UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
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(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ---------- ACT OF 1934
For the quarterly period ended December 31, 1998
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
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Commission File Number: 33-40808-A
SPECTRUM PHARMACEUTICAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Florida 65-0260247
(State of incorporation) (IRS Employer ID Number)
36 Valley View, Irvine CA 96212
(Address of principal executive offices)
(949) 856-1277
(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 NO X
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: April 30, 1999: 6,911,165
Transitional Small Business Disclosure Format (check one): YES NO X
<PAGE>
SPECTRUM PHARMACEUTICAL CORPORATION
Form 10-QSB for the Quarter ended December 31, 1998
Table of Contents
Page
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 8
Part II - Other Information
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 9
2
<PAGE>
<TABLE>
<CAPTION>
Part 1 - Item 1 - Financial Statements
SPECTRUM PHARMACEUTICAL CORPORATION
BALANCE SHEETS
December 31, 1998 and 1997
(Unaudited)
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash on hand and in bank $ -- $ --
Prepaid expenses -- --
----------- -----------
Total current assets -- --
----------- -----------
Property and Equipment - At Cost
Office furniture and equipment -- --
Less accumulated depreciation -- --
----------- -----------
Net property and equipment -- --
----------- -----------
Other Assets
Organization costs, net of accumulated
amortization of $41,972, respectively -- --
Patents 20,000 20,000
----------- -----------
Total other assets 20,000 20,000
----------- -----------
Total Assets $ 20,000 $ 20,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable - trade $ -- $ --
Due to officer/shareholder 511,250 361,250
----------- -----------
Total current liabilities 511,250 361,250
----------- -----------
Commitments and Contingencies
Shareholders' Equity
Common stock - $0.001 par value. 25,000,000 shares
authorized. 6,911,165 issued and outstanding, respectively 6,911 6,911
Additional paid-in capital 926,021 926,021
Deficit accumulated during the development phase (1,424,182) (1,274,182)
----------- -----------
Total shareholders' equity (491,250) (341,250)
----------- -----------
Total Liabilities and Shareholders' Equity $ 20,000 $ 20,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
3
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM PHARMACEUTICAL CORPORATION
STATEMENTS OF OPERATIONS
Nine and Three months ended December 31, 1998 and 1997
(Unaudited)
Nine months Nine months Three months Three months
ended ended ended ended
December 31, December 31, December 31, December 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
----------- ----------- ----------- -----------
Expenses
General and administrative 113,750 106,250 38,750 36,250
Depreciation and amortization -- -- -- --
----------- ----------- ----------- -----------
Total expenses 113,750 106,250 38,750 36,250
----------- ----------- ----------- -----------
Net Loss $ (113,750) $ (106,250) $ (38,750) $ (36,250)
=========== =========== =========== ===========
Loss per weighted-average
share of common stock outstanding $ (0.02) $ (0.02) $ (0.01) $ (0.01)
=========== =========== =========== ===========
Weighted-average number of shares
of common stock outstanding 6,911,165 6,911,165 6,911,165 6,911,165
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
4
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM PHARMACEUTICAL CORPORATION
STATEMENTS OF CASH FLOWS
Nine months ended December 31, 1998 and 1997
(Unaudited)
Nine months Nine months
ended ended
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Loss $(113,750) $(106,250)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization -- --
Common stock issued for consulting fees -- --
(Increase) decrease in
Prepaid expenses -- --
Increase (decrease) in
Accounts payable and other accrued liabilities -- --
Due to officer/shareholder 113,750 106,250
--------- ---------
Net cash provided by (used in) operating activities -- --
--------- ---------
Cash Flows from Investing Activities -- --
--------- ---------
Cash Flows from Financing Activities -- --
--------- ---------
Increase (Decrease) in Cash and Cash Equivalents -- --
Cash and cash equivalents at beginning of period -- --
--------- ---------
Cash and cash equivalents at end of period $ -- $ --
========= =========
Supplemental Disclosures of Interest and Income Taxes Paid
Interest paid during the period $ -- $ --
========= =========
Income taxes paid (refunded) $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements. The
financial information presented herein has been prepared by management without
audit by independent certified public accountants.
5
<PAGE>
SPECTRUM PHARMACEUTICAL CORPORATION
Notes to Financial Statements
Note 1 - Basis of Presentation
Spectrum Pharmaceutical Corporation (Company) was incorporated on May 29, 1990
as Interamerican Pharmaceutical Corporation under the laws of the State of
Florida. The Company changed its name to Spectrum Pharmaceutical Corporation in
April 1991. The Company was originally formed to engage in the development and
marketing of certain products utilizing the chemical compound procaine
hydrochloride for the treatment of tinnitus, certain symptoms of Alzheimer's
Disease and cocaine addiction. The Company received a patent covering its
products for the specifically named conditions and diseases.
The Company has generated no operating revenues from inception. Accordingly, the
Company is considered to be in the development stage. Accordingly, the Company
is fully dependent upon management and/or significant stockholders to provide
sufficient working capital to preserve the integrity of the corporate entity
during this phase. It is the intent of management and significant stockholders
to provide sufficient working capital necessary to support and preserve the
integrity of the corporate entity.
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the U. S. Securities and Exchange Commission.
The information presented herein does not include all disclosures required by
generally accepted accounting principles and the users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim
financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending March 31, 1999.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 - Summary of Significant Accounting Policies
a.) Cash and cash equivalents
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
6
<PAGE>
SPECTRUM PHARMACEUTICAL CORPORATION
Notes to Financial Statements - Continued
Note 3 - Common stock transactions
In April 1994, the Company issued 2,500,000 shares of unregistered, restricted
common stock to its President and Chief Executive Officer, who is also a
shareholder of the Company, in payment of approximately $233,000 in accrued, but
unpaid, compensation and advances and the assumption of responsibility for all
trade accounts payable and other liabilities, totaling approximately $133,000.
At various times during Fiscal 1995, the Company issued an aggregate 115,000
shares of unregistered, restricted common stock to an individual and a law firm
as compensation for professional services. These transactions were recorded
using an estimated fair value of approximately $0.13 per share, or $14,950 in
the aggregate, which approximates the value of the services provided and the
equivalent valuation on the shares issued to satisfy the payment of accrued
executive compensation and repayment of officer advances as discussed in the
preceding paragraph.
In July 1994, in conjunction with the issuance of 25,000 shares of unregistered,
restricted common stock for services, the Company issued options to an
individual to purchase up to an additional 25,000 shares of unregistered,
restricted common stock for $0.50 per share.
Note 4 - Contingencies
On June 1, 1992, the Company entered into an Employment Contract (Contract) with
an individual to serve as the Company's President. The Contract requires a
annual base salary, as specified to use the Contract's anniversary dates, as
follows:
June 1, 1992 to May 31, 1993 $ 85,000
June 1, 1993 to May 31, 1994 105,000
June 1, 1994 to May 31, 1995 115,000
June 1, 1995 to May 31, 1996 125,000
June 1, 1996 to May 31, 1997 135,000
June 1, 1997 to May 31, 1998 145,000
June 1, 1998 to May 31, 1999 155,000
Additionally, the Contract provides for discretionary bonuses, paid vacation and
sick leave time, use of a Company automobile or reimbursement for the use of a
personal automobile and various normal insurance coverage for life and health
coverages.
The Company and its President are defendants in a case initiated in August 1992
in Circuit Court for the 15th Judicial Circuit for Palm Beach County, Florida
seeking damages related to the termination of a partnership which was the
predecessor to the Company. In February 1999, this litigation was authorized to
be settled by the Company's Board of Directors through the transference of the
patent assigned to the Company to the plaintiff.
(Remainder of this page left blank intentionally)
7
<PAGE>
Part I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) Results of Operations, Liquidity and Capital Resources
As of the date of this filing, the Company has no operations, assets or
liabilities. Accordingly, the Company is dependent upon management and/or
significant shareholders to provide sufficient working capital to preserve the
integrity of the corporate entity at this time. It is the intent of management
and significant shareholders to provide sufficient working capital necessary to
support and preserve the integrity of the corporate entity.
The Company is currently seeking a suitable merger or acquisition candidate.
(3) Year 2000 Considerations
The Year 2000 (Y2K) date change is believed to affect virtually all computers
and organizations. The Company has undertaken a comprehensive review of its
information systems, including personal computers, software and peripheral
devices, and its general communications systems. The Company has no direct
electronic links with any customer or supplier. In addition, the Company has
held discussions with certain of its software suppliers with respect to the Y2K
date change. The Company has completed its detailed review, as a preliminary
assessment and the Company believes, as of the date of this filing, that it will
not be required to modify or replace significant portions of its computer
hardware or software and any such modifications or replacements are, or will be,
readily available. The Company has no known direct Y2K exposures and anticipates
that any costs associated with the Y2K date change compliance to have a material
effect on its financial position or its results of operations. There can be no
assurance until January 1, 2000, however, that all of the Company's systems, and
the systems of its suppliers, shippers, customers or other external business
partners will function adequately.
(Remainder of this page left blank intentionally)
8
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings
of shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SPECTRUM PHARMACEUTICAL CORPORATION
May 26, 1999 /s/ Howard I. Wertheim
-----------------------------------
Howard I. Wertheim
President and Director
<TABLE> <S> <C>
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<LEGEND>
</LEGEND>
<CIK> 0000875579
<NAME> Spectrum Pharmaceutical Corporation
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<S> <C>
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<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
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