and for the period from inception (June 15,
1987) to March 31, 1997........................................................... 6
Notes to Condensed Consolidated Financial Statements................................... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION..................................................................... 11
PART II. OTHER INFORMATION...................................................................... 15
ITEM 2. CHANGES IN SECURITIES.................................................................. 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................................... 15
</TABLE>
Page 2
<PAGE> 3
NEOTHERAPEUTICS, INC.
(A Development Stage Enterprise)
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1997
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENT REGARDING FINANCIAL INFORMATION
The financial statements included herein have been prepared by
NeoTherapeutics, Inc. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
normally included in the financial statements prepared in accordance with
generally accepted accounting principles has been condensed or omitted pursuant
to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that the financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1996 as filed with the
Securities and Exchange Commission.
Page 3
<PAGE> 4
NEOTHERAPEUTICS, INC. AND SUBSIDIARY
(A Development-Stage Enterprise)
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
March 31, December 31,
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,220,172 $ 9,995,062
Marketable securities and short-term investments 8,530,601 5,702,114
Other receivables, principally investment interest 250,104 163,988
Prepaid expenses and refundable deposits 213,835 239,171
------------ ------------
Total current assets 12,214,712 16,100,335
------------ ------------
PROPERTY AND EQUIPMENT, at cost:
Construction in progress 1,484,962 33,076
Equipment and furniture 367,780 158,396
Accumulated depreciation (70,435) (58,963)
------------ ------------
Property and equipment, net 1,782,307 132,509
------------ ------------
OTHER ASSETS:
Marketable securities 2,694,091 1,746,432
Deposits 50,210 --
------------ ------------
Total other assets 2,744,301 1,746,432
------------ ------------
TOTAL ASSETS $ 16,741,320 $ 17,979,276
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 284,384 $ 262,604
Accrued payroll and related taxes 35,527 331,175
Employee expense reimbursement -- 82,717
Accrued interest to related parties -- 122,396
Notes payable to related parties 558,304 558,304
------------ ------------
Total current liabilities 878,215 1,357,196
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, no par value, 25,000,000 shares authorized:
Issued and outstanding, 5,361,807 shares in both periods 23,185,763 23,125,763
Deficit accumulated during the development stage (7,322,658) (6,503,683)
------------ ------------
Total stockholders' equity 15,863,105 16,622,080
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,741,320 $ 17,979,276
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
Page 4
<PAGE> 5
NEOTHERAPEUTICS, INC. AND SUBSIDIARY
(A Development-Stage Enterprise)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
AND THE PERIOD FROM INCEPTION (JUNE 15, 1987) TO MARCH 31, 1997
<TABLE>
<CAPTION>
Period from
Three Months Three Months Inception
Ended Ended Through
March 31, March 31, March 31,
1997 1996 1997
----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES, from grants $ -- $ -- $ 497,128
----------- ----------- -----------
OPERATING EXPENSES:
Research and development 548,815 34,070 3,515,627
General and administrative 498,964 25,546 3,928,070
----------- ----------- -----------
Total operating expenses 1,047,779 59,616 7,443,697
----------- ----------- -----------
LOSS FROM OPERATIONS (1,047,779) (59,616) (6,946,569)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest income (expense), net 228,804 (12,997) 24,612
Other income (expense) -- (800) 48,299
----------- ----------- -----------
Total other income (expense) 228,804 (13,797) 72,911
----------- ----------- -----------
NET LOSS $ (818,975) $ (73,413) $(6,873,658)
=========== =========== ===========
NET LOSS PER SHARE $ (.15) $ (.03)
=========== ===========
Weighted Average Shares Outstanding 5,361,807 2,405,352
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
Page 5
<PAGE> 6
NEOTHERAPEUTICS, INC. AND SUBSIDIARY
(A Development-Stage Enterprise)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
AND THE PERIOD FROM INCEPTION (JUNE 15, 1987) TO MARCH 31, 1997
<TABLE>
<CAPTION>
Period from
Three Months Three Months Inception
Ended Ended Through
March 31, March 31, March 31,
1997 1996 1997
------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (loss) $ (818,975) $ (73,413) $(6,873,658)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 11,472 902 195,924
Issuance of common stock for services 60,000 -- 268,950
Amortization of deferred compensation -- -- 93,749
Compensation expense for extension of Debt
Conversion Agreements, net -- -- 503,147
Gain on sale of assets -- -- (5,299)
Increase in other receivables (86,116) -- (249,858)
Increase in prepaid expenses and refundable
deposits (24,874) (798) (214,042)
Increase in accounts payable and accrued
expenses 21,780 6,316 444,484
Increase (decrease) in accrued payroll and
related payroll taxes (295,648) 40,259 674,221
Increase (decrease) in employee expense
reimbursement and accrued interest to
related parties (205,113) 12,347 300,404
----------- ----------- -----------
Net cash used in operating activities (1,337,474) (14,387) (4,861,978)
----------- ----------- -----------
</TABLE>
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NEOTHERAPEUTICS, INC. AND SUBSIDIARY
(A Development-Stage Enterprise)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Period from
Three Months Three Months Inception
Ended Ended Through
March 31, March 31, March 31,
1997 1996 1997
------------- ------------ -------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,661,270) -- (1,933,045)
Purchases of marketable securities and
short-term investments (3,776,146) -- (11,224,692)
Payment of organization costs -- -- (66,093)
Proceeds from sale of equipment -- -- 29,665
Issuance of notes receivable -- -- 100,000
------------ ------------ ------------
Net cash used in investing activities (5,437,416) -- (13,094,165)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance
including Revenue Participation
Units converted to common stock -- 15,000 20,217,803
Proceeds from notes payable to related
parties, net -- -- 757,900
Cash at acquisition -- -- 200,612
------------ ------------ ------------
Net cash provided by financing
activities -- 15,000 21,176,315
------------ ------------ ------------
Net increase (decrease) in cash (6,774,890) 613 3,220,172
Cash, beginning of period 9,995,062 859 --
------------ ------------ ------------
Cash, end of period $ 3,220,172 $ 1,472 $ 3,220,172
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
Page 7
<PAGE> 8
NEOTHERAPEUTICS, INC. AND SUBSIDIARY
(A Development-Stage Enterprise)
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
1. Summary of Significant Accounting Policies
-----------------------------------------
a. Organization and Nature of Business
-----------------------------------
In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements include all adjustments (which
consist only of normal recurring adjustments) necessary for a fair presentation
of its consolidated financial position at March 31, 1997 and consolidated
results of operations and cash flows for the periods presented. Although the
Company believes that the disclosures in these financial statements are adequate
to make the information presented not misleading, certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted and
should be read in conjunction with the Company's audited financial statements
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996 as filed with the Securities and Exchange Commission. Results
of operations for the three months ended March 31, 1997 are not necessarily
indicative of results to be expected for the full year.
NeoTherapeutics, Inc. (the "Company") was incorporated in Colorado as
Americus Funding Corporation ("AFC") in December 1987. In August 1996, AFC
changed its name to "NeoTherapeutics, Inc." Its wholly-owned subsidiary,
Advanced ImmunoTherapeutics, Inc. ("AIT"), was incorporated in California in
June 1987. In July 1989, AIT completed an agreement with the Company, which
provided for AIT to become a wholly-owned subsidiary of AFC in a transaction
accounted for as a reverse acquisition. All references to the "Company"
hereinafter refer to NeoTherapeutics and AIT as a consolidated entity.
The Company is a development-stage biopharmaceutical enterprise engaged in
the discovery and development of novel therapeutic drugs intended to treat
neurodegenerative diseases and conditions such as memory deficits associated
with Alzheimer's disease and aging, stroke, spinal cord injuries and Parkinson's
disease.
b. Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany accounts and transactions have
been eliminated.
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NEOTHERAPEUTICS, INC. AND SUBSIDIARY
(A Development-Stage Enterprise)
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
c. Marketable Securities
---------------------
The Company accounts for investments in marketable securities under
Statements of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The statement requires
investments in debt and equity securities to be classified among three
categories as follows: Held-to-maturity, trading and available-for-sale. As of
March 31, 1997, all securities held by the Company were considered
held-to-maturity. Securities held-to-maturity are stated at cost, adjusted for
amortization of premiums and accretion of discounts, which are recognized as
adjustments to interest income on investment securities. A valuation allowance
is not established to recognize temporary market value fluctuations as the
Company has the intent and ability to hold these investments until maturity.
Short-term investments consist of commercial paper and equivalent corporate
obligations and are stated at amortized cost.
d. Net Loss Per Share
------------------
Net loss per share is calculated using the weighted average number of
shares outstanding for the period. Common equivalent shares are excluded from
the computation as their effect is antidilutive except that, pursuant to the
Securities and Exchange Commission ("SEC") Staff Accounting Bulletins, common
and common equivalent shares (stock options, warrants and RPU's converted to
common stock in July 1996) issued during the period commencing 12 months prior
to the initial filing of a proposed public offering at prices below the public
offering price have been included in the calculation as if they were outstanding
for all periods presented (using the treasury stock method for stock options and
warrants at the estimated initial public offering price).
e. Research and Development
------------------------
All costs related to research and development activities are treated as
expenses in the period incurred.
f. New Pronouncements
------------------
Effective January 1, 1997, the Company adopted SFAS No. 128, "Earnings per
Share." The statement requires, at a minimum, new calculations of earnings per
share and disclosures. The Company has reviewed the provisions of SFAS No. 128
and has determined that adoption of this pronouncement had no material effect on
the Company's reporting of its results of operations.
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NEOTHERAPEUTICS, INC. AND SUBSIDIARY
(A Development-Stage Enterprise)
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Commitments and Contingencies
-----------------------------
Facility leases:
The Company leases its present facilities from a property developer under a
non-cancelable operating lease which expires the earlier of August 1997 or upon
occupancy of the Company's new primary research and development and
administrative facility which is presently under construction by such developer
and expected to be completed during late June 1997. The existing lease requires
monthly payments of $8,424. The new facility lease (also a non-cancelable
operating lease) runs from July 1997 (expected date of occupancy) through June
2004 and contains two five year options to renew at fair value rates in effect
at that time. Minimum monthly rents under this lease range from $38,800 to
$47,600 through its term. The total minimum commitment under the new facility
lease aggregates approximately $3.6 million through June 2004.
The Company is obligated to reimburse the lessor-developer for
approximately $1.4 million for tenant improvements, primarily to construct the
specialized research and development laboratories for the new facility. This
amount was paid during March 1997 and is shown under "Construction in progress"
in the accompanying balance sheet.
University Research Grants:
The Company has committed an aggregate of $276,000 to several universities
to conduct general scientific research programs and to provide for a two year
Fellowship Grant. During the quarter ended March 31, 1997, the Company paid
$56,000 towards the grants, thereby reducing the remaining commitment to
$220,000 at March 31, 1997.
3. Stock Options and Warrants:
---------------------------
Stock option activities for the three month period ended March 31, 1997
were as follows:
<TABLE>
<CAPTION>
Option Price
Shares per Share
------- ------------
<S> <C> <C>
Outstanding at December 31, 1996 270,173 $0.025-$3.75
Granted 204,500 $3.88-$4.50
Exercised, expired - -
------- ------------
Outstanding at March 31, 1997 474,673 $0.025-$4.50
======= ============
</TABLE>
The Company recognized $60,000 of compensation expense for vested
consultant options during the quarter pursuant to SFAS 123. Options granted to
consultants consist of options that vest both immediately and upon the
occurrence of certain events as specified in the related agreements.
Page 10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION
PRELIMINARY NOTE REGARDING FORWARD LOOKING STATEMENTS
- -----------------------------------------------------
This Quarterly Report on Form 10-QSB contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company's actual results may differ
materially from the results projected in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, those
discussed below under "Factors Affecting Future Operating Results."
RESULTS OF OPERATIONS
- ---------------------
Overview:
From the inception of the Company in 1987 through March 31, 1997, the
Company incurred a cumulative net loss of approximately $6.9 million. The
Company expects its operating expenses to increase over the next several years
as it expands its research and development and commercialization activities and
operations. The Company expects to incur significant additional operating losses
for at least the next several years unless such operating losses are offset, if
at all, by licensing revenues under strategic alliances with larger
pharmaceutical companies which the Company is currently seeking.
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996:
- --------------------------------------------------------------------------------
There were no revenues during the three months ended March 31, 1997 or the
three months ended March 31, 1996.
Research and development expenses increased approximately $514,800 or
1,511% from the same period in 1996. Research and development activities were
restricted in the prior period due to the lack of sufficient funds. Current
period increases were due primarily to personnel additions, salary increases,
consulting fees, research grants made by the Company, facilities rent and costs
and expenses associated with the commencement of clinical trials. The Company
expects its research and development expenses to continue to increase in
absolute dollars as it expands its product development and clinical trial
activities.
General and administrative expenses increased approximately $473,400 or
1,853% from the same period in 1996 due to the addition of personnel, salary
increases, insurance, professional and consulting fees, commissions, travel and
facilities rent in the current period, whereas in the prior period, the Company
operated from the Chief Executive Officer's residence on a rent-free basis with
a very limited administrative and technical staff. The Company expects general
and administrative expenses to increase in
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future periods in support of the expected increases in both research and
development activities as well as marketing activities and as the Company incurs
expenses associated with being a public company. Net interest income increased
by approximately $241,800 due to interest income from higher cash balances
resulting from the investments of unallocated proceeds from its recent public
offering. The Company expects its interest earnings to decrease over the next
year due to the use of its funds in current operations.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
From inception through March 31, 1997, the Company financed its operations
primarily through sales of equities, borrowings and deferred payment of salaries
and other expenses from related parties and grants. On September 26, 1996, the
Company effected the public sale of 2,500,000 units of its common stock and
attached warrants. Each unit consisted of one share of common stock and one
warrant to purchase one share of common stock. The closing took place on October
1, 1996 and on that date, the Company realized net cash proceeds of
approximately $17,363,000 from the sale. On October 11, 1996, the underwriter of
the public offering exercised an option to purchase an additional 200,000 units
resulting in net proceeds of approximately $1,389,000 to the Company. Expenses
directly related to the public offering of units were approximately $576,000,
and have been offset against the common stock proceeds of the offering in
stockholders' equity.
At March 31, 1997, working capital amounted to approximately $11.3 million.
This amount included cash and cash equivalents of approximately $3.2 million and
marketable securities and short-term investments of approximately $8.5 million.
In comparison, at December 31, 1996, the Company had working capital of $14.7
million, which included cash and cash equivalents of approximately $10 million
and marketable securities and short-term investments of approximately $5.7
million. The $3.4 million decrease in working capital during the quarter is
attributable primarily to (1) investments in property and equipment of $1.7
million and transfers of cash to non-current marketable securities of $0.9
million The balance of the working capital decrease, $0.9 million was expended
primarily in operations.
The Company is in the development stage devoting substantially all of its
efforts to research and development. During its development stage, the Company
has incurred cumulative losses of approximately $6.9 million through March 31,
1997, and expects to incur substantial losses over the next several years. In
addition to the funds derived from the recently completed public offering, the
Company will require substantial additional funds in order to complete the
research and development activities currently contemplated and to commercialize
its proposed products. The Company's future capital requirements and
availability of capital will depend upon many factors, including continued
scientific progress in research and development programs, the scope and results
of preclinical studies and clinical trials, the time and costs involved in
obtaining regulatory approvals, the cost involved in filing, prosecuting and
enforcing patent claims, competing technological developments, the cost of
manufacturing scale-up, the cost of
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<PAGE> 13
commercialization activities and other factors which may not be within the
Company's control. While the Company believes that its existing capital
resources will be adequate to fund its capital needs for at least 12 months, the
Company also believes that ultimately it will require substantial additional
funds in order to complete the research and development activities currently
contemplated and to commercialize its proposed products.
Without additional funding, the Company may be required to delay, reduce
the scope or eliminate one or more of its research and development projects, or
obtain funds through arrangements with collaborative partners or others which
may require the Company to relinquish rights to certain technologies, product
candidates or products that the Company would otherwise seek to develop or
commercialize on its own.
FACTORS AFFECTING FUTURE OPERATING RESULTS:
- -------------------------------------------
The future operating results of the Company are highly uncertain, and the
following factors should be carefully reviewed in addition to the other
information contained in this quarterly report on Form 10-QSB:
The Company has incurred losses in every year of its existence and expects
to continue to incur significant operating losses for the next several years.
The Company has never generated revenues from product sales and there is no
assurance that revenue from product sales will ever be achieved. In addition,
there is no assurance that any of the Company's proprietary products will ever
be successfully developed, receive and maintain require governmental regulatory
approvals, become commercially viable or achieve market acceptance.
The Company has no experience in manufacturing, procuring products in
commercial quantities or marketing, and only limited experience in negotiating,
setting up or maintaining strategic relationships and conducting clinical trials
or other late stage phases of the regulatory approval process, and there is no
assurance that the Company will successfully engage in any of these activities.
The Company's need for additional funding is expected to be substantial and
will be determined by the progress and cost of the development and
commercialization of its products and other activities. The Company believes
that its existing capital resources will be sufficient to satisfy its current
and projected funding requirements for at least the next twelve months. However,
if the Company experiences unanticipated cash requirements during the interim
period, the Company could require additional funds sooner. The source,
availability, and terms of such funds have not been determined. Although funds
may be received from the sale of equity securities or the exercise of
outstanding warrants and options to acquire common stock of the Company, there
is no assurance any such funding will occur.
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<PAGE> 14
Factors impacting the future success of the Company include, among other
things, the ability to develop products which will be safe and effective in
treating neurological and immunological diseases and the ability to obtain
government approval.
The Company faces numerous other risks in the operation of its business,
including, but not limited to, protecting its proprietary technology and trade
secrets and not infringing those of others; attaining a competitive advantage;
entering into agreements with others to source, manufacture, market and sell its
products; attracting and retaining key personnel in research and development,
manufacturing, marketing, sales and other operational areas; managing growth, if
any; and avoiding potential claims by others in such areas as product liability
and environmental matters.
The above factors are not intended to be inclusive. A more comprehensive
list of factors which could affect the Company's future operating results can be
found in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996, under the caption "Business-Risk Factors." Failure to
satisfactorily achieve any of the Company's objectives or avoid any of the above
or other risks would likely have a material adverse effect on the Company's
business and results of operations.
Page 14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
RECENT SALES OF UNREGISTERED SECURITIES:
The following is a summary of transactions by the Company during the
quarter ended March 31, 1997 involving sales of the Company's securities that
were not registered under the Securities Act of 1933 (the "Securities Act"):
1. In January 1997, pursuant to its 1991 Stock Option Plan, the Company
granted to six employees, incentive options to purchase a total of 19,500 shares
of Common Stock at an exercise price of $4.50 per share, and to a consultant in
exchange for consulting services, a non-qualified option to purchase 5,000
shares of Common Stock at the exercise price of $4.50 per share.
2. In January 1997 the Company granted to a consultant an option to
purchase 180,000 shares of Common Stock at the price of $3.875 per share, in
exchange for consulting services.
In the transactions described above, exemption from the registration
requirements of the Securitites Act was claimed under Section 4(2) of the
Securities Act. The foregoing transactions did not involve any public offering
and the recipients either received adequate information about the Company or had
access, through employment or other relationships, to such information. In each
of the foregoing transactions, the Company reasonably believed that each of the
recipients was "sophisticated" within the meaning of Section 4(2) of the
Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
27. Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
--------------------
period covered by this report.
Page 15
<PAGE> 16
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.
NEOTHERAPEUTICS, INC.
Date: May 13, 1997 By /s/ ALVIN J. GLASKY
---------------------------
Alvin J. Glasky, Ph.D.,
President
Date: May 13, 1997 By /s/ SAMUEL GULKO
---------------------------
Samuel Gulko
Chief Financial Officer
Page 16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,220,172
<SECURITIES> 8,530,601
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,214,712
<PP&E> 1,852,742
<DEPRECIATION> 70,435
<TOTAL-ASSETS> 16,741,320
<CURRENT-LIABILITIES> 878,215
<BONDS> 0
0
0
<COMMON> 23,185,763
<OTHER-SE> (7,322,658)
<TOTAL-LIABILITY-AND-EQUITY> 16,741,320
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,047,779
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (228,804)
<INCOME-PRETAX> (818,975)
<INCOME-TAX> 0
<INCOME-CONTINUING> (818,975)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (818,975)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> 0
</TABLE>
