================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-27578
-------------------------------
SUNPHARM CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE F593097048
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4651 Salisbury Road, Suite 205
Jacksonville, Florida 32256
(Address of principal executive offices)
Issuer's telephone number: (904) 296-3320
-------------------------------
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 [X] No [ ]
Number of shares of the issuer's Common Stock outstanding as of August
7, 1998: 5,767,830
================================================================================
<PAGE>
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-QSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of
a number of important factors. For a discussion of important factors that could
affect the Company's results, please refer to the discussions herein and to
those contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997 under the caption "Item 1. Description of Business - Risk
Factors."
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following unaudited financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and notes disclosures, normally included in annual financial
statements prepared in accordance with generally accepted accounting principles,
have been omitted pursuant to these rules and regulations. However, the Company
believes that the disclosures made herein are adequate and, accordingly, that
the information presented is not misleading. These financial statements should
be read in conjunction with the financial statements and notes for the year
ended December 31, 1997, which are included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997, filed pursuant to the
Securities Exchange Act of 1934.
-2-
<PAGE>
SUNPHARM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash .................................................. $ 177,436 $ 356,969
Short-term investments ................................ 2,079,143 4,268,566
Receivables ........................................... 18,732 --
Other current assets .................................. 133,899 206,024
------------ ------------
Total current assets .............................. 2,409,210 4,831,559
Receivable from shareholder ................................ 114,942 106,611
Property and equipment, net ................................. 31,476 30,319
Other assets ................................................ 34,132 3,250
------------ ------------
$ 2,589,760 $ 4,971,739
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ...................................... $ 276,324 $ 399,996
Accrued liabilities ................................... 160,867 231,754
Notes payable ......................................... 38,246 155,271
------------ ------------
Total current liabilities ........................ 475,437 787,021
Stockholders' Equity:
Undesignated preferred stock, par value
$.0001 per share; 2,500,000 shares
authorized; 0 shares issued and
outstanding ....................................... -- --
Common stock, par value $.0001 per share;
25,000,000 shares authorized; 5,767,830
and 5,737,828 shares issued and
outstanding, respectively ........................ 577 574
Additional paid-in capital ............................ 19,704,780 19,687,198
Accumulated deficit during development stage .......... (17,591,034) (15,503,054)
------------ ------------
Total stockholders' equity ....................... 2,114,323 4,184,718
------------ ------------
$ 2,589,760 $ 4,971,739
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
SUNPHARM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1998 1997
----------- ------------
<S> <C> <C>
Revenues:
Sponsored research/sublicensing revenue ............. $ -- --
Interest income ..................................... 47,093 94,968
----------- -----------
Total revenues ................................. 47,093 94,968
Expenses:
Research and development ............................ 641,512 781,096
General and administrative .......................... 454,434 260,448
Royalty expense ..................................... -- --
----------- -----------
Total expenses ................................. 1,095,946 1,041,544
----------- -----------
Net loss ................................................. $(1,048,853) $ (946,576)
=========== ===========
Net loss per share ....................................... $ (0.18) $ (0.17)
=========== ===========
Shares used in computing loss per share .................. 5,765,919 5,616,423
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
SUNPHARM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
From Inception
(May 3, 1990)
Six Months Ended June 30, Through
1998 1997 June 30, 1998
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Sponsored research/sublicensing revenue ............... $ -- -- $ 2,885,000
Interest income ....................................... 96,031 119,505 611,338
------------ ------------ ------------
Total revenues ................................... 96,031 119,505 3,496,338
EXPENSES:
Research and development .............................. 1,164,798 1,331,681 11,151,038
General and administrative ............................ 1,019,213 654,943 9,446,334
Royalty expense ....................................... -- -- 490,000
------------ ------------ ------------
Total expenses ................................... 2,184,011 1,986,624 21,087,372
------------ ------------ ------------
NET LOSS ................................................... $ (2,087,980) $ (1,867,119) $(17,591,034)
============ ============ ============
NET LOSS PER SHARE ......................................... $ (0.36) $ (0.40)
============ ============
SHARES USED IN COMPUTING LOSS PER SHARE .................... 5,756,652 4,698,362
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
SUNPHARM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Redeemable Convertible Preferred Stock: Additional Accumulated
Series A Series B Common Stock: Paid-In Deficit Since
Shares Amount Shares Amount Shares Amount Capital Inception
------------------------------------------ ------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 .... -- -- -- -- 5,737,828 $ 574 $ 19,687,198 $(15,503,054)
Issuance of Common Stock ........ -- -- -- -- -- -- -- --
Exercise of Options ............. -- -- -- -- 28,573 3 11,330 --
Exercise of Warrants............. -- -- -- -- 1,429 -- 6,252 --
Net Loss ........................ -- -- -- -- -- -- -- (2,087,980)
------------------------------------------ ------------------------------------------------------
Balance at June 30, 1998* ....... -- -- -- -- 5,767,830 $ 577 $ 19,704,780 $(17,591,034)
========================================== ======================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
SUNPHARM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
From Inception
(May 3, 1990)
Six months ended June 30, Through
1998 1997 June 30, 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss .......................................................... $ (2,087,980) $ (1,867,119) $(17,591,034)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization .............................. 3,911 1,800 81,309
Expense related to issuance of
stock for services ...................................... -- -- 133,770
Compensation expense related to
operations, warrants and stock
appreciation rights ..................................... -- -- 865,246
Amortization of deferred offering costs
incurred in connection with
issuance of Bridge Notes ................................ -- -- 775,000
Write-off of patents ....................................... -- -- 70,120
Increase in receivable from shareholder .................... (8,331) (117,529) (114,942)
(Increase) decrease in prepaid expenses,
receivables and other assets ............................ (3,393) 470,623 (211,058)
(Decrease) increase in accounts payable .................... (123,672) (68,786) 276,324
(Decrease) increase in accrued liabilities ................. (70,887) (432,701) 167,117
Increase in accrued legal fees ............................. -- -- 300,000
------------ ------------ ------------
Total adjustments ....................................... (202,372) (146,593) 2,342,886
------------ ------------ ------------
Net cash used in operating activities ................................ (2,290,352) (2,013,712) (15,248,148)
------------ ------------ ------------
Cash flows from investing activities
Purchases of short-term investments ............................... (4,368,706) (5,808,774) (22,303,758)
Sales and maturities of short-term investments .................... 6,584,033 1,677,755 20,250,519
Purchases of property and equipment ............................... (5,068) (4,922) (49,090)
Payment of patent costs ........................................... -- -- (67,424)
------------ ------------ ------------
Net cash provided by (used in) investing activities .................. 2,210,259 (4,135,941) (2,169,753)
------------ ------------ ------------
Cash flows from financing activities
Repayments of notes payable ....................................... (117,025) (74,301) (61,754)
Increase in deferred offering costs ............................... -- -- (597,348)
Issuance of Series A preferred stock .............................. -- -- 513,525
Issuance of Series B preferred stock .............................. -- -- 450,000
Issuance of common stock .......................................... 17,585 6,333,489 17,290,914
Proceeds from payable to shareholders ............................. -- -- 542,500
Repayment of payable to shareholders .............................. -- -- (542,500)
------------ ------------ ------------
Net cash (used in) provided by financing activities .................. (99,440) 6,259,188 17,595,337
------------ ------------ ------------
Net change in cash ................................................... (179,533) 109,535 177,436
Cash at beginning of period .......................................... 356,969 341,145 --
------------ ------------ ------------
Cash at end of period ................................................ $ 177,436 $ 450,680 $ 177,436
============ ============ ============
Supplemental information:
Cash paid for interest ............................................ $ 3,550 $ 2,174 $ 171,002
============ ============ ============
The accompanying notes are an integral part of these financial statements.
- 7 -
</TABLE>
<PAGE>
SUNPHARM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The balance sheet at June 30, 1998, the related statements of
operations for the three- and six- month periods ended June 30, 1998 and 1997
and the period from inception (May 3, 1990) through June 30, 1998, the statement
of stockholders' equity at June 30, 1998, and the statements of cash flows for
the three-month periods ended June 30, 1998 and 1997 and the period from
inception through June 30, 1998 are unaudited. These interim financial
statements should be read in conjunction with the December 31, 1997 financial
statements and related footnotes included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1997. The unaudited interim financial
statements reflect all adjustments which are, in the opinion of management,
necessary for a fair statement of results for the interim periods presented, and
all such adjustments are of a normal recurring nature. Interim results are not
necessarily indicative of results for a full year.
NET LOSS PER SHARE
Net loss per share is computed based on the weighted-average number of
shares of common stock outstanding for the period.
PATENT COSTS
The Company reimburses the University of Florida Research Foundation,
Inc. (UFRFI) for direct expenses relating to the Company's patents. Patent costs
consist of legal fees and other direct costs incurred in obtaining patents.
These costs are charged to research and development expense when incurred.
RESEARCH AND DEVELOPMENT
Sponsored research revenue is recognized as revenue when such payments
are earned or received and the research has been performed. Research and
development expenses are charged to operations when incurred. Research and
development expenses include, among other expenses, consulting fees and cost of
reimbursements to UFRFI.
NEW ACCOUNTING STANDARD
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes standards for
-8-
<PAGE>
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements. SFAS 130 requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported in
a financial statement that is displayed with the same prominence as other
financial statements. SFAS 130 does not require a specific format for that
financial statement but requires that an enterprise display an amount
representing total comprehensive income for the period in that financial
statement. Additionally, SFAS 130 requires that an enterprise (a) classify items
of other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. SFAS 130 is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial statements for
earlier periods provided for comparative purposes is required. Adoption of SFAS
130 did not have a material impact on the Company's financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
Since its inception in May 1990, SunPharm Corporation ("SunPharm" or
the "Company") has devoted substantially all of its efforts and resources to
research and development conducted on its own behalf and through collaborations
with clinical institutions. The Company's drug development strategy emphasizes
conducting most of its research and preclinical activities at the University of
Florida, with clinical investigations conducted at various sites, including the
University of Florida. Consequently, the Company believes that its cumulative
research and development expenditures have been lower than other comparable
development stage pharmaceutical companies. The Company has incurred cumulative
net losses of $17,591,034 from its inception through June 30, 1998. The Company
expects to incur additional significant operating losses for at least the next
two years, principally as a result of its continuing anticipated research and
development and clinical trial expenditures.
The Company has recently undertaken an assessment of all its financial
and operational systems to ensure Year 2000 compliance and plans to complete the
assessment by December 31, 1998. Year 2000 issues result from the inability of
certain computer programs or computerized equipment to accurately calculate,
store or use a date subsequent to December 31, 1999. The erroneous date can be
interpreted in a number of different ways; typically the year 2000 is
represented as the year 1900. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business.
Based on its limited review to date and other preliminary information,
the Company does not anticipate that it will incur any significant costs
relating to the assessment and remediation of Year 2000 issues. The Company
believes that the potential impact, if any, of its systems not being Year 2000
compliant should not impact the Company's ability to continue its research and
development activities. However, there can be no assurance at this time that the
Company, its business partners, vendors or customers will successfully be able
to identify and remedy all potential Year 2000 problems or that a system failure
resulting from a failure to identify any such problems would not have a material
adverse effect on the Company.
-9-
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Interest income decreased to $47,000 for the three months ended June
30, 1998 from $95,000 for the same period in 1997. This decrease is attributable
to a lower cash balance available for investment during the current quarter, as
compared to the year-ago quarter.
The Company's research and development expenses totaled $642,000 for
the three months ended June 30, 1998, a decrease of 18% from $781,000 recorded
in the same period in 1997. The higher 1997 expenses reflected a greater level
of clinical monitoring activity, in that patient enrollment in clinical trials
of the Company's lead compounds, diethylnorspermine (DENSPM) and
diethylhomospermine (DEHOP), were ongoing at that time. Also during that period
the Company incurred higher expenses of drug compound screening and slightly
higher patent costs.
General and administrative expenses were $454,000 for the three months
ended June 30, 1998, as compared to $260,000 for the same period in 1997. The
75% increase resulted from the Company's increased utilization of administrative
services, most significantly in investor relations but also in other areas
relating to operation of a public company. The higher 1998 expenses were also
impacted by the addition of a senior management position in September 1997,
which impacted salaries, benefits, payroll taxes, and travel.
Net loss for the three months ended June 30, 1998 was $1,049,000, as
compared to a loss of $947,000 for the same period in 1997. The greater loss in
the current quarter was due to lower interest income and higher general and
administrative expenses as discussed above. Net loss per share for the three
months ended June 30, 1998 of $0.18 was essentially unchanged from net loss per
share of $0.17 for the same period in 1997, but was impacted slightly by the
greater number of weighted-average shares outstanding.
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Interest income of $96,000 for the six months ended June 30, 1998 was
about 20% lower than the $120,000 recorded in the same period in 1997. The
decrease is attributable to a lower average balance of invested cash during the
current quarter, as compared to a year earlier.
Research and development expenses of $1,165,000 for the six months
ended June 30, 1998 were about 13% lower than the $1,332,000 recorded in the
same period a year ago. The higher expenses in 1997, as previously discussed,
were attributable to clinical monitoring activity associated with patient
enrollment in Phase I and Phase II clinical trials of the Company's lead
compounds. Additionally, drug screening and patent costs were higher in the
prior-year period.
The Company expects its research and development expenses to increase
significantly during the second half of 1998 and continuing into 1999, in
anticipation of increased expenses related to preclinical studies and human
clinical trials, as well as the addition of senior management positions in
clinical and scientific affairs.
-10-
<PAGE>
General and administrative expenses of $1,019,000 for the six months
ended June 30, 1998 were 56% higher than the $655,000 recorded in the same
period a year earlier. The increase is attributable to an increased level of
investor relations activity, the addition of a senior management position in
September 1997, and a higher level of associated administrative expenses. The
Company expects its general and administrative expenses to increase, although at
a slower rate than its research and development expenses, with the anticipated
additions of accounting and marketing positions in the second half of 1998.
Net loss for the six months ended June 30, 1998 was $2,088,000, or
$0.36 per share, which compares to a net loss of $1,867,000 or $0.40 per share,
for the comparable period a year ago. The greater net loss is attributable to
lower interest income and higher general and administrative expenses as
discussed above. Net loss per share in the current period was impacted by the
greater number of weighted average shares outstanding, as compared to a year
ago, due to a private placement financing which closed on March 28, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through collaborative research and sublicense agreements with its strategic
alliance partners and the issuance of debt and equity securities. Through June
30, 1998, the Company has received $2,885,000 of cumulative sponsored research
and sublicensing revenues and approximately $19,700,000 in consideration of the
issuance of debt and equity securities, including net proceeds of approximately
$7,200,000 related to its initial public offering in January 1995.
During the six months ended June 30, 1998, net cash used in operating
activities was $2,290,000, compared with $2,014,000 for the comparable period in
1997. The greater use of cash in the current period was principally due to the
greater net loss, impacted by revenue and expense factors previously discussed.
At June 30, 1998, the Company had cash and investments totaling $2,257,000,
compared with $4,626,000 at December 31, 1997. The Company's working capital was
$1,934,000 at June 30, 1998, compared to $4,045,000 at December 31, 1997. These
decreases are attributable to the Company's use of cash to fund its operations
over the last six months.
The Company expects currently available resources to be sufficient to
fund its operations through the end of 1998. However, the Company will be
required to obtain additional funds to finance its operations thereafter. In
that regard, the Company intends to obtain funds through a private placement of
equity securities prior to the end of 1998. Additionally, the Company may seek
to obtain funds through additional financings, through new collaborative
arrangements with corporate partners, or from other sources. There can be no
assurance, however, that the Company will be able to complete a private
placement of equity securities before the end of 1998, or to obtain necessary
financing when required, or what the terms of any such financing, if obtained,
might be. In addition, the Company's future success is affected by the progress
of the Company's research and development efforts and results of preclinical
studies and clinical trials, the cost and timing of regulatory approvals, the
Company's ability to obtain patent protection for its products on a
cost-effective and timely basis, the rate of technological advances,
determinations as to the commercial potential of the Company's products under
development, the status of competitive products, the establishment of
manufacturing capacity or third-party manufacturing arrangements, its reliance
on
-11-
<PAGE>
research institutions and corporate partners, the uncertainty of health care
reform, and the competitive environment in which the Company operates. As noted
above, the Company's currently existing capital resources will not be sufficient
to fund the Company's operations to the point of introduction of a commercially
successful product, if and when that time should arrive. No assurance can be
given that additional funds will be available on acceptable terms, if at all.
The Company expects to incur substantial additional research and
development expenses, including expenses associated with preclinical studies,
clinical trials and drug testing. The Company intends to use a portion of its
cash resources, together with funds from its existing collaborative arrangements
with Warner-Lambert and Nippon Kayaku, for these purposes. The Company's rights
to receive payments from Warner-Lambert and Nippon Kayaku, are dependent upon
the achievement of certain milestones by Warner-Lambert and Nippon Kayaku,
respectively, and are not within the control of the Company. No assurance can be
made that such milestones will be achieved or that such payments will be
received by the Company.
The Company has incurred losses since inception and, therefore, has not
been subject to federal income taxes. As of December 31, 1997, the Company had a
net operating loss ("NOL") and tax credit carry forwards for income tax purposes
of $13,327,000 and $464,000, respectively, which may be available to reduce
future taxable income and future tax liabilities. These carry forwards begin to
expire in 2008. The Tax Reform Act of 1986 provides for an annual limitation on
the use of NOL and credit carry forwards (following certain ownership changes)
that could significantly limit the Company's ability to utilize these carry
forwards. The Company has made no determination concerning whether there has
been such a cumulative change in ownership. It is possible that such change in
ownership occurred following the completion of the Company's initial public
offering in 1995 and private placements in 1996 and 1997. Accordingly, the
Company's ability to utilize the aforementioned carry forwards to reduce future
taxable income and tax liabilities may be limited. Additionally, because United
States tax laws limit the time during which these carry forwards may be applied
against future taxes, the Company may not be able to take full advantage of
these attributes for federal income tax purposes.
-12-
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
During the first six months of 1998, the Company issued an aggregate of
30,002 shares of Common Stock upon the exercise of options granted to former
consultants of the Company in transactions exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2)
thereof or Rule 701 thereunder. The options in question were granted prior to
the Company's 1995 initial public offering.
ITEM 4. MATTERS SUBMITTED FOR SHAREHOLDER APPROVAL.
The Company's annual meeting was held on May 21, 1998. The shareholders
of the Company elected the following directors of the Company to serve until the
next annual meeting. The total number of votes cast "For" and "Withheld" each of
the nominees are as set forth opposite their respective names:
NOMINEES VOTES FOR VOTES WITHHELD
-------- --------- --------------
Stefan Borg 3,462,434 5,648
Philip R. Tracy 3,462,184 5,898
Charles L. Dimmler III 3,461,434 5,648
Jerry T. Jackson 3,462,184 5.898
Robert S. Janicki, M. D 3,462,434 5,648
Jay Moorin 3,441,088 26,994
Jacques F. Rejeange 3,460,784 7,298
Robert A. Schoellhorn 3,458,434 9,648
The shareholders of the Company approved the amendment of Company's
Amended and Restated 1995 Nonemployee Directors' Stock Option Plan. The total
number of shares cast "For," cast "Against" and "Abstentions" are set forth
below:
VOTES VOTES
FOR AGAINST ABSTENTIONS
--- ------- -----------
3,364,966 8,472 14,644
Finally, the shareholders of the Company ratified the selection of
Deloitte & Touche LLP as independent accountants for its fiscal year ended
December 31, 1998. The total number of shares cast "For," cast "Against" and
"Abstentions" are set forth below:
VOTES VOTES
FOR AGAINST ABSTENTIONS
--- ------- -----------
3,447,618 4,750 15,714
-13-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1* First Amendment to Amended and Restated 1995
Nonemployee Directors' Stock Option Plan
11.1* Statement of computation of weighted average shares
outstanding and net loss per share
27.1* Financial Data Schedule
________________
*Filed herewith.
-14-
<PAGE>
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.
SUNPHARM CORPORATION
Date: August 14, 1998 By: /s/ STEFAN BORG
-------------------
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 1998 By: /s/ PAUL M. HERRON
----------------------
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
-15-
EXHIBIT 10.1
FIRST AMENDMENT
TO THE
SUNPHARM CORPORATION
AMENDED AND RESTATED 1995 NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
This First Amendment to the SunPharm Corporation (the "Company")
Amended and Restated 1995 Nonemployee Directors' Stock Option Plan (the
"Amendment") is executed pursuant to Article VIII of the Company's Amended and
Restated 1995 Nonemployee Directors' Stock Option Plan (the "Plan"). All
capitalized and undefined terms used herein shall have the meanings ascribed to
such terms in the Plan.
WHEREAS, the Company's Board of Directors (the "Board") is authorized
by Article VIII of the Plan to amend the Plan from time to time, subject to any
required stockholder approval of any such amendments; and
WHEREAS, by written consent, effective as of April 1, 1998, the Board
approved an increase in the number of shares of the Company's common stock, par
value $.001 per share (the "Common Stock"), for which options may be granted
under the Plan from 300,000 to 500,000 shares; and
WHEREAS, at a meeting held on May 21, 1998, the Company's stockholders
approved the Amendment.
NOW, THEREFORE, in order to amend Article IV of the Plan as authorized
by the Board and approved by the stockholders:
1. The first sentence of Article IV of the Plan is hereby revised
in its entirety to read as follows:
"The aggregate number of shares which may be issued under
Options granted under the Plan shall not exceed 500,000 shares
of Stock."
2. Except as amended hereby, the terms and provisions of the Plan
shall remain in full force and effect, and the Plan and this Amendment shall be
read, taken and construed as one and the same instrument.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption
of the foregoing First Amendment to the Plan by the directors of the Company and
approval and adoption thereof by the stockholders of the Company, the Company
has caused this Amendment to be duly executed in its name and behalf by its
proper officers thereunto duly authorized as of the 21st day of May, 1998.
SUNPHARM CORPORATION
By: /s/ STEFAN BORG
---------------------
Name: Stefan Borg
---------------------
Title: President & CEO
---------------------
EXHIBIT 11.1
SUNPHARM CORPORATION
CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING
AND NET LOSS PER SHARE
For six months ended June 30,1998:
<TABLE>
<CAPTION>
DAYS
TOTAL SHARES OUTSTANDING
-------------- ----------------
<S> <C> <C>
5,737,828 x 7 = 40,164,796
5,745,618 x 56 = 321,754,608
5,748,618 x 15 = 86,229,270
5,758,901 x 13 = 74,865,713
5,760,330 x 22 = 126,727,260
5,767,830 x 68 = 392,212,440
---------------- -----------------
181 1,041,954,087
Weighted Average Shares = 1,041,954,087 /181= 5,756,652
Net Loss Per Share = $(2,087,980) /5,756,652= $(0.36)
For six months ended June 30,1997:
DAYS
TOTAL SHARES OUTSTANDING
-------------- ----------------
3,708,879 x 87 = 322,672,473
5,537,165 x 4 = 22,148,660
5,607,471 x 76 = 426,167,796
5,672,471 x 14 = 79,414,594
---------------- -----------------
181 850,403,523
Weighted Average Shares = 850,403,523 /181= 4,698,362
Net Loss Per Share = $(1,867,119) /4,698,362= $(0.40)
For three months ended June 30,1998:
DAYS
TOTAL SHARES OUTSTANDING
-------------- ----------------
5,758,901 x 1 = 5,758,901
5,760,330 x 22 = 126,727,260
5,767,830 x 68 = 392,212,440
---------------- -----------------
91 524,698,601
Weighted Average Shares = 524,698,601 /91= 5,765,919
Net Loss Per Share = $(1,048,853) /5,765,919= $(0.18)
For three months ended June 30,1997:
DAYS
TOTAL SHARES OUTSTANDING
-------------- ----------------
5,537,165 x 1 = 5,537,165
5,607,141 x 76 = 426,142,716
5,672,471 x 14 = 79,414,594
---------------- -----------------
91 511,094,475
Weighted Average Shares = 511,094,475 /91= 5,616,423
Net Loss Per Share = $(946,576) /5,616,423= $(0.17)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000884888
<NAME> SUNPHARM CORPORATION
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 177,436
<SECURITIES> 2,079,143
<RECEIVABLES> 18,732
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,409,210
<PP&E> 45,720
<DEPRECIATION> 14,244
<TOTAL-ASSETS> 2,589,760
<CURRENT-LIABILITIES> 475,437
<BONDS> 0
0
0
<COMMON> 577
<OTHER-SE> 2,113,746
<TOTAL-LIABILITY-AND-EQUITY> 2,589,760
<SALES> 0
<TOTAL-REVENUES> 47,093
<CGS> 0
<TOTAL-COSTS> 1,095,946
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,048,853)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,048,853)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,048,853)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> 0
</TABLE>
