<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-----------------
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: 0-19777
DUSA Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 22-3103129
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6870 Goreway Drive
Mississauga, Ontario L4V 1P1 CANADA
(Address of principal executive offices)
(Zip Code)
(905) 677-4554
(Registrant's telephone number, including area code)
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 No
----- -----
APPLICABLE ONLY TO ISSUER'S INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
9,353,450 shares as of August 12, 1996
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DUSA PHARMACEUTICALS, INC.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
(Stated in U.S. dollars)
June 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash (interest bearing) $ 785,258 $ 1,197,030
U.S. government securities available for sale
(cost - $22,591,673 and $19,244,839, respectively) 22,543,470 19,282,562
Accrued interest receivable 203,523 181,850
Other current assets 201,065 114,400
----------------------------
23,733,316 20,775,842
Fixed Assets 45,450 49,079
Intangible Assets 965 2,657
----------------------------
$ 23,779,731 $ 20,827,578
============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,207,490 $ 429,790
Accrued changes 210,940 176,679
Amounts due to Draxis Health Inc. 40,474 1,869
----------------------------
1,458,904 608,338
----------------------------
Commitments
Shareholders' Equity
Common stock, no par, 20,000,000 shares authorized,
9,353,450 and 8,528,500 shares issued and outstanding 36,144,888 30,976,739
Deficit accumulated during the development stage (13,775,858) (10,780,608)
Net unrealized gain (loss) on U.S. government securities
available for sale (48,203) 37,723
Note receivable from director - (14,614)
----------------------------
22,320,827 20,219,240
----------------------------
$ 23,779,731 $ 20,827,578
============================
</TABLE>
See the accompanying notes to the Consolidated Financial Statements
<PAGE> 3
DUSA PHARMACEUTICALS, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
(Stated in U.S. dollars) Cumulative
period from
February 21,
Three months Three months Six months Six months 1991 (date of
ended ended ended ended incorporation)
June 30, June 30, June 30, June 30, to June 30,
1996 1995 1996 1995 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUE
Interest income $ 311,566 $ 144,546 $ 580,268 $ 309,565 $ 3,519,888
Gain (loss) on foreign currency exchange (140) (763) (1,834) (907) 18,217
Gain (loss) on sale of securities
available for sale - 36,402 (62) (1,571) 322,659
Unrealized loss on securities
available for sale - - - - (62,832)
---------------------------------------------------------------------------
311,426 180,185 578,372 307,087 3,797,932
---------------------------------------------------------------------------
RESEARCH AND DEVELOPMENT COSTS 1,808,571 631,627 2,759,098 1,344,846 12,919,426
---------------------------------------------------------------------------
OPERATING EXPENSES
Administration 381,554 274,712 801,963 568,527 4,650,225
Depreciation and amortization 6,379 5,314 12,561 9,786 66,971
---------------------------------------------------------------------------
387,933 280,026 814,524 578,313 4,717,196
---------------------------------------------------------------------------
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE (1,885,078) (731,468) (2,995,250) (1,616,072) (13,838,690)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - - - 62,832
---------------------------------------------------------------------------
NET LOSS $(1,885,078) $ (731,468) $(2,995,250) $(1,616,072) $(13,775,858)
===========================================================================
NET LOSS PER COMMON SHARE $ (0.21) $ (0.13) $ (0.34) $ (0.30) $ (2.70)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 9,095,892 5,438,500 8,819,267 5,438,500 5,097,742
</TABLE>
See the accompanying notes to the Consolidated Financial Statements.
<PAGE> 4
DUSA PHARMACEUTICALS, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------
(Stated in U.S. dollars)
Cumulative
period from
February 21,
Six Months Six Months 1991 (date of
ended ended incorporation
June 30, June 30, to June 30,
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS USED IN OPERATING
ACTIVITIES
NET LOSS $(2,995,250) $ (884,604) $(13,775,858)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization of premiums and accretion of
discounts on U.S. government securities
available for sale and investment securities,
net (3,944) 6,506 180,174
Depreciation and amortization 12,561 4,472 66,971
Loss (gain) on foreign currency exchange 1,834 144 (18,217)
Loss (gain) on sale of U.S. government
securities available for sale 62 37,973 (322,659)
Unrealized loss on U.S. government
securities available for sale - - 62,832
Cumulative effect of change in accounting
principle - - (62,832)
Write-off of intangible assets - - 307,519
Changes in other assets and liabilities
impacting cash flows from operations:
Accrued interest receivable (21,673) 143,721 (203,523)
Other current assets (86,665) 8,502 (201,065)
Accounts payable 777,700 (6,947) 1,207,490
Accrued charges 34,261 (18,795) 210,940
Amounts due to Draxis Health Inc. 38,605 (818) 40,474
License agreement obligations - - (12,203)
---------------------------------------------------
Net cash used in operating activities (2,242,509) (709,846) (12,519,957)
---------------------------------------------------
CASH FLOWS PROVIDED BY (USED IN)
INVESTING ACTIVITIES
Advances by Draxis Health Inc. - - (2,867,900)
Repayment of advances by Draxis Health Inc. - - 2,867,900
Purchases of U.S. government securities
available for sale and investment securities (6,742,890) (151,453) (82,435,244)
Proceeds from maturing U.S. government
securities available for sale and investment
securities 3,300,000 - 6,110,000
Proceeds from sale of U.S. government
securities available for sale 99,938 1,003,859 53,876,056
Intangible assets - - (193,022)
Purchases of fixed assets (7,240) (541) (96,465)
---------------------------------------------------
Net cash provided by (used in) investing
activities (3,350,192) 851,865 (22,738,675)
---------------------------------------------------
</TABLE>
<PAGE> 5
DUSA PHARMACEUTICALS, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------
(Stated in U.S. dollars)
Cumulative
period from
February 21,
Six months Six months 1991 (date of
ended ended incorporation)
June 30, June 30, to June 30,
1996 1995 1996
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY
FINANCING ACTIVITIES
Stock offering costs $ (637,062) $ - $(5,048,255)
Issuance of common stock and underwriters'
options 5,805,211 - 43,357,971
Redemption of Draxis Option - - (2,250,000)
Receipts of Section 16(b) common stock profits - - 17,125
Payment on license agreement obligations - - (119,215)
Payment received on note receivable from
director 14,614 - 68,047
-----------------------------------------------
Net cash provided by financing activities 5,182,763 - 36,025,673
-----------------------------------------------
EFFECT ON EXCHANGE RATES ON CASH (1,834) (144) 18,217
-----------------------------------------------
NET INCREASE (DECREASE) IN CASH (411,772) 141,875 785,258
CASH AT BEGINNING OF PERIOD 1,197,030 205,166 -
-----------------------------------------------
CASH AT END OF PERIOD 785,258 $347,041 785,258
===============================================
SUPPLEMENTAL SCHEDULE OF
CASH FLOW INFORMATION
Issuance of common stock for promissory
note from Draxis Health Inc. $ 150,000
============
License agreement obligations incurred in the
acquisition of an intangible asset $ 131,418
============
Stock offering costs offset against
common stock $ 637,062 $ 5,048,255
========== ============
Note receivable from director originated upon
exercise of options for common stock $ 68,047
============
Interest paid $ 12,594
============
</TABLE>
There were no income tax payments made during the periods.
See the accompanying notes to the Consolidated Financial Statements.
<PAGE> 6
DUSA PHARMACEUTICALS, INC.
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The Consolidated Balance Sheet as of June 30, 1996, the Consolidated
Statements of Operations for the three and six month periods ended
June 30, 1996 and 1995 and for the period from February 21, 1991 (date
of incorporation) to June 30, 1996 and the Consolidated Statements of
Cash Flows for the six month periods ended June 30, 1996 and 1995 and
for the period from February 21, 1991 (date of incorporation) to June
30, 1996 have been prepared by the Company, without audit. In the
opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in cash flows as of June
30, 1996 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements should be read in conjunction with the Company's December
31, 1995 financial statements and notes thereto.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, DUSA Pharmaceuticals New
York, Inc. All significant intercompany accounts have been eliminated
on consolidation.
2. The Company's United States securities available for sale consist of
securities of the United States government and its agencies with
yields ranging from 4.9% to 6.1%, interest rates ranging from 4.52% to
7.25% and maturity dates ranging from July 1, 1996 to April 7, 1998.
3. On March 11, 1996, Draxis Health Inc., which held a 12.8% interest in
the Company as of December 31, 1995, sold all of its shares of common
stock of the Company. During the six month period ended June 30,
1996, total fees for administrative services of $24,377 were paid to
Draxis Health Inc.
4. Net loss per common share is based on the weighted average number of
shares outstanding during each period. Certain common stock issuances
(2,200,000) were made at prices less than the initial public offering
price. Accordingly, the associated shares are included in the
calculation of net loss per share as if they were outstanding for the
entire period. Stock options are not included in the computation of
the weighted average number of shares outstanding during the period as
the effect would be antidilutive.
5. On May 1, 1996, the Company completed a public offering for the sale
of 750,000 shares of common stock at a price of $7.20 per share.
Proceeds of the issue, net of stock offering costs of $637,062, were
$4,762,938.
<PAGE> 7
The Company granted Purchase Options to the underwriters in
conjunction with the May 1996 public offering to purchase up to 37,500
shares of common stock with an exercise price equal to 110% of the
public offering price of the shares, or $7.92, for cash consideration
of $0.001 per option or $37.50, in aggregate.
6. During the six month period ended June 30, 1996, a total of 74,950 of
the Company's stock options were exercised for total proceeds of
$405,211 and a total of 22,500 options lapsed.
During the six month period ended June 30, 1996, pursuant to the
Company's 1996 Omnibus Plan, the Company granted non-qualified stock
options to purchase 325,000 shares of common stock at $7.75 per share
to two officers. The Company also granted non-qualified stock options
for 50,000 shares of common stock; 30,000 at $9.875 per share, and
20,000 at CDN $13.50 per share, to directors as automatic grants under
the Plan. Also, the Company granted incentive stock options to
purchase 100,000 shares of common stock at $7.75 per share to an
officer of the Company. The exercise price of all such options is the
fair market value of the shares on the day of the grant.
7. On March 18, 1993, the Company made a loan to a director in the amount
of $68,047 (CDN. $84,875) in order to enable him to exercise 12,500
options for CDN $6.79 per share of common stock. The balance of the
loan, which was $14,614 (CDN $18,228) as of December 31, 1995, was
fully paid on March 18, 1996.
8. The Company has entered into a series of agreements for research
projects and clinical studies. As of June 30, 1996, future payments
to be made pursuant to these agreements, under certain terms and
conditions, totaled approximately $1,760,000 for the remainder of
1996, $429,000 in 1997 and $118,000 in 1998.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Company's consolidated financial statements and Notes to Consolidated
Financial Statements for the year ended December 31, 1995 and for the
three and six-month periods ended June 30, 1996 and June 30, 1995,
respectively. The Company is a development stage pharmaceutical company
engaged primarily in the development of proprietary methods of
photodynamic therapy ("PDT") and photodiagnosis ("PD"), which combine
the use of DUSA's pharmaceutical product aminolevulinic acid ("ALA")
with exposure to light to induce a therapeutic and/or diagnostic effect.
The Company has raised funds through its initial public offering in
January, 1992, private placements and two recently completed public
offerings of the Company's common stock in December, 1995 and May, 1996.
Draxis Health Inc., formerly the Company's parent and largest
shareholder ("Draxis"), sold its interest in the Company during March,
1996 after its 20% interest had been diluted to approximately 13%
following the Company's public offering in December.
The Company's wholly-owned subsidiary, DUSA Pharmaceuticals New York
Inc., located in Tarrytown, New York, is the Company's center for its
research and development activities.
Financial Condition
The Company is aggressively proceeding with its research and development
programs after completion of a public offering in May, 1996 which
resulted in a significant increase to the Company's cash position. The
Company's total current assets increased during the period to
$23,733,316 as of June 30, 1996 from $20,775,842 as of December 31,
1995. The Company held United States government securities at a fair
market value of $22,543,470 as of June 30, 1996, as compared to
$19,282,562 as of December 31, 1995. The Company had an operational
loss of $1,885,078 for the three-month period ended June 30, 1996, as
compared to $731,468 for the three-month period ended as of June 30,
1995. (See "Results of Operations".) As of June 30, 1996, the Company
had current liabilities of $1,458,904 as compared to $608,338 as of
December 31, 1995.
<PAGE> 9
The increase is due primarily to expansion of the Company's research and
development activities. Since its inception the Company has had no
long-term debt. The Company's management believes that it currently has
sufficient funds to enable the Company to continue preclinical and
clinical development efforts for several potential indications, such as
actinic keratoses, the photodiagnosis of bladder cancer, hair removal,
endometrial ablation, acne and psoriasis. There can be no assurance,
however, that such funds will be sufficient to enable the Company to
obtain regulatory marketing approval or to market any product for any
indications currently under development. As the development of the ALA
PDT system continues, the Company may adjust its priorities on how its
resources are to be allocated among the current and potential
indications for its ALA PDT system. In addition, exact allocation of
the proceeds for such purposes and timing of the expenditures will be
dependent on various factors, including the progress of the Company's
research and development programs, the results of preclinical and
clinical trials, the timing of regulatory marketing approvals,
competitive developments, payments under any collaborative arrangements,
if any, entered into by the Company and the availability of additional
financing. The Company may also use a portion of the net proceeds from
its recent offerings to acquire, by license, purchase or other
arrangement, businesses, technologies, or products that enhance or
expand the Company's business. At the current time, the Company is
conducting trials for actinic keratoses, is planning trials for late
1996 in bladder cancer diagnosis, acne and hair removal, and is
sponsoring investigator INDs for hair removal, bladder cancer diagnosis,
endometrial ablation, and psoriasis. There can be no assurance that any
product will be successfully developed, prove to be safe and effective
in necessary pivotal clinical trials, or receive applicable regulatory
marketing approvals. Therefore, there is no way to predict the timing or
magnitude of the revenues from the marketing of the Company's product or
whether any such revenues will be realized. Consequently, in order to
maintain continuing research and development programs, it may be
desirable or necessary in the future to raise additional funds through
financings, corporate
<PAGE> 10
alliances or other sources.
Results of Operations
The Company is in the development stage and, therefore, has had no sales
to date. The Company's clinical program is most advanced for actinic
keratoses. The Company intends to begin its own multi-center trial for
the photodiagnosis of bladder cancer in the fourth quarter of 1996.
During this quarter, the Company proceeded with its own and/or supported
independent studies using its ALA PDT system in acne and hair removal.
In addition, the Company continued its pilot work on endometrial
ablation, a non-dermatological indication, by supporting an investigator
IND.
Interest income, earned primarily on United States government
securities, increased to $311,566 for the three-month period ended June
30, 1996, as compared to $144,546 for the three-month period ended June
30, 1995 primarily due to the interest earned on the net proceeds of the
Company's recently completed offerings, in addition to that earned on
the Company's previously existing cash and government securities.
Interest income for the cumulative period from February 21, 1991 (date
of incorporation) to June 30, 1996 was $3,519,888. Interest income is
likely to decline as funds are expended for the drug development
program.
Research and development costs for the three-month period ended June 30,
1996 increased dramatically to $1,808,571 as compared to $631,627 for
the three-month period ended June 30, 1995 and $2,759,098 for the
six-month period ended June 30, 1996 as compared to $1,344,846 for the
six-month period ended June 30, 1995. The increase in research and
development spending is due to increased payments to third parties
conducting research and development activities primarily with regard to
actinic keratoses clinical trials and preparations for bladder cancer
clinical studies. These costs are expected to continue to increase
significantly, as scheduled. Total research and development costs for
the cumulative period from February 21, 1991 (date of incorporation) to
June 30, 1996 were $12,919,426. Costs and development fees associated
with all
<PAGE> 11
agreements for research projects and clinical studies commit the Company
to make payments during the remainder of 1996 of approximately
$1,760,000.
Operating expenses were $387,933 and $814,524 for the three and
six-month periods ended June 30, 1996, as compared to $280,026 and
578,313 for the three and six-month periods ended June 30, 1995. The
increase in the operating expenses reflects the costs associated with
expansion of the Company's activities. Operating expenses are expected
to increase, mainly through the hiring of additional research and
development and administrative personnel, as required, particularly as
the Company replaces the Draxis personnel who supported the Company's
efforts under a management agreement prior to March, 1996. During the
six-month period ended June 30, 1996, the Company paid limited fees to
Draxis for administrative services. See Note 3 to the Notes to the
Consolidated Financial Statements (unaudited).
The Company incurred a net loss of $1,885,078, or $.21 per share, for
the three-month period ended June 30, 1996, as compared to a net loss of
$731,468, or $.13 per share, for the three-month period ended June 30,
1995. The net loss was $2,995,250, or $.34 per share for the six-month
period ended June 30, 1996 as compared to $1,616,072, or $.30 per share
for the six-month period ended June 30, 1995. Net losses for the
cumulative period from February 21, 1991 (date of incorporation) to June
30, 1996 were $13,775,858, or $2.70 per share. Such losses are
consistent with the Company's expectations and the Company anticipates
that losses will continue throughout the development stage.
In May, 1996, the Company reported that Lipomelanin(TM)-LQ, a synthetic
melanin, designed for use as a black hair coloring agent, was launched
at an industry trade show. The Company obtained rights to
Lipomelanin(TM) from its two inventors at the University of Toronto.
Mel-Co, an independent California firm, is producing and marketing the
product. Mel-Co conducted the development program under a consulting
agreement with the Company. The parties are now negotiating a
definitive agreement with respect to marketing of all Lipomelanin(TM)
products. The
<PAGE> 12
Company does not anticipate that it will receive any revenues in the
near future as the product is still being analyzed for various cosmetic
applications.
Liquidity and Capital Resources
In May, 1996, the Company completed a public offering of 750,000 shares
of common stock at $7.20 per share resulting in proceeds to the Company
net of stock offering costs of $4,762,938. The Company's United States
government securities available for sale have an aggregate cost of
$22,591,673 and a current aggregate market value of $22,543,470 as of
June 30, 1996, resulting in a net unrealized loss on securities
available for sale of $48,203, the provision for which has been charged
to shareholders' equity. The decline in the market value of the
Company's government securities was the result of fluctuating interest
rates in the United States from the time these securities were acquired.
The Company continues to monitor the performance of U.S. Trust, the
manager of these United States government securities. U.S. Trust
believes that a combination of capital gains and increased interest
income should partially offset these unrealized losses in the medium- to
long-term, as interest rates fluctuate. However, some losses could be
realized, depending upon the timing of the Company's need to convert
government securities into cash to meet its working capital
requirements. The Company's securities currently have yields from 4.9%
to 6.1%, interest at rates ranging from 4.52% to 7.25%, and maturity
dates ranging from July 1, 1996 to April 7, 1998. The Company believes
it has sufficient capital resources to proceed with its current
development program for its ALA PDT system. Management is focusing
initial pivotal clinical trials on a limited number of indications to
maximize the Company's ability to complete the regulatory process, but
full development and testing of all potential indications which are
currently under development would require additional funding. The
Company has invested its funds in liquid investments, so that it will
have ready access to its cash reserves as needed for the funding of its
development plan on a short-term and long-term basis.
The foregoing Management's Discussion and Analysis contains various
"forward looking
<PAGE> 13
statements" within the meaning of Section 27A of the Securities Act of
1933 which represent the Company's expectations or beliefs concerning
future events, including, but not limited to statements regarding
managements' expectations of regulatory approval and the commencement of
sales; and the sufficiency of the Company's cash flow for the Company's
future liquidity and capital resource needs. These forward looking
statements are further qualified by important factors that could cause
actual results to differ materially from those in the forward looking
statements. These factors include, without limitation, changing market
conditions, clinical results of its trials, the impact of competitive
products and pricing, the timely development, FDA approval and market
acceptance of the Company's products, none of which can be assured.
Results actually achieved may differ materially from expected results
included in these statements as a result of these or other factors.
Inflation
Although inflation rates have been comparatively low in recent years,
inflation is expected to apply upward pressure on the operating costs of
the Company. The Company has included an inflation factor in its cost
estimates; however the overall net effect of inflation on the operations
of the Company should be minimal.
Effect of United States Statement of Financial Accounting Standards No. 123
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based
Compensation" which became effective for the Company beginning January
1, 1996. SFAS No. 123 will require increased disclosure of compensation
expense arising from both fixed and performance stock compensation
plans. Such expense will be measured as the fair value of the award at
the date it is granted using an option-pricing model that takes into
account the exercise price and expected term of the option, the current
price of the underlying stock, its expected volatility, expected
dividends on the stock and the expected risk-free rate of return during
the term of the option. The compensation cost would
<PAGE> 14
be recognized over the service period, usually the period from the grant
date to the vesting date. SFAS No. 123 encourages rather than requires,
companies to adopt a new method that accounts for stock compensation
awards based on their estimated fair value at the date they are granted.
Companies would be permitted, however, to continue accounting under APB
Opinion No. 25, which requires compensation cost for stock based
employee compensation plans to be recognized based on the difference, if
any, between the quoted market price of the stock and the amount an
employee must pay to acquire the stock. The Company will continue to
apply APB Opinion No. 25 in its financial statements and will disclose
in a footnote pro forma net income and earnings per share, determined as
if the Company had applied the new method.
PART II - OTHER INFORMATION
Items 1-3.
None.
Item 4. Submission of Matters to a Vote of Security Holders
Matters submitted to a vote of security holders of the Corporation at
the Annual Meeting of Shareholders held June 6, 1996 included (1) the
election of five (5) directors; (2) ratification of the selection of
Deloitte & Touche LLP as the independent auditors for the Corporation
for 1996; (3) adoption of the 1996 Omnibus Plan; and (4) ratification of
the extension of the expiration date for certain restricted stock
options.
(1) The following persons were elected to serve as directors of the
Corporation:
<TABLE>
<CAPTION>
For Against Abstained Broker non-votes
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Dr. Geoffrey Shulman 6,142,972 6,081 0 0
Dr. John H. Abeles 6,142,873 6,180 0 0
James P. Doherty 6,142,972 6,081 0 0
Richard C. Lufkin 6,142,972 6,081 0 0
Nanette Mantell, Esq. 6,142,973 6,080 0 0
</TABLE>
<PAGE> 15
(2) Shareholders ratified the selection of Deloitte & Touche LLP as the
independent auditors for the Corporation for 1996 as follows:
Votes cast for 6,118,903
Votes cast against 14,895
Abstained 15,255
Broker non-votes 0
(3) Shareholders adopted the 1996 Omnibus Plan as follows:
Votes cast for 1,892,786
Votes cast against 121,082
Abstained 45,989
Broker non-votes 4,089,196
(4) Shareholders ratified and approved the extension of the expiration
date of certain restricted stock options as follows:
Votes cast for 5,640,706
Votes cast against 108,261
Abstained 25,568
Broker non-votes 374,518
Item 5.
a) None.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibit 27 - Financial Data Schedule, which is submitted
electronically to the Securities and Exchange Commission for
information only and not filed.
b) Form 8-K filed on May 17, 1996.
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.
DUSA PHARMACEUTICALS, INC.
Date August 12, 1996
By: /s/ D. GEOFFREY SHULMAN
--------------------------------------
D. Geoffrey Shulman, MD, FRCPC
President, Chief Executive Officer, and
Chief Financial Officer
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for information
only and not filed.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF OPERATIONS AND
CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 785,258
<SECURITIES> 22,543,470
<RECEIVABLES> 203,523
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,733,316
<PP&E> 45,450
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,779,731
<CURRENT-LIABILITIES> 1,458,904
<BONDS> 0
0
0
<COMMON> 36,144,888
<OTHER-SE> (13,824,061)
<TOTAL-LIABILITY-AND-EQUITY> 23,779,731
<SALES> 0
<TOTAL-REVENUES> 578,372
<CGS> 0
<TOTAL-COSTS> 2,759,098
<OTHER-EXPENSES> 814,524
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,995,250)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,995,250)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (2,995,250)
<NET-INCOME> (2,995,250)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
