<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-KSB/A
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-17951
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CORTEX PHARMACEUTICALS, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 33-0303583
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
15241 BARRANCA PARKWAY, IRVINE, CALIFORNIA 92718
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(714) 727-3157
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
<TABLE>
<S> <C>
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units, consisting of three (3) shares of
Common Stock, $0.001 par value, and two
(2) Redeemable Class A Purchase Warrants
Common Stock, $0.001 par value
Redeemable Class A Purchase Warrants
Redeemable Class B Common Stock Purchase
Warrants
(TITLE OF CLASSES)
</TABLE>
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 / /
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB / /.
Issuer's revenues for its most recent fiscal year were $0. The aggregate
market value of the voting stock held by non-affiliates as of June 30, 1995 was
$14,189,883 (based on the last sale price of the common stock as reported by
Nasdaq).
6,126,521 shares of Common Stock were outstanding at September 28, 1995.
----------
Page 1 of 13 Pages
<PAGE>
TABLE OF CONTENTS
PART III
<TABLE>
<S> <C> <C>
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act. . . . . . . . . . . . . 1
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . . 5
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . . 8
Item 12. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A)OF THE EXCHANGE ACT.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<S> <C> <C>
NAME AGE POSITION
Carl W. Cotman, Ph.D. (1) 55 Director
Harvey S. Sadow, Ph.D. (1)(2) 73 Chairman of the Board of Directors
Alan A. Steigrod 58 President and Chief Executive Officer (until
October 31, 1995) and Director
Jerome M. Arnold (1)(3) 54 Director
Davis L. Temple, Jr., Ph.D. 52 Director
Michael G. Grey (2)(3) 42 Director
Gary S. Lynch, Ph.D. (2) 52 Director
D. Scott Hagen 39 Vice President, Chief Financial Officer and
Secretary. Acting President and Chief
Operating Officer.
</TABLE>
(1) Member of the Board of Directors' Compensation Committee.
(2) Member of the Board of Directors' Audit Committee.
(3) Member of the Board of Directors' Stock Option Committee.
DIRECTORS
CARL W. COTMAN, PH.D., 55 has been a Scientific Director of and consultant
to the Company since October 1987, served as a director of the Company from
March 1989 to October 1990, and was reelected as a director in November 1991.
Dr. Cotman has been a Professor of Psychobiology, Neurology, and Psychiatry at
the University of California, Irvine since 1985. He was a Professor of
Psychobiology and Neurology at that University from 1983 to 1985, and has held
various other teaching and research positions at that University since 1968. He
chaired the Scientific Advisory Council of the American Paralysis Association
and is a member of numerous professional associations and committees, including
the Council of the American Society for Neurochemistry, the National Institute
of Aging Task Force, the American Association for the Advancement of Science and
the International Society for Neurochemistry. Dr. Cotman has served on the
editorial boards of numerous scientific journals and has authored or co-authored
seven books and over 400 articles in the fields of neurobiology, memory and
cognition, and the recovery of function after brain injury. Dr. Cotman holds a
B.A. in Chemistry from Wooster College, an M.A. in Analytical Chemistry from
Wesleyan University, and a Ph.D. in Biochemistry from Indiana University.
1
<PAGE>
HARVEY S. SADOW, PH.D., 73, has been a director of the Company since March
1988 and Chairman of the Board of Directors since January 1991. Dr. Sadow was
President and Chief Executive Officer of Boehringer Ingelheim Corporation, a
major health care company, from 1971 until his retirement in January 1988 and
was Chairman of the Board of that company from 1988 through December 1990.
Dr. Sadow was Chairman of the University of Connecticut Foundation, the
President's Council of the American Lung Association, and the Connecticut Law
Enforcement Foundation and was a member of the Board of Directors of the
Pharmaceutical Manufacturers Association ("PMA") and Chairman of the Board of
the PMA Foundation. Dr. Sadow is also a member of several other professional
committees and societies, including the American Society for Clinical
Pharmacology and Therapeutics. He has published extensively in the field of
treatment of diabetes mellitus. Dr. Sadow is Chairman of Cholestech Corporation,
a developer, manufacturer and seller of lipid measuring diagnostic products; a
director of Telios Pharmaceuticals, Inc., a company involved in wound healing
and other applications of cell adhesion; a director of Penederm, Inc., a
developer and marketer of specialized products in the dermatology area; a
director of Cytel Corporation, a biotechnology firm; and a director of several
privately-held companies in the health care field. Dr. Sadow holds a B.S. from
the Virginia Military Institute, an M.S. from the University of Kansas, and a
Ph.D. from the University of Connecticut.
ALAN A. STEIGROD, 58, joined the Company as President and Chief Executive
Officer, and as a director, in February 1993. Mr. Steigrod has resigned as
President and Chief Executive Officer effective October 31, 1995. From February
1991 to February 1993, Mr. Steigrod was an independent consultant to a number of
biopharmaceutical firms. From 1981 to January 1991, he was with Glaxo Inc., most
recently as Executive Vice President, Sales and Marketing. Prior to 1981,
Mr. Steigrod served in a succession of domestic and international management
positions with Eli Lilly & Company and Boehringer Ingelheim Corporation.
Mr. Steigrod is a director of Zynaxis, Inc., a biopharmaceutical firm, and
Sepracor, Inc., a pharmaceutical company. Mr. Steigrod holds a B.S. degree
in Pharmacy from Temple University and has completed advanced corporate
management programs at The Wharton School of the University of Pennsylvania and
at Harvard University.
JEROME M. ARNOLD, 54, was elected as a director in December 1993.
Mr. Arnold has been Chief Operating Officer, Clinics and Analytical Laboratories
Worldwide, Pharmaco LSR Inc. since July 1994. Prior to that, he was President
and Chief Executive Officer of CIBUS Pharmaceuticals, Inc., a pharmaceutical
company, from August 1992 to June 1994. From March 1992 to August 1992, Mr.
Arnold was Vice President of Market Planning and Development at Cato Research
Ltd., and Executive Vice President of Operations of Research Triangle
Pharmaceuticals Ltd., a contract clinical research organization and
pharmaceutical company in its developmental stage, respectively, both of which
are operating divisions of Cato Holdings, a privately-held firm. From June 1991
to December 1991, Mr. Arnold was Vice President of Marketing and Sales of Serono
Laboratories, Inc., with responsibility for marketing, sales and business
development. From 1988 to May 1991, Mr. Arnold was Vice President and General
Manager of the hospital products division of Burroughs Wellcome Co. Mr. Arnold
holds B.A. and B.S. degrees from Merrimack College, an M.B.A. degree from
Suffolk University and has completed the Executive Program at the University of
North Carolina Graduate School of Business Administration.
DAVIS L. TEMPLE, JR., PH.D., 52, has been a director of and consultant to
the Company since March 1994. Dr. Temple, now an independent consultant, was a
Managing Director at Stover Haley Burns, Inc., a life science
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<PAGE>
advisory group since January 1994 until September 1995. From 1990 until 1993,
Dr. Temple served as Vice President, CNS Drug Discovery, of Bristol-Myers
Squibb and from 1984 to 1990 he served as Senior Vice President, CNS Research
at Bristol-Myers Company. Dr. Temple holds a B.S. degree in Pharmacy from
Louisiana State University and a Ph.D. degree in Medicinal Chemistry and
Pharmacology from the University of Mississippi.
MICHAEL G. GREY, 42, has been a director of the Company since September
1994. Since November 1, 1994, Mr. Grey has been President of BioChem
Therapeutic, Inc., a wholly-owned subsidiary of BioChem Pharma, an
international biopharmaceutical company. From January 1994 to October 1994,
Mr. Grey was Senior Vice President, Corporate Development of Titan
Pharmaceuticals, Inc. a biopharmaceutical holding company and President and
Chief Operating Officer at Ansan, Inc., an early stage biopharmaceutical
company. From 1991 until 1993, Mr. Grey served as Vice President, Corporate
Development of Glaxo, Inc., and from 1989 until 1991, Mr. Grey served as
Director of International Licensing of Glaxo Holdings p.l.c., and was
responsible for the worldwide licensing activities of Glaxo, Inc. Mr. Grey
holds a B.Sc. degree in Chemistry from the University of Notingham.
GARY S. LYNCH, PH.D., 52, has been a Scientific Director of and consultant
to the Company since October 1987. He has served as a director of the Company
since December 1994, and previously served as a director from March 1988 to
March 1989. Dr. Lynch has been a Professor in the Department of Psychobiology
at the University of California, Irvine, since 1981, and has held various other
teaching and research positions at that University since 1969. He is a
Professor at the University's Center for the Neurobiology of Learning and
Memory. Dr. Lynch is a member of the Neuroscience Society and the International
Brain Research Organization. He also serves on the Advisory Board of the
Cognitive Neurosciences Institute. Dr. Lynch has authored and co-authored over
400 articles and a number of books in the areas of neurobiology, cognition, and
memory. Dr. Lynch holds a B.A. in Psychology from the University of Delaware and
a Ph.D. in Psychology from Princeton University.
EXECUTIVE OFFICER
D. SCOTT HAGEN, 39, was appointed Acting President and Chief Operating
Officer in October 1995, has been Vice President and Chief Financial Officer
of the Company since January 1992, and was Vice President-Finance and
Administration from September 1988 through December 1991. Mr. Hagen has been
Secretary since August 1991. From 1981 to August 1988, he was employed by
Chembiomed Ltd., a Canadian biopharmaceutical company, where he served in a
progression of scientific and administrative positions. Mr. Hagen holds a B.Sc.
in Biochemistry and an M.B.A. from the University of Alberta in Edmonton,
Canada, where he also completed two years of graduate level study in
biochemistry.
BOARD COMMITTEES
All directors hold office until the next annual meeting of stockholders of
the Company and the election and qualification of their successors. The Board
of Directors of the Company has a standing Compensation Committee, Audit
Committee and Stock Option Committee. The Board of Directors does not have a
standing nominating committee. The functions of the Compensation Committee
include advising the Board of Directors on officer compensation and on employee
compensation generally. The Compensation Committee held one meeting during
fiscal 1995, and currently consists of Mr. Arnold as Chairman of the Committee,
Dr. Sadow and Dr. Cotman. The
3
<PAGE>
Audit Committee has the responsibility of recommending to the Board of
Directors the appointment of the Company's outside auditors, examining the
results of audits and reviewing internal accounting controls. The Audit
Committee held no meetings during fiscal 1995, since its responsibilities
were addressed at the meetings of the Board of Directors. The Audit Committee
currently consists of Dr. Sadow as Chairman, Dr. Lynch and Mr. Grey. The
function of the Stock Option Committee is to administer the Company's stock
plans. The Stock Option Committee held three meetings during fiscal 1995, and
currently consists of Mr. Arnold as Chairman and Mr. Grey. There are no
family relationships between any of the directors or executive officers of
the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and ten-percent stockholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on the review of copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended June 30, 1995 the Company's officers,
directors and ten-percent stockholders complied with all applicable Section
16(a) filing requirements, except that (i) one Annual Statement of Changes in
Beneficial Ownership on Form 5 relating to five stock option grants was filed
late by Dr. Davis Temple, (ii) one Annual Statement of changes in Beneficial
Ownership on Form 5 relating to four stock option grants was filed late by Dr.
Gary Lynch, (iii) one Annual Statement of Changes in Beneficial Ownership on
Form 5 relating to three stock option grants was filed late by Harvey Sadow,
(iv) one Annual Statement of Changes in Beneficial Ownership relating to a
single stock option grant was filed late by D. Scott Hagen, (v) one Annual
Statement of Changes in Beneficial Ownership on Form 5 relating to two stock
option grants was filed late by Michael Grey, (vi) one Annual Statement of
Changes in Beneficial Ownership relating to three stock option grants was filed
late by Dr. Carl Cotman and (vii) one Annual Statement of Changes in Beneficial
Ownership relating to two stock option grants was filed late by Jerome Arnold.
4
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning compensation
paid or accrued by the Company for services rendered during the three fiscal
years ended June 30, 1995, to the Company's Chief Executive Officer and to the
other executive officer employed by the Company as of June 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- -------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (2) OPTIONS(#) COMPENSATION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan A. Steigrod (1) 1995 $207,440 $-- $12,559 195,600 (3) $--
President and Chief 1994 196,602 74,000 17,483 119,500 --
Executive Officer 1993 74,000 -- 21,273 180,000 --
D. Scott Hagen 1995 $124,583 $15,000 $9,346 15,000 $--
Vice President, 1994 114,035 25,000 9,577 -- --
Chief Financial Officer 1993 96,692 -- 8,308 5,000 --
and Secretary
</TABLE>
- ----------
(1) Mr. Steigrod was appointed President and Chief Executive Officer in
February 1993 and served until October 1995.
(2) Accrued or paid-out vacation pay, sick pay and/or relocation
reimbursements.
(3) Represents options issued to replace 195,600 of cancelled options.
OPTION MATTERS
OPTION GRANTS. The following table sets forth certain information
concerning grants of stock options to each of the Company's executive officers
named in the Summary Compensation Table during the fiscal year ended June 30,
1995.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE($/SH) DATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alan A. Steigrod 100,000 (1) 30% $3.50 02/03/03
65,560 (2) 20% 3.50 11/30/03
30,040 (3) 9% 4.50 11/30/03
D. Scott Hagen 15,000 5% $3.125 01/12/05
</TABLE>
- ----------
(1) Represents options granted to replace 100,000 canceled options.
(2) Represents options granted to replace 65,560 canceled options.
(3) Represents options granted to replace 30,040 canceled options.
OPTION EXERCISES. The following table sets forth certain information
concerning the exercise of options by each of the Company's executive officers
named in the Summary Compensation Table during the fiscal year ended June 30,
1995, including the aggregate value of gains on the date of exercise. In
addition, the table includes the number of shares covered by both exercisable
and unexercisable stock options as of June 30, 1995. Also reported are the
values for "in the money" options which represent the positive spread between
the exercise prices of any such existing stock options and $3.00, the last sale
price of Common Stock on June 30, 1995 as reported by Nasdaq.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE REALIZED
(MARKET PRICE VALUE OF UNEXERCISED
AT EXERCISE NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED LESS EXERCISE OPTIONS AT FY-END OPTIONS AT FY-END
NAME ON EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan A. Steigrod 0 $0 175,007 100,593 $0 $0
D. Scott Hagen 0 0 22,800 16,200 7,000 0
</TABLE>
EMPLOYMENT AND CONSULTING AGREEMENTS
In February 1993, the Company entered into a three-year employment
agreement with Mr. Steigrod. Under the agreement, Mr. Steigrod is entitled to a
base salary of $210,000 per year with an annual bonus at the discretion of the
Board of Directors of the Company, in cash and/or equity equal to between 15%
and 50% of his base salary. In connection with his employment, Mr. Steigrod was
granted options to purchase an aggregate of 180,000 shares of Common Stock, of
which 100,000 shares had an exercise price of $8.75, the fair market value on
the date of grant, and 80,000 shares had an exercise price of $4.375,
representing 50% of fair market value on the date of grant. The options were 20%
vested on the date of grant and the balance vests periodically through January
31, 1998. In March 1995, 100,000 of these options were
6
<PAGE>
cancelled and reissued as options to purchase 100,000 shares of common stock
at $3.50 per share, the then fair market value of the common stock. Options
to purchase an additional 95,600 shares with an exercise price of $9.375 per
share, representing 100% of then fair market value, were granted to Mr.
Steigrod on December 1, 1993 pursuant to a one-time anti-dilution provision
in his employment agreement. These options were cancelled on March 23, 1995
and reissued as options to purchase 65,560 shares of common stock at an
exercise price of $3.50 per share, the then fair market value of the common
stock, and options to purchase 30,040 shares of common stock at $4.50 per
share. Such options have a term and vesting provisions identical to the options
described above. In June 1995, Mr. Steigrod's annual salary was voluntarily
decreased by $10,000.
Mr. Hagen entered into a three-year employment agreement with the
Company, commencing September 1, 1988. The employment agreement was renewed
for additional one-year terms as of September 1, 1991, 1992 and 1993, and was
amended and extended effective September 1, 1994 for a term ending December
31, 1995. The agreement currently provides for a base salary of $130,000 with
an annual bonus of between $10,000 and $30,000. In December 1993, options to
purchase a total of 14,000 shares of Common Stock at an exercise price of
$2.50 per share, which were originally granted in 1989, were extended by the
Stock Option Committee for an additional three-year period, or until February
1997. The aggregate difference between exercise price and fair market value
of the Common Stock on the date of the extension has been recorded as
compensation expense. In the event that Mr. Hagen's employment is terminated
other than for cause or as a result of his voluntary resignation, death or
disability, he will receive a severance payment equal to six months' salary.
Mr. Hagen voluntarily reduced his annual compensation by $5,000 beginning
June 1, 1995.
Drs. Carl W. Cotman and Gary S. Lynch (both of whom are co-founders and
Scientific Directors of the Company) have each entered into a consulting
agreement with the Company that provides for the payment of an annual consulting
fee of $30,000. In December 1993, Dr. Lynch was awarded a bonus of $25,000 by
the Board of Directors in recognition of his contributions to the AMPAKINE-TM-
program. In September 1994, and again in July 1995, his consulting fee was
increased to $50,000 and $75,000 per year, respectively. Also in September 1994,
Dr. Cotman's consulting fee was increased to $33,000 per year. The term of each
consulting agreement commenced in November 1987 and will continue until
terminated by the respective parties thereto. The consulting agreements obligate
the respective consultants to make themselves available to the Company for
consulting and advisory services for an average of three days per month. In June
1995, each of the consultants voluntarily reduced their annual consulting fees
by $10,000. In December 1993, the Board of Directors instructed its Stock Option
Committee to annually review the contributions of Drs. Cotman and Lynch and
to grant stock options in recognition of those contributions, and to
encourage future contributions, to them in such amounts as are deemed
appropriate by the Committee. On December 13, 1993, the Committee granted
options to purchase 5,000 shares of Common Stock, with an exercise price equal
to 100% of fair market value of the Common Stock on the date of grant and
vesting over a three-year period, to each of Drs. Cotman and Lynch. On the same
date, an additional option to purchase 7,000 shares of Common Stock, with an
exercise price equal to 100% of fair market value of the Common Stock and full
vesting on the date of grant, was granted to Dr. Lynch in recognition of his
contributions to the AMPAKINE-TM- program. On March 24, 1994, the Committee
granted options to purchase
7
<PAGE>
5,000 shares of Common Stock, with an exercise price of $8.4375 per share, the
then fair market value, to each of Drs. Cotman and Lynch. These options vest
over a three-year period. On December 15, 1994, the Committee granted options
to purchase 20,000 shares of Common Stock with an exercise price of $3.125 per
share, the then fair market value, and vesting over a four-year period to
Dr. Cotman. On the same date, Dr. Lynch was granted options to purchase 70,000
shares of Common Stock at the same exercise price, and with the same vesting
period. See also Director Compensation.
Dr. Davis L. Temple, a director of the Company, signed a consulting
agreement with the Company that includes the payment of consulting fees of
$10,000 for each six months of service. On February 27, 1995, the Stock Option
Committee, in recognition of his contributions to the Company, granted Dr.
Temple options to purchase 20,000 shares of the Company's common stock at an
exercise price of $2.125 per share, representing the fair market value of the
common stock on that date. See also Director Compensation.
DIRECTOR COMPENSATION
Each non-employee director (other than those who join the Board of
Directors to oversee an investment in the Company) receives $1,500 at each Board
of Directors meeting attended, and an additional $750 annual retainer for each
committee on which he or she serves.
Under the Company's 1989 Incentive Stock Option, Nonqualified Stock Option
and Stock Purchase Plan, each non-employee director (other than those who serve
on the Board of Directors to oversee an investment in the Company) is
automatically granted options to purchase 15,000 shares of Common Stock upon
commencement of service as a director and additional options to purchase 2,500
shares of Common Stock on the date of each Annual Meeting of Stockholders. These
nonqualified options have an exercise price equal to 100% of the fair market
value of the Common Stock on the date of grant, have a ten-year term and vest in
equal increments of 25% on the anniversary dates of the dates of grant.
Non-employee directors who serve on the Board of Directors to oversee an
investment in the Company receive options to purchase 5,000 shares of Common
Stock upon commencement of service as a director and additional options to
purchase 1,000 shares of Common Stock on the date of each Annual Meeting of
Stockholders. These nonqualified options have an exercise price equal to 100% of
the fair market value of the Common Stock on the date of grant, have a ten-year
term and vest in equal increments of 25% on the last day of each calendar
quarter following the dates of grant. The foregoing plan is subject to approval
by the Company's stockholders. In accordance with such plan, in January 1995 an
aggregate of 75,600 options were granted to the non-employee directors of the
Company. As previously approved by the stockholders, and currently in effect,
each director receives options to purchase 5,000 shares upon commencement of
service and additional options to purchase 1,000 shares on the date of each
Annual Meeting of Stockholders.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of the Company, certain
information regarding the beneficial ownership of the Company's Common Stock as
of September 30, 1995, by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each of
the Company's directors and nominees, (iii) each of the named executive officers
in the Summary Compensation Table and (iv) all of the Company's executive
officers and directors as a group. Except as
8
<PAGE>
indicated in the footnotes to this table, the Company believes that the
persons named in this table have sole voting and investment power with
respect to the shares of Common Stock indicated.
<TABLE>
<CAPTION>
DIRECTORS, NOMINEES, SHARES PERCENT OF
OFFICERS, AND 5% BENEFICIALLY COMMON STOCK
STOCKHOLDERS OWNED BENEFICIALLY OWNED
- --------------------------------------------------------------------------------
<S> <S> <S>
Jerome M. Arnold 3,250 (1) *
Carl W. Cotman, Ph.D. 104,584 (2) 1.7
D. Scott Hagen 23,200 (3) *
Michael G. Grey 4,250 (4) *
Gary S. Lynch, Ph.D. 123,974 (5) 2.0
Harvey S. Sadow, Ph.D. 23,250 (6) *
Alan A. Steigrod 197,500 (7) 3.1
Davis L. Temple, Jr., Ph.D. 4,250 (8) *
Alkermes, Inc. 350,000 (9) 5.5
64 Sidney Street
Cambridge, MA 02139
Quantum Partners LDC 1,100,000 17.9
Soros Fund Management
888 Seventh Avenue, 33rd Floor
New York, NY 10106
All officers, directors and nominees
as a group (8 persons) 481,258 7.5
</TABLE>
- ----------
* Less than one percent
(1) Includes 3,250 shares that may be purchased upon exercise of options within
60 days of September 30, 1995.
(2) Includes 6,584 shares that may be purchased upon exercise of options within
60 days of September 30, 1995.
(3) Includes 22,800 shares that may be purchased upon exercise of options
within 60 days of September 30, 1995.
(4) Includes 1,250 shares that may be purchased upon exercise of options within
60 days of September 30, 1995.
(5) Includes 10,334 shares that may be purchased upon exercise of options
within 60 days of September 30, 1995.
(6) Includes 13,250 shares that may be purchased upon exercise of options
within 60 days of September 30, 1995.
(7) Includes 194,300 shares that may be purchased upon exercise of options
within 60 days of September 30, 1995.
(8) Includes 4,250 shares that may be purchased upon exercise of options within
60 days of September 30, 1995.
(9) Includes 200,000 shares that may be acquired upon exercise of warrants.
9
<PAGE>
The Company is not aware of any arrangements that may at a subsequent date
result in a change of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Restated Certificate of Incorporation provides that, pursuant
to Delaware Law, directors of the Company shall not be liable for monetary
damages for breach of the directors' fiduciary duty of care to the Company and
its stockholders. This provision does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctions or other forms
of non-monetary relief remain available under Delaware Law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Company, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for actions
leading to improper personal benefit to the director and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware Law. The provision also does not affect a director's
responsibility under any other law, such as the federal securities laws. The
Company has entered into Indemnification Agreements with each of its officers
and directors that obligate the Company to indemnify them as permitted by
applicable law.
10
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: October 27, 1995 CORTEX PHARMACEUTICALS, INC.
(Registrant)
By: /s/ D. Scott Hagen
----------------------------------------
D. Scott Hagen, Vice President and Chief
Financial Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1995, AND THE RELATED STATEMENTS OF OPERATIONS,
STOCKHOLDER'S EQUITY AND CASH FLOWS FOR THE YEAR THEN ENDED AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 149,880
<SECURITIES> 3,689,356
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,931,448
<PP&E> 1,787,009
<DEPRECIATION> 855,215
<TOTAL-ASSETS> 4,886,372
<CURRENT-LIABILITIES> 603,660
<BONDS> 1,000,000<F1>
<COMMON> 6,085
0
673,837
<OTHER-SE> 2,592,774
<TOTAL-LIABILITY-AND-EQUITY> 4,886,372
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,031,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,835,532)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,835,532)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,835,532)
<EPS-PRIMARY> (1.13)
<EPS-DILUTED> (1.13)
<FN>
<F1>PROMISSORY NOTE ISSUABLE TO ALKERMES, INC.
</FN>
</TABLE>
