U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 15, 1996
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SPARTA PHARMACEUTICALS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-23076 56-1755527
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
111 Rock Road, Horsham, Pennsylvania 19044-2310
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (215) 442-1700
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Lexin Pharmaceutical Corporation
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These financial statements are supplemental to, and should
be read in conjunction with, the financial statements
included in Form 8-K/A previously filed by the Company,
dated March 15, 1996 and filed on May 2, 1996.
(b) Pro Forma Financial Information
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Basis of Presentation
Unaudited Pro Forma Consolidated Balance Sheet
as of December 31, 1995
Unaudited Pro Forma Consolidated Statement of Operations
for the Year Ended December 31, 1995
Unaudited Pro Forma Consolidated Statement of Operations (Unaudited)
for the Six Months Ended June 30, 1996
Notes to Unaudited Pro Forma Consolidated Financial Statements
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
SPARTA PHARMACEUTICALS, INC.
September 25, 1996 By: /s/ Jerry B. Hook
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Date Jerry B. Hook , President,
Chief Executive Officer &
Director (principal
executive officer)
<PAGE>
SPARTA PHARMACEUTICALS, INC.
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(A DEVELOPMENT STAGE COMPANY)
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PRO FORMA CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF
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OPERATIONS
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BASIS OF PRESENTATION
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(UNAUDITED)
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The accompanying pro forma consolidated balance sheet at December 31, 1995 and
the pro forma consolidated statements of operations for the year ended December
31, 1995 and the six months ended June 30, 1996 give effect to the acquisition
of the business, assets and the assumption of certain liabilities of Lexin
Pharmaceutical Corporation, as described in Note 2, as if the transaction had
occurred on January 1, 1995.
The pro forma consolidated balance sheet and the pro forma consolidated
statements of operations have been prepared by the management of Sparta
Pharmaceuticals, Inc. (the "Company") and should be read in conjunction with
the historical financial statements of the Company filed with the Company's
Annual Report for the year ended December 31, 1995 on Form 10-K/A, interim
financial statements filed with the Company's Form 10-Q as of June 30, 1996 and
the historical financial statements of Lexin Pharmaceutical Corporation, filed
pursuant to item 7(a) of this report on Form 8-K/A. The pro forma consolidated
balance sheet and the pro forma consolidated statements of operations are based
on certain assumptions and preliminary estimates which are subject to change.
These statements do not purport to be indicative of the results of operations
or financial position of the Company that might have occurred, nor are they
indicative of future results.
<PAGE>
SPARTA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE><CAPTION>
December 31, 1995
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Pro Forma
Sparta Lexin Adjustments Pro Forma
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash & short term investments $ 734,296 $ 174334 $ - $ 908,630
Other current assets 180,125 34,932 215,057
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Total curent assets 914,421 209,266 1,123,687
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FIXED ASSETS, net 21,102 603,739 624,841
RESTRICTED CASH 244,856 244,856
LICENSE AGREEMENTS, net 64,443 64,443
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$ 999,966 $ 1,057,861 $ - $ 2,057,827
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LIABILTIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Senior demand notes $ - $ 177,630 $ (177,630)(C) $ -
Convertible demand notes 1,000,000 (1,000,000)(C)
Capital lease obligations 1,502,590 (1,502,590)(C)
Accounts payable and accrued expenses 185,861 417,090 (267,090)(C) 335,861
Deferred revenue 65,000 (65,000)(C)
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Total current liabilities 185,861 3,162,310 (3,012,310) 335,861
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REDEEMABLE SERIES C CONVERTIBLE
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PREFERRED STOCK 7,822,695 (7,822,695)(C)
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STOCKHOLDERS' EQUITY (DEFICIT)
Series A Preferred Stock 2,000 (2,000)(C)
Series B Preferred Stock 1,000 (1,000)(C)
Common Stock 6,186 3,010 (1,010)(C,D) 8,186
Additional paid in capital 10,825,375 1,848,839 1,749,161 (C,D) 14,423,375
Accumulated deficit (10,017,456) (11,781,993) 9,089,854 (C,D) (12,709,595)
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Total stockholders' equity (deficit) 814,105 (9,927,144) 10,835,005 1,721,966
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$ 999,966 $ 1,057,861 $ - $ 2,057,827
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</TABLE>
The accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements
are an integral part of this statement
<PAGE>
SPARTA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE><CAPTION>
Year Ending December 31, 1995
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Pro Forma
Sparta Lexin Adjustments Pro Forma
<S> <C> <C> <C> <C>
REVENUE
Interest income $ 121,438 $ 45,480 $ - $ 166,918
Contract revenue 17,875 229,163 247,038
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Total revenue 139,313 274,642 413,955
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OPERATING EXPENSES
Research and development 1,819,887 2,243,739 4,063,626
General and administrative 961,833 658,488 1,620,321
Provision for impairment of
fixed assets 774,922 (774,922)(A)
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2,781,720 3,677,148 (774,922) 5,683,946
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Operating loss (2,642,407) (3,402,506) 774,922 (5,269,991)
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INTEREST EXPENSE (356,665) (356,665)
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NET LOSS $ (2,642,407) $ (3,759,171) $ 774,922 $ (5,626,656)
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Net loss per common share ($0.43) ($0.69)
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Shares used in computing net loss
per common share 6,167,817 8,167,817
==================== ================
</TABLE>
Note: Pro Forma net loss excludes a non-recurring charge of
$3,062,913 for in-process research and development
which was charged to the statement of operations on the acquisition
date (March 15, 1996) See Note 2.
The accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements
are an integral part of this statement
<PAGE>
SPARTA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE><CAPTION>
Six Months Ended June 30, 1996
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Pro Forma
Sparta Lexin Adjustments Pro Forma
<S> <C> <C> <C> <C>
REVENUE
Interest income $ 47,584 $ 3,819 $ - $ 51,403
Contract revenue 105,747 105,747
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Total revenue 47,584 109,566 157,150
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OPERATING EXPENSES
Research and development 1,034,002 254,601 1,288,603
General and administrative 764,208 80,602 844,810
Charge for acquired research and
development 3,062,913 (3,062,913)(B)
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4,861,123 335,203 (3,062,913) 2,133,413
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Operating loss (4,813,539) (225,637) 3,062,913 (1,976,263)
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INTEREST EXPENSE (103,589) (103,589)
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NET LOSS $ (4,813,539) $ (329,226) $ 3,062,913 $ (2,079,852)
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Net loss per common share ($0.65) ($0.25)
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Shares used in computing net loss
per common share 7,374,613 8,187,800
================= ==================
</TABLE>
The accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements
are an integral part of this statement
<PAGE>
SPARTA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Historical:
The historical balances represent the results of operations for the year ended
December 31, 1995, the six months ended June 30, 1996 and the financial position
at December 31, 1995, as reported in the historical financial statements of
Sparta Pharmaceuticals, Inc. (the "Company"),filed with the Company's Annual
Report on Form 10-K and Form 10-Q.
2. Acquisition of Lexin Pharmaceutical Corporation
On March 15, 1996, the Company acquired the business and assets, and assumed
certain liabilities of Lexin Pharmaceutical Corporation ("Lexin"), for an
initial payment of 2,000,000 shares of the Company's Common Stock. The purchase
agreement provides for the issuance of up to an additional 600,000 shares of
Common Stock upon achievement of certain milestones related to the Lexin assets
acquired. The acquisition was accounted for using the purchase method of
accounting. The fair value of the net assets acquired was recorded based on the
carrying value for monetary and fixed assets with the remaining portion of the
purchase price ($3,062,913) allocated to in-process research and development
which was expensed.
Lexin had a fiscal year-end of June 30, and consequently the historical balances
contained in the pro forma balance sheet at December 31, 1995 and the pro forma
statements of operations for the year ended December 31, 1995 and the period
from January 1, 1996 to March 15, 1996 were derived from the unaudited financial
statements prepared by Lexin management. The operations of Lexin ceased on
March 15, 1996.
The following pro forma adjustment was made to the pro forma statements of
operations to reflect the acquisition of Lexin as if the acquisition had
occurred on January 1, 1995:
(A) To eliminate the effect of a non-operating charge in the Lexin results of
operations related to the impairment of certain assets. See Note 2 of the Notes
To Financial Statements included with the Lexin Pharmaceutical Corporation
Financial Statements as of June 30, 1995, filed pursuant to item 7(a) of this
report on Form 8-K/A.
(B) To eliminate the effect of a non-operating charge in the Sparta results of
operations related to the acquisition of Lexin during the first quarter of 1996.
<PAGE>
The following pro forma adjustments were made to the pro forma balance sheet to
reflect the acquisition of Lexin:
(C) To eliminate the Lexin liabilities, redeemable convertible preferred stock
and components of stockholders' deficit not acquired by Sparta including:
Senior demand notes $177,630
Convertible demand notes 1,000,000
Capital lease obligations 1,502,590
Accounts payable and accrued expenses 267,090
Deferred revenue 65,000
Redeemable convertible preferred stock 7,822,695
Series A Preferred Stock 2,000
Series B Preferred Stock 1,000
Common Stock (3,010)
Additional paid in capital (1,848,839)
Accumulated deficit (11,781,993)
(D) To record the issuance of 2,000,000 shares of the Company's Common Stock in
exchange for the Lexin assets acquired and to record the charge attributable to
in-process research and development:
Common Stock $2,000
Additional paid in capital 3,598,000
In-process R&D (accumulated deficit) 2,692,139
3. Pro Forma Loss Per Share
Pro forma loss per share was calculated by dividing the pro forma net loss by
the weighted average number of shares outstanding for the year adjusted for the
2,000,000 shares issued in connection with the purchase of the Lexin business
and assets.
