SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the Fiscal Year Ended: March 31, 1999
Commission File No. 33-40848-A
SPECTRUM PHARMACEUTICAL CORPORATION
(Exact name of Registrant as specified in its charter)
Florida 65-026047
(State of Incorporation) (IRS Employer Identification No.)
36 Valley View
Irvine, California 92612
(address of principal executive office)
Registrant's Telephone No. including area code: (949) 856-1277
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
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 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)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K. (X)
Registrant's revenues for its most recent fiscal year were: None.
As of March 31, 1999 the aggregate market value of the Registrant's common
stock, computed by reference to the average bid and asked prices of such stock
on that date or the date of the last trades in that month, held by
non-affiliates of the Registrant was approximately $101,979. As of March 31,
1999 the Registrant had 6,911,165 shares of its Common Stock ($0.001 par value)
issued and outstanding. Transitional Small Business Disclosure Format
Yes ( ) No (X).
<PAGE>
Item 1. Business.
GENERAL
- -------
Spectrum Pharmaceutical Corporation (herein the "Company") was originally
organized to develop pharmaceutical products incorporating the compound Procaine
Hydrochloride intended for use in the treatment of tinnitus, certain symptoms of
Alzheimer's Disease and cocaine addiction. The Company is in the development
stage and has had no revenues to date. The Company has received a U.S. Patent
covering its products for the foregoing conditions and diseases.
The Company believed that it had developed pharmaceutical products, which could
result in effective treatment of certain diseases. However, the safety and
efficacy of such products have not been established by formal clinical studies
and the Company needed to obtain substantial working capital in order to
undertake such studies.
Marketing of the Company's pharmaceutical products is governed by the U.S. Food
and Drug Administration (the "FDA") and comparable agencies in foreign
countries. To date no applications have been filed by the Company with the FDA
or any other agency with respect to any of its products. Accordingly, it is not
anticipated that the Company will receive revenues from the commercial sale of
its products in the U.S. for at least three years after receipt of sufficient
capital to undertake studies of the safety and efficacy of its proposed
products.
The Company's general business strategy was to attempt to enter into licensing
or joint development agreements with established pharmaceutical companies which
will participate in the clinical evaluation and regulatory approval processes
and will market and distribute commercial products for the treatment of
Alzheimer's Disease, cocaine addiction and tinnitus. To date the Company has not
been successful in finding a partner to assist in developing its business plan.
The 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's executive
office is located at 36 Valley View, Irvine California 92612 and its telephone
number is (949) 856-1277.
The Company became delinquent in its SEC reporting and the payment of franchise
taxes to the State of Florida in 1994. In April 1999 management decided to bring
the Company's SEC reporting current and pay its delinquent franchises taxes so
that the Company can pursue a new business plan. The Company has entered into a
contract with a consultant to help it achieve these immediate goals. On May 10,
1999 the Company paid in full its delinquent franchise taxes and was reinstated
by the State of Florida.
2
<PAGE>
ORIGINAL PLAN OF OPERATIONS
- ---------------------------
Until 1995 the Company was pursuing the following general business strategy with
regards to its products. With regards to the Alzheimer's and cocaine addiction
products, the Company wanted to enter into licensing or joint venture
arrangements with established pharmaceutical companies to participate in
clinical evaluation, regulatory approval and commercial distribution. The
Company had intended to directly market its tinnitus product in the United
States since the prescribing physicians, generally ear, nose and throat
specialists, may be easily identified. Due to lack of success in pursing this
business plan, it was abandoned in 1995.
COMPETITION
- -----------
Many companies, including large pharmaceutical, chemical and biotechnology firms
with financial resources and research and development staffs and facilities
substantially greater than those of the Company are engaged in researching and
developing products to be used in the treatment of the disorders for which it is
anticipated that the Company's products may be used. The industry is
characterized by rapid technological advances and competitors may develop their
products more rapidly and/or such products may be more effective than those
under development by the Company. In addition, competitors may be able to
complete the regulatory approval process sooner, and therefore market their
product earlier, than the Company.
PATENTS
- -------
The Company considers the protection of the discoveries in connection with its
products important to its business. In September 1990 the Company was granted
U.S. Patent No. 4,954,391 entitled "Protected Complex of Procaine for the
Treatment of Symptoms of Narcotics Addiction, Tinnitus and Alzheimer's Disease"
which patent has been assigned to the Company.
GOVERNMENTAL REGULATION
- -----------------------
The marketing of pharmaceutical products requires the approval of the FDA and
comparable agencies in foreign countries. The FDA has established guidelines and
safety standards that apply to the preclinical evaluation, clinical testing,
manufacture and marketing of pharmaceutical products. The Process of obtaining
FDA approval for a new therapeutic product (drug) may take several years and
often involves the expenditure of substantial resources. The steps required
before such a product can be produced and marketed for human use include: (1)
preclinical studies; (2) the filing of an Investigational New Drug ("IND")
application; (3) human clinical trials; and (4) obtaining approval by the FDA of
a New Drug Application ("NDA")
3
<PAGE>
Without FDA approval no drug can be marketed in the United States. To date no
applications have been filed by the Company with the FDA with respect to any
products and without sufficient capital the Company cannot pursue its original
business plan.
NEW BUSINESS PLAN
- -----------------
The Company currently intends to locate and combine with an existing, privately
held company, which is profitable, or, in management's view, has growth
potential, irrespective of the industry in which it is engaged. However, the
Company does not intend to combine with a private company that may be deemed to
be an investment company subject to the Investment Company Act of 1940. A
combination may be structured as a merger, consolidation, exchange of the
Company's common stock for stock or assets or any other form that will result in
the combined enterprise's becoming a publicly held corporation.
Pending negotiation and consummation of a combination, the Company anticipates
that it will have, aside from carrying on its search for a combination partner,
no business activities, and, thus, will have no source of revenue. Should the
Company incur any significant liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as they are incurred.
If the Company's management pursues one or more combination opportunities beyond
the preliminary negotiations stage and those negotiations are subsequently
terminated, it is foreseeable that such efforts will exhaust the Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated. In that event, the Company's common stock will
become worthless and holders of the Company's common stock will receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.
SUITABILITY STANDARDS FOR BUSINESS COMBINATION
- ----------------------------------------------
In its pursuit for a combination partner, the Company's management
intends to consider only combination candidates which are profitable or, in
management's view, have growth potential. The Company's management does not
intend to pursue any combination proposal beyond the preliminary negotiation
stage with any combination candidate that does not furnish the Company with
audited financial statements for at least its most recent fiscal year and
unaudited financial statements for interim periods subsequent to the date of
such audited financial statements, or is in a position to provide such financial
statements in a timely manner. In the event such a combination candidate is
engaged in a high technology business, the Company may obtain reports from
independent organizations of recognized standing covering the technology being
developed and/or used by the candidate. The Company's limited financial
resources may make the acquisition of such reports difficult or even impossible
to obtain and, thus, there can be no assurance that the Company will have
sufficient funds to obtain such reports when considering combination proposals
or candidates. To the extent the Company is unable to obtain the advice or
4
<PAGE>
reports from experts, the risks of any combined enterprise's being unsuccessful
will be enhanced. Furthermore, to the knowledge of the Company's officers and
directors, neither the candidate nor any of its directors, executive officers,
principal shareholders or general partners:
(1) will have been convicted of securities fraud, mail fraud, tax fraud,
embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(2) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities, whether
as issuer, underwriter, broker, dealer, or investment advisor, may be the
subject of any pending investigation or a defendant in a pending lawsuit
arising from or based upon allegations of unlawful transactions in
securities; or
(3) will have been a defendant in a civi1 action which resulted in a final
judgement against it or him awarding damages or rescission based upon
unlawful practices or sales of securities.
The Company's management will make these determinations by asking
pertinent questions of the management of prospective combination candidates and
others who may be involved in the combination proceedings. However, the Company
will not generally take other steps to verify independently information obtained
in this manner which is favorable. Unless something puts the Company on notice
of a possible disqualification that is being concealed, it will rely on the
information received from the management of the prospective combination
candidate and from others who may be involved in the combination proceedings.
Employees
- ---------
As of April 30, 1999 the Company had one employee, its President.
Item 2. Properties None.
-------------------
Item 3. Legal Proceedings.
-------------------
The Company and its President are defendants in a case begun by Linda Johnson in
August 1992 in the 15th Judicial Circuit Court for Palm Beach County, Florida,
seeking damages for the alleged improperly divesting Johnson of her interest in
the Company. Johnson was an original partner with Dr. Howard Wertheim and Dr.
Alfred Sapse in a partnership that was a predecessor to the Company. That
partnership was terminated in 1990 and this case arises out of a dispute
concerning what Johnson was entitled to receive as a result of that termination.
In February 1999 the Company's Board of Directors authorized a settlement of
this litigation by transferring a patent to the plaintiff in full satisfaction
of all of her claims.
5
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders. None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
Set forth below is the range of high and low bid quotations for the Common Stock
for the periods indicated, as reported by the National Quotation Bureau, Inc.
These over-the-counter market quotations reflect inter-dealer prices without
retail markup, markdown or commissions and do not necessarily represent actual
transactions. The Company's Common Stock is listed on the NASD OTC Bulletin
Board under the symbol SPCP.
Quarter Ended High Bid Low Bid
June 30, 1997 $0.02 $0.01
September 30, 1997 $0.04 $0.01
December 31, 1997 $0.03 $0.01
March 31, 1998 $0.01 $0.01
June 30.1998 $0.01 $0.01
September 30, 1998 $0.01 $0.01
December 31, 1998 $0.01 $0.01
March 31, 1999 $0.01 $0.01
On March 31, 1999 the reported high bid price for the Common Stock was $0.01 and
the lowest offer price was $0.01. As of March 31, 1999 there were 311 holders of
record of the Company's common stock.
The Company has not paid any dividends and intends to retain all future profits,
when earned, for use by the Company in its operations.
Item 6. Management's Discussion and Analysis of the Financial Condition and
Results of Operations.
The Company is still in the developmental stage and has not yet begun sale of
any product. The Company will require substantial working capital in order to
undertake the scientific studies necessary to apply for FDA approval for its
products. Substantially all activities of the Company are geared towards raising
capital for this purpose and the Company has not yet secured working capital in
sufficient amounts to enable it to undertake such studies. Accordingly, there
can be no assurance that the Company will be able to successfully complete the
transition from a development stage company to an operating company.
6
<PAGE>
Item 7. Financial Statements and Supplementary Data.
The required financial statements are included in this document starting at page
F-1.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
None.
PART III
Item 9. Directors and Executive Officers of the Registrant.
---------------------------------------------------
The director and executive officer of the Company as of March 31, 1999 is Howard
I. Wertheim, who serves as President, Secretary, Treasurer and sole Director.
Howard I. Wertheim , D.M.D., (born 1934) has been President and a Director of
the Company since May 1990. Until 1995 he devoted his full time to the Company.
From 1958 until 1968 he practiced dentistry. In 1968 he entered the business
world as an investment developer. He was the general partner of 14 limited
partnerships from 1970 to 1978. He served as President of each of the following
businesses for the time periods indicated:
Professional Enterprises, Ltd., a real estate investment firm, from June 1970 to
December 1982; Hobar Property Management Co. from June 1970 to December 1982;
American Sportswear Co., a sportswear manufacturer, from January 1979 to
November 1983; Omni Financial Investment Corp., an investment firm, from January
1985 to October 1989; Brickell Associates, a financial firm, from January 1985
to November 1989.
From summer 1995 to summer 1997 Dr. Wertheim served as President of the Multi
Media Publishing Co. (a publisher of medical texts
on CDs).
From summer 1997 to the end of 1998, he served as President of Allergy Immuno
Technologies, Inc.
Currently, Dr. Wertheim is semi-retired.
7
<PAGE>
Item 10. Executive Compensation.
-----------------------
There follows a statement regarding the cash compensation paid or
accrued during the fiscal year ended March 31, 1999 for the Company's President,
Dr. Howard Wertheim, who was the only officer or director receiving any
compensation from the Company.
On June 20, 1992 the Company entered into an employment contract with
Dr. Wertheim to serve as its President and Chief Executive Officer for seven
years. This contract requires an 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, this 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.
Pursuant to his employment contract Dr. Wertheim was entitled to receive
$152,500 for the fiscal year that ended March 31, 1999.
Item 11. Security Ownership by Certain Beneficial Owners and Management.
The following table set forth, as of March 31, 1999, the beneficial ownership of
the Company's common stock by: (i) persons who own of record or are know to own,
beneficially, more than 5% of the Company's common stock; (ii) each director or
officer of the Company; and (iii) all directors and officers as a group.
Name and Address Number of Shares Percentage of Outstanding
Common Stock
- --------------------------------------------------------------------------------
Dr. Howard I. Wertheim 4,722,634 68.3%
36 Valley View
Irvine CA 92612
Dr. Alfred Sapse 1,168,741 16.9%
3505 Spencer Street
Las Vegas NV 89109
Officers and Directors 4,722,634 68.3%
As a Group (one person)
8
<PAGE>
Item 12. Certain Relationships and Related Transactions. None.
-----------------------------------------------
PART IV
Item 13. Exhibits, Index to Financial Statements and Reports on Form 8-K.
-----------------------------------------------------------------
(A) Index to financial statements that are filed as part of this report:
Report of Independent Certified Accountants F-3
Balance Sheets as of March 31, 1999 and 1998 F-4
Statements of Operations and Comprehensive Income
for the years ended March 31, 1999 and 1998 and for the
period May 29, 1990 (date of inception) to March 31 1999 F-5
Statement of Changes in Stockholders' Equity
for the period from May 29, 1990 (date of inception)
to March 31, 1999 F-6
Statements of Cash Flows for the years ended
March 31, 1999 and 1998 and for the period from
May 29, 1990 (date of inception) to March 31, 1999 F-8
Index to Financial Statements F-9
(B) Reports on Form 8-K: None.
C. Exhibits.
The following exhibits are incorporated by reference to the Company's
Registration Statement on Form S-18 (File No. 33-40848-A) effective July 25,
1999.
Exhibit No. Description
- ----------- -----------
2.0 Articles of Incorporation of the Registrant
2.1 Bylaws of the Registrant
2.5 Articles of Amendment to Articles of Incorporation
9
<PAGE>
The following exhibits are incorporated by reference to the Company's Form 10-K
for the fiscal year ending March 31, 1992:
Exhibit No. Description
- ----------- ------------
10.7 Partnership Agreement dated May 22, 1990
10.8 Employment Agreement with Howard I. Wertheim dated June 20, 1992
11.0 U.S. Patent No. 4,956,391
The following exhibits are filed herewith: None.
SIGNATURE
- ---------
Pursuant to the requirements of Section 13 or 15 (d) 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.
SPECTRUM PHARMACEUTIAL CORPORATION
BY: /s/ Howard I. Wertheim
-------------------
Howard I. Wertheim, President and sole Director
(Principal Executive Officer
and Principal Financial Officer)
Dated: May 26, 1999.
10
<PAGE>
SPECTRUM
PHARMACEUTICAL
CORPORATION
(a development stage company)
Financial Statements
and
Auditor's Report
March 31, 1999 and 1998
S. W. HATFIELD, CPA
certified public accountants
Use our past to assist your future sm
<PAGE>
SPECTRUM PHARMACEUTICAL CORPORATION
CONTENTS
Page
Report of Independent Certified Public Accountants 3
Financial Statements
Balance Sheets as of March 31, 1999 and 1998 4
Statements of Operations and Comprehensive Income
for the years ended March 31, 1999 and 1998
and for the period May 29, 1990 (date of inception)
to March 31, 1999 5
Statement of Changes in Stockholders' Equity
for the period from May 29, 1990 (date of inception)
to March 31, 1999 6
Statements of Cash Flows
for the years ended March 31, 1999 and 1998
and for the period May 29, 1990 (date of inception)
to March 31, 1999 8
Notes to Financial Statements 9
<PAGE>
S. W. HATFIELD, CPA
certified public accountant
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Stockholders
Spectrum Pharmaceutical Corporation
We have audited the accompanying balance sheets of Spectrum Pharmaceutical
Corporation (a Florida corporation and a development stage company) as of March
31, 1999 and 1998 and the related statements of operations and comprehensive
income, changes in stockholders' equity and cash flows for the year then ended
and for the period from May 29, 1990 (date of inception) through March 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spectrum Pharmaceutical
Corporation (a development stage company) as of March 31, 1999 and 1998, and the
results of its operations and its cash flows for each of the two years then
ended and for the period from May 29, 1990 (date of inception) through March 31,
1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant shareholders to provide sufficient working
capital to maintain the integrity of the corporate entity. These circumstances
create substantial doubt about the Company's ability to continue as a going
concern and are discussed in Note A. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.
S. W. HATFIELD, CPA
Dallas, Texas
May 14, 1999
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
F-3
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM PHARMACEUTICAL CORPORATION
(a development stage company)
BALANCE SHEETS
March 31, 1999 and 1998
March 31, March 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash $ -- $ --
----------- -----------
Total current assets -- --
----------- -----------
Other Assets
Organization costs, net of accumulated
amortization of $41,972, respectively -- --
Patent 20,000 20,000
----------- -----------
Total other assets 20,000 20,000
----------- -----------
Total Assets $ 20,000 $ 20,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable - trade $ -- $ --
Due to officer/shareholder 550,000 397,500
----------- -----------
Total current liabilities 550,000 397,500
----------- -----------
Commitments and contingencies
Stockholders' Equity Common stock - $0.001 par value
25,000,000 shares authorized
6,911,165 shares issued and outstanding 6,911 6,911
Additional paid-in capital 926,021 926,021
Deficit accumulated in the development stage (1,462,932) (1,310,432)
----------- -----------
Total stockholders' equity -- (377,500)
----------- -----------
Total Liabilities and Stockholders' Equity $ 20,000 $ 20,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM PHARMACEUTICAL CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended March 31, 1999 and 1998 and
Period from May 29, 1990 (date of
inception) through March 31, 1999
Period from
May 29, 1990
(date of inception)
Year ended Year ended through
March 31, March 31, March 31,
1999 1998 1999
----------- ----------- -----------------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
----------- ----------- -----------
Expenses
General and administrative expenses
Compensation 152,500 142,500 902,500
Other operating expenses -- -- 514,973
Depreciation -- -- 1,660
Amortization of organization costs -- -- 41,972
Loss on abandonment of office
furniture and equipment -- -- 1,827
----------- ----------- -----------
Total expenses 152,500 142,500 1,462,932
----------- ----------- -----------
Net Loss (152,500) (142,500) (1,462,932)
Other comprehensive income -- -- --
----------- ----------- -----------
Net Loss $ (152,500) $ (142,500) $(1,462,932)
=========== =========== ===========
Loss per weighted-average share of
common stock outstanding, computed
on net loss - basic and fully diluted $(0.02) $(0.02) $(0.28)
===== ===== ====
Weighted-average number of shares
of common stock outstanding -
basic and fully diluted 6,911,165 6,911,165 5,273,380
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM PHARMACEUTICAL CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from May 29, 1990 (date of inception) through March 31, 1999
Deficit
accumulated
Additional during the
Common Stock paid-in development
Shares Amount capital stage Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Issuance of stock at formation
on May 29, 1990 at $0.0001 par 5,443,185 $ 544 $ 24,184 $ -- $ 24,728
---------- ---------- ---------- ---------- ----------
Balances at March 31, 1991 5,443,185 544 24,184 -- 24,728
Effect of April 25, 1991 reverse
stock split and change in par
value to $0.001 par (3,559,952) 1,339 (1,339) -- --
Effect of June 5, 1991 forward
stock split 950,000 950 (950) -- --
---------- ---------- ---------- ---------- ----------
Balances at March 31, 1991,
as restated 2,833,233 2,833 21,895 -- 24,728
Common stock issued for services 122,858 123 230,227 -- 230,350
Exercise of warrants for
purchase of common stock 32,832 33 105,483 -- 105,516
less underwriting costs -- -- (63,019) -- (63,019)
Net loss for the year -- -- -- (370,794) (370,794)
---------- ---------- ---------- ---------- ----------
Balances at March 31, 1992 2,988,923 2,989 294,586 (370,794) (73,219)
Exercise of warrants for
purchase of common stock 47,242 47 59,659 -- 59,706
Net loss for the year -- -- -- (190,026) (190,026)
---------- ---------- ---------- ---------- ----------
Balances at March 31, 1993 3,036,165 3,036 354,245 (560,820) (203,539)
Common stock issued for
Payment of executive
compensation 1,000,000 1,000 162,119 -- 163,119
Payment of services 260,000 260 41,340 -- 41,600
Net loss for the year -- -- -- (184,994) (184,994)
---------- ---------- ---------- ---------- ----------
Balances at March 31, 1994 4,296,165 $ 4,296 $ 557,704 $ (760,814) $ (198,814)
========== ========== ========== ========== ==========
</TABLE>
- Continued -
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM PHARMACEUTICAL CORPORATION
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - CONTINUED
Period from May 29, 1990 (date of inception) through March 31, 1999
Deficit
accumulated
Additional during the
Common Stock paid-in development
Shares Amount capital stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances at March 31, 1994 4,296,165 $ 4,296 $ 557,704 $ (760,814) $ (198,814)
Common stock issued for
Payment of executive
compensation and
assumption of liabilities 2,500,000 2,500 353,482 -- 355,982
Payment of services 115,000 115 14,835 -- 14,950
Net loss for the year -- -- -- (138,173) (138,173)
----------- ----------- ----------- ----------- -----------
Balances at March 31, 1995 6,911,165 6,911 926,021 (898,987) 33,945
Net loss for the year -- -- -- (130,896) (130,896)
----------- ----------- ----------- ----------- -----------
Balances at March 31, 1996 6,911,165 6,911 926,021 (1,029,883) (96,951)
Net loss for the year -- -- -- (138,049) (138,049)
----------- ----------- ----------- ----------- -----------
Balances at March 31, 1997 6,911,165 6,911 926,021 (1,167,932) (235,000)
Net loss for the year -- -- -- (142,500) (142,500)
----------- ----------- ----------- ----------- -----------
Balances at March 31, 1998 6,911,165 6,911 926,021 (1,310,432) (377,500)
Net loss for the year -- -- -- (152,500) (152,500)
----------- ----------- ----------- ----------- -----------
Balances at March 31, 1999 6,911,165 $ 6,911 $ 926,021 $(1,462,932) $ (530,000)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
SPECTRUM PHARMACEUTICAL CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
Years ended March 31, 1999 and 1998 and
Period from May 29, 1990 (date of inception) through March 31, 1999
Period from
May 29, 1990
(date of inception)
Year ended Year ended through
March 31, March 31, March 31,
1999 1998 1999
--------------- -------------- ---------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net loss for the period $ (152,500) $ (142,500) $(1,462,932)
Adjustments to reconcile net loss
to net cash provided by operating activities
Depreciation -- -- 1,660
Amortization of organization costs -- -- 41,972
Loss on abandonment of office
furniture and equipment -- -- 1,827
Services and executive compensation
paid with common stock -- -- 806,001
(Increase) Decrease in
Prepaid expenses -- -- --
Organization costs and other -- -- (41,972)
Increase (Decrease) in
Accounts payable and other liabilities -- -- --
Due to shareholder/officer 152,500 142,500 550,000
--------------- -------------- -----------
Net cash used in operating activities -- -- (103,444)
--------------- -------------- -----------
Cash Flows from Investing Activities
Purchase of office furniture and equipment -- -- (3,487)
Cash paid for patent development -- -- (20,000)
--------------- -------------- -----------
Net cash used in investing activities -- -- (23,487)
--------------- -------------- -----------
Cash Flows from Financing Activities
Sale of common stock -- -- 189,950
Cash paid for underwriting costs -- -- (63,019)
--------------- -------------- -----------
Net cash used in financing activities -- -- 126,931
--------------- -------------- -----------
Increase (Decrease) in Cash -- -- --
Cash at beginning of period -- -- --
--------------- -------------- -----------
Cash at end of period $ -- $ -- $ --
=============== ============== ===========
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period $ -- $ -- $ --
=============== ============== ===========
Income taxes paid for the period $ -- $ -- $ --
=============== ============== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
SPECTRUM PHARMACEUTICAL CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
Note A - Organization and Description of Business
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 and has incurred
cumulative operating losses of approximately $1,463,000. 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.
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 B - Summary of Significant Accounting Policies
1. 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.
2. Property and equipment
----------------------
Property and equipment was recorded at historical cost. These costs were
depreciated over the estimated useful lives of the individual assets using
the straight-line method.
Gains and losses from disposition of property and equipment were recognized
as incurred and was included in operations.
3. Organization costs
------------------
Costs related to the organization of the Company have been capitalized and
are being amortized over a five year period using the straight-line method.
F-9
<PAGE>
SPECTRUM PHARMACEUTICAL CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Note B - Summary of Significant Accounting Policies - Continued
4. Patents
-------
In September 1990, the Company was assigned U. S. Patent No. 4,954,391
entitled "Protected Complex of Procaine for the Treatment of Symptoms from
Narcotics Addiction, Tinnitus and Alzheimer's Disease". The patent is
stated at cost and will be amortized over the remaining life of the patent
starting in the first period in which commercial production of the patented
products begins.
5. Loss per share
--------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and/or warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and/or warrants
at either the beginning of the respective period presented or the date of
issuance, whichever is later. As of March 31, 1999 and 1998, the Company's
outstanding options are deemed to be anti-dilutive due to the Company's net
operating loss position.
Note C - 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.
F-10
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<NAME> Spectrum Pharmaceutical Corporation
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<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 0
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<TOTAL-ASSETS> 20000
<CURRENT-LIABILITIES> 550000
<BONDS> 0
0
0
<COMMON> 6911
<OTHER-SE> (536911)
<TOTAL-LIABILITY-AND-EQUITY> 20000
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<INCOME-PRETAX> (152500)
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<NET-INCOME> (152500)
<EPS-BASIC> (0.02)
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