SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): November 6, 1997
Inkine Pharmaceutical Company, Inc.
------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
New York 0-24972 13-3754005
- -----------------------------------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
</TABLE>
425 Park Avenue, New York, NY 10022
- ----------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 319-8300
This Form 8-K/A is being filed to amend Item 7 in order to provide
the financial statements and proforma financial information required
by that Item.
<PAGE>
Item 1. Changes in Control of Registrant
On November 18, 1997, InKine Pharmaceutical Company, Inc., formerly
Panax Pharmaceutical Company Ltd. (the "Company"), completed the private
placement of 17 million shares of common stock (the "Private Placement") at a
purchase price of $1 per share for gross proceeds of $17 million. The Company
also issued 1,448,429 shares of common stock to the placement agents in the
Private Placement in lieu of cash commissions. The Company's estimated
expenses in connection with the Private Placement were approximately $1.1
million (including $660,000 in non-accountable expense allowance and other
cash payments to the placement agents), resulting in net proceeds to the
Company from the Private Placement of approximately $15.9 million.
Prior to the Private Placement, the Company had outstanding 3,357,012
shares of common stock. Consequently, in connection with the consummation of
the Private Placement, a change in control of the Company occurred. The
Company believes, however, that no particular stockholder or group of
stockholders is or was a controlling stockholder or group, either before or
after consummation of the Private Placement.
<PAGE>
Item 2. Acquisition or Disposition of Assets.
As of November 6, 1997 the Company acquired all the outstanding
capital stock of CorBec Pharmaceuticals, Inc. ("CorBec") and Sangen
Pharmaceutical Company ("Sangen"), both Delaware corporations. The businesses
of CorBec and Sangen have been described in reports previously filed by the
Company under the Securities Exchange Act of 1934.
The CorBec acquisition was accomplished (pursuant to an Agreement and
Plan of Reorganization dated October 31, 1997 among the Company, CorBec and
certain security holders of CorBec) by the merger of a wholly owned subsidiary
of the Company (formed for the purpose of this acquisition) with and into
CorBec, with CorBec the surviving corporation (the "Merger"). In the Merger,
the Company paid an aggregate of $750,000 and issued an aggregate of 750,000
shares of common stock to the former stockholders of CorBec. The Company also
agreed to issue additional shares and pay additional cash to the former CorBec
stockholders on a contingent basis in the future upon the realization of
certain milestones in the development of CorBec's technology. The description
of these milestone-based payments and share issuances set forth under the
caption "Acquisitions" in Item 5 of Part II of the Company's quarterly report
on Form 10-QSB for the quarter ended September 30, 1997 (as amended by Form
10-QSB/A filed on November 17, 1997) is incorporated herein by reference. This
consideration paid and payable to the former CorBec stockholders was
determined in negotiations between the Company's management and the former
CorBec stockholders based on the current and potential value of CorBec's
technology. The former CorBec stockholders consist of the University of
Pennsylvania, Dr. Alan Schreiber, the inventor of CorBec's technology, four
private venture capital funds and certain other former employees of or
consultants to CorBec. None of these persons has any relationship (other than
as a stockholder by virtue of the Merger) with the Company or its officers,
directors or affiliates or any person associated with any of the foregoing,
except that (i) the University of Pennsylvania is a party to a Funded Research
Agreement and a License Agreement with CorBec and (ii) Dr. Schreiber is party
to a consulting agreement with CorBec. The Company funded the cash portion of
the Merger consideration from its operating capital.
The Sangen acquisition occurred pursuant to a Stock Purchase
Agreement dated September 3, 1997 between the Company and Dr. Leonard S.
Jacob, formerly the sole stockholder of Sangen. In connection with this
acquisition, Dr. Jacob entered into an employment agreement with the Company
as the Chairman of the Board of Directors and the Chief Executive Officer. In
consideration for all the outstanding stock of Sangen and Dr. Jacob's
employment arrangement with the Company, the Company granted to Dr. Jacob an
option to purchase a number of shares of the Company's common stock equal to
7.5% of the fully diluted capitalization of the Company. "Fully diluted
capitalization" was determinable upon completion of the Private Placement
described in Item 1 above and means all issued and outstanding shares of
common stock of the Company plus all shares issuable upon exercise of
outstanding derivative instruments (other than certain warrants and options
granted to the underwriter in the Company's initial public offering). The
additional information regarding Dr. Jacob's option, as well as an option
granted to Dr. Taffy J. Williams, the Company's President and Chief Operating
Officer, and shares of common stock and warrants issued to Allegheny
University of the Health Sciences and Dr. George Tuszynski in connection with
the Sangen acquisition, which was included under the caption "Acquisitions" in
Item 5 of Part II of the quarterly report on Form 10-QSB for the quarter ended
September 30, 1997 (as amended by Form 10-QSB/A filed on November 17, 1997) is
incorporated herein by reference. The consideration payable by the Company to
Dr. Jacob in connection with the Sangen acquisition was determined by
negotiation between the Company's management and Dr. Jacob and was based on
the current and potential value of the Sangen technology and on Dr. Jacob's
employment arrangement with the Company.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
The financial statements of CorBec set forth on pages F-20 through
F-28 of the Company's proxy statement dated October 7, 1997 and filed
October 9, 1997 with the Securities and Exchange Commission, as
amended, are incorporated herein by this reference.
<PAGE>
The unaudited, interim financial statements for CorBec as of, and for
the nine month period ended, September 30, 1997 are set forth below:
CORBEC PHARMACEUTICALS, INC.
BALANCE SHEET
September 30,
1997
(Unaudited)
-----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 240,786
Prepaid expenses and other 6,568
------------
Total current assets 247,354
EQUIPMENT, net --
------------
$ 247,354
============
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Accrued expenses $ --
-----------
Total current liabilities --
------------
MANDATORY REDEEMABLE PREFERRED STOCK 2,650,000
------------
STOCKHOLDERS' DEFICIT:
Common Stock 369
Additional paid-in capital 18,278
Deficit accumulated during development stage (2,421,293)
-----------
Total stockholders' deficit (2,402,646)
------------
$ 247,354
------------
See accompanying notes.
<PAGE>
CORBEC PHARMACEUTICALS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the
Period from
For the Inception
For the Nine Months (June 11, 1993)
Nine Months Ended Ended through
September 30, September 30, September 30,
1997 1996 1997
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- -------------
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development expenses $ 322,215 $ 481,675 $ 2,011,780
General and administrative expenses 122,974 109,981 456,689
---------- ---------- ------------
Net loss from operations (445,189) (591,656) (2,468,469)
INTEREST INCOME: 5,574 3,865 47,176
---------- ---------- ------------
Net loss $(439,615) $(587,791) $(2,421,293)
========== ========== ============
</TABLE>
See accompanying notes.
<PAGE>
CORBEC PHARMACEUTICALS, INC. STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the
Period from
For the For the Inception
Nine Months Nine Months (June 11, 1993)
Ended Ended through
September 30, September 30, September 30,
1997 1996 1997
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (439,615) $ (587,791) $(2,421,293)
Adjustments to reconcile net loss to net
cash used in operating activities-
Depreciation 493 1,479 5,917
Licensed technology acquired
with stock -- -- 18,462
(Increase) decrease in prepaid
expenses and other (4,485) 4,129 (6,568)
Increase (decrease) in accounts
payable and accrued expenses (193,056) (67,783) --
----------- ----------- -----------
Net cash used in operating
activities (636,663) (649,966) (2,403,482)
------------ ----------- -----------
CASH FROM INVESTING ACTIVITIES:
Purchase of equipment -- -- (5,917)
----------- ----------- -----------
Net cash used in investing activities
-- -- (5,917)
----------- ----------- -----------
CASH FLOW FROM FINANCING
ACTIVITIES:
Proceeds from issuance of common
stock -- -- 185
Proceeds from issuance of preferred
stock -- -- 2,650,000
----------- ----------- -----------
Net cash provided by financing
activities -- -- 2,650,185
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents (636,663) (649,966) 240,786
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 877,449 657,308 --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 240,786 $ 7,342 $ 240,786
=========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
CORBEC PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The financial statements as of September 30, 1997 and for the nine months
ended September 30, 1997 and 1996 are unaudited and, in the opinion of
management of CorBec Pharmaceuticals, Inc. (the "Company"), include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for those interim periods. The results of
operations for the nine months ended September 30, 1997 are not necessarily
indicative of the results to be expected for the full year.
<PAGE>
SANGEN PHARMACEUTICAL COMPANY
BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
ASSETS
Cash $1,000
STOCKHOLDER'S EQUITY
Stockholder's Equity
Common Stock, $1.00 par value,
1000 shares authorized, 100 shares
issued and outstanding $ 100
Additional paid-in capital $ 900
------
$1,000
------
Sangen Pharmaceutical Company was organized in January 1997 and
incorporated in the State of Delaware. Sangen's principal asset is its
right to enter into an exclusive worldwide license to certain
thrombospondin technology, a cancer treatment technology, currently
owned by Allegheny University of the Health Sciences.
<PAGE>
(b) Pro Forma Financial Information.
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
AT SEPTEMBER 30, 1997
The following pro forma condensed balance sheet assumes the transactions
indicated below (the Purgative Product, defined below, license occurred in
February 1997 and the acquisitions of CorBec Pharmaceuticals Inc. ("CorBec")
and Sangen Pharmaceutical Company ("Sangen") occurred in November 1997 along
with the closing of the Private Placement, defined below) and reflects the
transactions if they had occurred on September 30, 1997: (1) the acquisition
of CorBec for 750,000 shares of common stock and $750,000, (2) the acquisition
of Sangen for an option for 300,000 shares of common stock, (3) the issuance
of 17,000,000 shares of common stock yielding net proceeds of $15,940,000 (the
"Private Placement") and (4) acquisition of certain technologies from
Allegheny University of the Health Sciences ("TSP-1 Technology") for 125,000
shares of Common Stock and a license from AWL Partnership for a colonic
purgative product (the "Purgative Product") for $250,000. The acquisitions
of CorBec and Sangen are accounted for as purchases in accordance with
Accounting Principles Board Opinion No. 16. In the opinion of the management
of InKine Pharmaceutical Company, Inc., all adjustments necessary to present
such pro forma condensed balance sheet data have been made.
The pro forma condensed balance sheet should be read in conjunction with
the notes thereto, the financial statements of the Company, CorBec and Sangen
and the related notes thereto. The pro forma condensed balance sheet is not
necessarily indicative of what the actual financial position would have been
had the transactions occurred at September 30, 1997 nor does it purport to
represent the financial position of the Company.
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Adjustments Pro Forma
------------------------------------- for for Private Balance
InKine CorBec Sangen Acquisitions Subtotal Placement Sheet
------------ ---------- ---------- ------------ ----------- ---------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.... $ 391,000 $ 241,000 $1,000(4) $ (20,000)
(5) (750,000)
(8) (150,000) (287,000)(6) 16,203,000 15,916,000
Investments to be held to
maturity................... 285,000 285,000 285,000
Prepaid expenses and other
current assets............. 23,000 7,000 30,000 30,000
------------ ---------- ------- ----------- ----------- ---------- ----------
Total current assets . 699,000 248,000 1,000 (920,000) 28,000 16,203,000 16,231,000
Equipment, net.................. 28,000 28,000 28,000
Deferred assets................. 464,000 (1) (146,000)
(5) (55,000) 263,000 (6) (263,000)
Other assets.................... 250,000 (8) 150,000 400,000 400,000
------------ ---------- ------- ----------- ----------- ---------- ----------
TOTAL................. 1,441,000 248,000 1,000 (971,000) 719,000 15,940,000 16,659,000
============ ========== ======= =========== =========== ========== ==========
Current liabilities:
Accounts payable and other
accrued expenses........... $ 157,000 157,000 157,000
------------ ----------- =========
<PAGE>
Redeemable convertible
preferred stock............... 2,650,000 (5) (2,650,000)
----------- -----------
Stockholders' equity (deficit):
Common stock and additional
paid-in capital............ 5,761,000 19,000 1,000(1) 608,000
(2) 753,000
(3) 305,000
(5) (19,000)
(5) 1,828,000
(7) 2,454,000
(9) 3,308,000 15,018,000 (6) 15,940,000 30,958,000
Unearned portion of
compensatory stock/warrants (104,000) (2) (314,000)
(7) (1,540,000)
(9) (3,308,000) (5,266,000) (5,266,000)
Deficit accumulated during
the development stage...... (4,336,000) (2,421,000) (1) (754,000)
(2) (439,000)
(3) (305,000)
(4) (20,000)
(5) 2,421,000
(5) (2,385,000)
(7) (914,000) (9,153,000) (9,153,000)
Treasury Stock (37,000) (37,000) (37,000)
------------ ---------- ------- ----------- ----------- ---------- ----------
Total stockholders'
equity (deficit)..... 1,284,000 (2,402,000) 1,000 1,679,000 562,000 15,940,000 16,502,000
------------ ---------- ------- ----------- ----------- ---------- ----------
TOTAL................. 1,441,000 248,000 1,000 (971,000) 719,000 15,940,000 16,659,000
============ ========== ======= =========== =========== ========== ==========
</TABLE>
<PAGE>
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
NOTES TO PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
AS AT SEPTEMBER 30, 1997
(1) Reflects acquisition of Sangen, for 300,000 options issued at an
exercise price of $.61 per share (estimated fair value $609,000) and
costs of $146,000. The excess of the cost over the estimated fair value
of the net assets of Sangen is treated as purchased research and
development and charged to expense immediately. Technological
feasibility of the purchased in-process research and development has not
yet been established and the technology has no alternative uses.
(2) Reflects the estimated fair value of 395,000 options to be issued to
consultants for the TSP-1 Technology, CorBec and a financial consultant.
The Company has immediately charged operations for $439,000 for options
that vest immediately and the remaining $314,000 will be charged to
operations over the three year term of the consulting agreements.
(3) Reflects the issuance of 125,000 shares of common stock at a market
price of $2.44 per share to Allegheny University for certain technology
rights which has been charged to operations immediately. Technological
feasibility of the technology rights has not yet been established and
the technology has no alternative uses.
(4) Reflects the obligations of the Company for payment of patent costs
incurred by Allegheny University prior to completion of the acquisition
of technology rights.
(5) Reflects the acquisition of common and preferred stock of CorBec at a
cost of $2,633,000 (750,000 shares of common stock at a market price of
$2.44, $750,000 in cash and costs of $55,000). In addition, cash
payments in the aggregate amount of $16,580,000 and issuances of an
aggregate of 720,000 shares of Common Stock are to be made upon the
achievement, if any, of certain milestones and targets. The excess of
cost over the estimated fair value of the net assets of CorBec of
$2,385,000 is treated as purchased research and development and expensed
immediately. Technological feasibility of the purchased in-process
research and development has not yet been established and the technology
has no alternative uses. CorBec preferred stock was converted to common
stock immediately prior to the acquisition.
(6) Reflects the issuance of 17,000,000 share of common stock in the Private
Placement at $1.00 per share yielding net proceeds of $15,940,000 after
offering costs and placement agent fees aggregating $1,060,000 ($263,000
paid as at September 30, 1997) plus 1,448,429 shares of common stock
received in lieu of cash commission.
(7) Reflects the recognition of compensation expense to the President and
Chief Operating Officer of $2,454,000 comprised of (i) $914,000
representing the difference between the fair value of the underlying
common stock of $2.44 per share and the exercise price of $0.61 per share
of an immediately exercisable option for 500,000 shares of common stock,
and (ii) $1,540,000 representing the difference between the fair value of
the underlying common stock of $2.44 per share and the exercise price of
$1.00 per share of an option for 1,071,182 shares of common stock, which
becomes exercisable in equal increments over a period of 36 months
commencing on the initial closing date of the Private Placement (November
6, 1997). The Company has immediately charged to operations $914,000 and
the remaining $1,540,000 will be charged to operations over the term of
vesting.
(8) Consideration of $250,000 in cash (of which $100,000 was prepaid) for the
ALW License of the Purgative Product. In addition, options for 500,000
shares of common stock will be granted upon the achievement of certain
development and sales milestones.
(9) Reflects the recognition of unearned compensation expense to the new
Chairman of the Board and Chief Executive Officer of $3,308,000 comprised
of (i) $1,645,000 representing the difference between the fair value of
the underlying common stock of $2.44 per share and the exercise price of
$0.61 per share of an immediately exercisable option for 900,000 shares
of common stock, and (ii) $1,663,000 representing the difference between
the fair value of the underlying common stock of $2.44 per share and the
exercise price of $1.00 of an immediately exercisable option for
1,156,733 shares of common stock. All the foregoing options (in excess
of a portion of the $0.61 per share option covering 300,000 shares) are
subject to the Company's right to repurchase the options at a nominal
amount (or the shares underlying exercised options at the exercise
price), which right expires in equal increments over a period of 36
months commencing on the initial closing date of the Private Placement.
<PAGE>
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
The following pro forma condensed statement of operations reflects the
recurring operations on the assumption that the acquisitions of CorBec and
Sangen occurred on July 1, 1996. The acquisitions of CorBec and Sangen have
been accounted for as purchases in accordance with Accounting Principles Board
Opinion No. 16. In the opinion of management of the Company, all adjustments
necessary to present fairly such pro forma statements of operations have been
made. The historical financial data represents operations for the twelve
months ended June 30, 1997.
This pro forma condensed statement of operations should be read in
conjunction with the notes thereto, the financial statements of the Company
and CorBec and the related notes thereto. The pro forma condensed statements
of operations are not necessarily indicative of what the actual results of
operations would have been had the transactions occurred at July 1, 1996 nor
do they purport to indicate the results of future operations.
Pro Forma
Results
Historical (1) Pro Forma of
InKine CorBec(2) Adjustments Operations
-------- --------- ----------- ----------
(unaudited) (unaudited)
Costs and expenses:
Research and
development . . . $ 743,000 $679,000 (3) 74,000
(6) 65,000
(7) 225,000
(8) 30,000 1,816,000
General and
administrative. . 1,011,000 137,000 (3) 31,000
(4) 1,103,000
(5) 513,000
(6) 52,000 2,847,000
---------- -------- ---------- ---------
Total. . . . 1,754,000 816,000 2,093,000 4,663,000
Interest (income) . (104,000) (9,000) (113,000)
---------- -------- ---------- ----------
PRO FORMA LOSS . . . . 1,650,000 807,000 2,093,000 4,550,000
========== ======== ========== =========
Pro forma loss per
share . . . . . . . $0.51 $0.20(9)
===== =====
Pro forma weighted
average shares
outstanding . . . . 3,259,640 (10) 125,000
==========
(11) 750,000
(12) 17,000,000
(12) 1,448,429 22,583,069
==========
(1) Does not include the operations of Sangen since they were not material.
(2) Based on management's internal financial statements for the twelve months
ended June 30, 1997.
(3) To record amortization of fair value of options granted to consultants.
(4) To record amortization of fair value of options granted to the new
Chairman of the Board and Chief Executive Officer.
(5) To record amortization of fair value of options granted to the President
and Chief Operating Officer.
(6) To record additional consulting fees to be paid to consultants to Sangen
for TSP-1 Technology and CorBec.
(7) To record additional contractual funding research for TSP-1 Technology
and the CorBec Technology. In addition, the Company is also required to
fund at least $1,000,000 of additional research in furtherance of the
development of the Purgative Product through November 1999.
(8) To record additional amortization of fair value of options granted for
consulting services in connection with the Purgative Product license
and amortization of the Purgative Product license.
<PAGE>
(9) The proforma loss and loss per share does not reflect the excess of
cost over the estimated fair value of the net assets of CorBec and Sangen
aggregating $3,141,000, which is a nonrecurring charge directly
attributed to the transaction and is treated as purchased research and
development expense which will be expensed in the period the acquisition
will be consummated.
(10) Represents the issuance of 125,000 shares of Common Stock to Allegheny
University of the Health Sciences for certain technology rights.
(11) Represents the issuance of 750,000 shares of Common Stock in connection
with the CorBec acquisition.
(12) Represents the issuance of 17,000,000 shares of Common Stock in
connection with the Private Placement.
(13) Represents the issuance of 1,448,429 shares of Common Stock to the
placement agents in lieu of cash commission for the Private Placement.
<PAGE>
INKINE PHARMACEUTICAL COMPANY, INC.
(a development stage company)
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
The following pro forma condensed statement of operations data reflects
the recurring operations on the assumption that the acquisitions of CorBec and
Sangen occurred on July 1, 1997. The acquisitions of CorBec and Sangen have
been accounted for as purchases in accordance with Accounting Principles Board
Opinion No. 16. In the opinion of management of the Company, all adjustments
necessary to present fairly such pro forma statements of operations data have
been made. The unaudited historical financial data represents operations for
the three months ended September 30, 1997.
This pro forma condensed statement of operations data should be read in
conjunction with the notes thereto, the financial statements of the Company
and CorBec and the related notes thereto. The pro forma condensed statements
of operations data are not necessarily indicative of what the actual results
of operations would have been had the transactions occurred at July 1, 1997
nor do they purport to indicate the results of future operations.
Pro Forma
Results
Historical (1) Pro Forma of
InKine CorBec(2) Adjustments Operations
-------- --------- ----------- ----------
(unaudited) (unaudited) (unaudited)
Costs and expenses:
Research and
development . . . $ 67,000 $ 56,000 (3) 19,000
(6) 16,000
(7) 56,000
(8) 8,000 222,000
General and
administrative. . 285,000 45,000 (3) 8,000
(4) 276,000
(5) 128,000
(6) 13,000 755,000
---------- -------- ---------- ---------
Total. . . . 352,000 101,000 524,000 977,000
Interest (income) . (8,000) (1,000) (9,000)
---------- -------- ---------- ----------
PRO FORMA LOSS . . . . 344,000 100,000 524,000 977,000
========== ======== ========== =========
Pro forma loss per
share . . . . . . . $0.10 $0.04(9)
===== =====
Pro forma weighted
average shares
outstanding . . . . 3,356,847 (10) 125,000
==========
(11) 750,000
(12) 17,000,000
(12) 1,448,429 22,680,276
==========
(1) Does not include the operations of Sangen since they were not material.
(2) Based on management's internal financial statements for the three months
ended September 30, 1997.
(3) To record amortization of fair value of options granted to consultants.
(4) To record amortization of fair value of options granted to the new
Chairman of the Board and Chief Executive Officer.
(5) To record amortization of fair value of options granted to the President
and Chief Operating Officer.
(6) To record additional consulting fees to be paid to consultants to Sangen
for TSP-1 Technology and CorBec.
(7) To record additional contractual funding research for TSP-1 Technology
and the CorBec Technology. In addition, the Company is also required to
fund at least $1,000,000 of additional research in furtherance of the
development of the Purgative Product through November 1999.
(8) To record additional amortization of fair value of options granted for
consulting services in connection with the Purgative Product license and
amortization of the Purgative Product license.
<PAGE>
(9) The proforma loss and loss per share does not reflect the excess of
cost over the estimated fair value of the net assets of CorBec and Sangen
aggregating $3,141,000, which is a nonrecurring charge directly
attributed to the transaction and is treated as purchased research and
development expense which will be expensed in the period the acquisition
will be consummated.
(10) Represents the issuance of 125,000 shares of Common Stock to Allegheny
University of the Health Sciences for certain technology rights.
(11) Represents the issuance of 750,000 shares of Common Stock in connection
with the CorBec acquisition.
(12) Represents the issuance of 17,000,000 shares of Common Stock in
connection with the Private Placement.
(13) Represents the issuance of 1,448,429 shares of Common Stock to the
placement agents in lieu of cash commission for the Private Placement.
<PAGE>
(c) Exhibits.
3 Certificate of Incorporation, as amended.
10.1* Agreement and Plan of Reorganization among Panax Pharmaceutical
Company Ltd., CorBec Pharmaceuticals, Inc. and certain Security
Holders of CorBec Pharmaceuticals, Inc., dated October 31, 1997.
10.2* Registration Rights Agreement among Panax Pharmaceutical Company Ltd.
and the former security holders of CorBec Pharmaceuticals, Inc.,
dated November 6, 1997.
10.3* Stock Purchase Agreement by and between Panax Pharmaceutical Company
Ltd. and Leonard S. Jacob dated September 3, 1997.
10.4* Employment Agreement between InKine Pharmaceutical Company, Inc. and
Leonard S. Jacob, dated November 6, 1997
10.5* Employment Agreement between InKine Pharmaceutical Company, Inc. and
Taffy J. Williams, dated November 6, 1997.
10.6* Option to Purchase Shares of Common Stock of the InKine
Pharmaceutical Company, Inc. dated November 6, 1997 issued to Leonard
S. Jacob.
10.7* Common Stock Purchase Warrant, dated November 6, 1997 issued to
Allegheny University of the Health Sciences.
10.8* Non-Milestone Common Stock Purchase Warrant, dated November 6, 1997
issued to George Tuszynski.
10.9* Common Stock Purchase Warrant, dated November 6, 1997 issued to
George Tuszynski.
99* Item 5 of Part II of the Company's quarterly report on Form 10-QSB
for the quarter ended September 30, 1997 (as amended by Form 10-QSB/A
filed on November 17, 1997), portions of which are incorporated by
reference into this report on Form 8-K.
99.1 Financial Statements of CorBec Pharmaceuticals, Inc. appearing on pages
F-20 through F-28 of the Company's proxy statement dated October 7,
1997 and filed with the Securities and Exchange Commission on October
9, 1997 are incorporated herein as Exhibit 99.1 by this reference.
- -----------
* Previously filed as an exhibit to this Form 8-K.
<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 hereunto duly authorized.
InKine Pharmaceutical Company, Inc.
By: /s/ Taffy J. Williams
---------------------------------------
Taffy J. Williams, Ph.D.
President and Chief Operating Officer
Dated: December 3, 1997
<PAGE>
EXHIBIT INDEX
3 Certificate of Incorporation, as amended.
10.1* Agreement and Plan of Reorganization among Panax Pharmaceutical
Company Ltd., CorBec Pharmaceuticals, Inc. and certain Security
Holders of CorBec Pharmaceuticals, Inc., dated October 31, 1997.
10.2* Registration Rights Agreement among Panax Pharmaceutical Company Ltd.
and the former security holders of CorBec Pharmaceuticals, Inc.,
dated November 6, 1997.
10.3* Stock Purchase Agreement by and between Panax Pharmaceutical Company
Ltd. and Leonard S. Jacob dated September 3, 1997.
10.4* Employment Agreement between InKine Pharmaceutical Company, Inc. and
Leonard S. Jacob, dated November 6, 1997
10.5* Employment Agreement between InKine Pharmaceutical Company, Inc. and
Taffy J. Williams, dated November 6, 1997.
10.6* Option to Purchase Shares of Common Stock of the InKine
Pharmaceutical Company, Inc. dated November 6, 1997 issued to Leonard
S. Jacob.
10.7* Common Stock Purchase Warrant, dated November 6, 1997 issued to
Allegheny University of the Health Sciences.
10.8* Non-Milestone Common Stock Purchase Warrant, dated November 6, 1997
issued to George Tuszynski.
10.9* Common Stock Purchase Warrant, dated November 6, 1997 issued to
George Tuszynski.
99* Item 5 of Part II of the Company's quarterly report on Form 10-QSB
for the quarter ended September 30, 1997 (as amended by Form 10-QSB/A
filed on November 17, 1997), portions of which are incorporated by
reference into this report on Form 8-K.
99.1 Financial Statements of CorBec Pharmaceuticals, Inc. appearing on pages
F-20 through F-28 of the Company's proxy statement dated October 7,
1997 and filed with the Securities and Exchange Commission on October
9, 1997 are incorporated herein as Exhibit 99.1 by this reference.
- -----------
* Previously filed as an exhibit to this Form 8-K.
Certificate of Amendment of the Certificate of Incorporation
of
Panax Pharmaceutical Company Ltd.
Under Section 805 of the Business Corporation Law
It is hereby certified that:
FIRST: The name of the corporation is Panax Pharmaceutical
Company Ltd. (the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation
was filed with the Department of State on May 27, 1993.
THIRD: The Certificate of Incorporation is hereby amended as
authorized in Subdivision 1 of Section 801 of the Business Corporation Law, to
change the name of the Corporation in its entirety by deleting Article "FIRST"
in its entirety and effecting the following Article FIRST:
"FIRST: The name of the corporation is
InKine Pharmaceutical Company, Inc."
FOURTH: The Certificate of Incorporation is hereby amended as
authorized in Subdivision 7 of Section 801 of the Business Corporation Law, to
change the authorized capitalization of the Corporation by deleting Article
"FOURTH" in its entirety and effecting the following Article FOURTH:
"FOURTH: The aggregate number of shares
which the Corporation shall have authority to issue is
(a) Fifty Million (50,000,000) shares of Common Stock,
all of which shall have a par value of One Hundredth
($.0001) of a cent; and (b) Five Million (5,000,000)
shares of Preferred Stock, all of which shall have a
par value of One Hundredth ($.0001) of a cent, in
series and the authority to establish and fix the
designations of each series and the variations in the
relative rights, preferences and limitations as
between series shall be vested in the Board of
Directors of the Corporation. The Board of Directors
is authorized to file an amendment to the Certificate
of Incorporation of the Corporation under Section 805-A
of the BCL setting forth the designations of each
series and the variations in the relative rights,
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<PAGE>
preferences and limitations of each series of
preferred stock without further action by the
shareholders of the Corporation."
FIFTH: The foregoing amendment of the Certificate of
Incorporation of the Corporation was authorized by the vote of the directors
of the Corporation at a duly convened meeting of the Board of Directors of the
Corporation, followed by the vote of the holders of at least a majority of all
the outstanding shares of the Corporation entitled to vote on the said
amendment of the Certificate of Incorporation.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm. under the penalties of perjury, that the
statements contained herein have been examined by us and are true and correct.
Dated as of October 30, 1997.
Panax Pharmaceutical Company Ltd.
/s/ Taffy James Williams
------------------------
By: Taffy James Williams, President
/s/ Tanya Akimova
-----------------
By: Tanya Akimova, Secretary
2
<PAGE>
Certificate of Amendment of the Certificate of Incorporation
of
Panax Pharmaceutical Company Ltd.
Under Section 805 of the Business Corporation Law
_________________________
It is hereby certified that:
FIRST: The name of the corporation is Panax Pharmaceutical
Company Ltd.
SECOND: The Certificate of Incorporation of the corporation was
filed by the Department of State on May 27, 1993.
THIRD: Article FOURTH of the Certificate of Incorporation is
hereby amended to state as follows:
"FOURTH: The aggregate number of shares
which the corporation shall have the authority to
issue is Ten Million (10,000,000), each with a par
value of $.0001."
FOURTH: The effect of the amendment is to reduce the authorized
but unissued 10,000,000 shares, par value $.0001, of capital stock to
8,000,000 shares of the same par value, and there is no change in the
presently issued 2,000,000 shares of capital stock, par value $.0001.
FIFTH: The amendment to the Certificate of Incorporation was
authorized by the unanimous consent of the Directors of the corporation
followed by a vote of the holders of a majority of all the outstanding shares
of the corporation entitled to vote on the said amendment of the Certificate
of Incorporation.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained herein have been examined by us and are true and correct.
/s/ David Zaretsky
------------------
David Zaretsky, President
/s/ Norman Eisner
-----------------
Norman Eisner, Secretary
Date: October 28, 1994
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<PAGE>
Certificate of Amendment of the Certificate of Incorporation
of
Panax Pharmaceutical Company Ltd.
Under Section 805 of the Business Corporation Law
It is hereby certified that:
FIRST: The name of the corporation is Panax Pharmaceutical
Company Ltd.
SECOND: The certificate of incorporation was filed with the
Department of State on May 27, 1993.
THIRD: The Certificate of Incorporation is hereby amended as
authorized in Subdivision 11 of Section 801 of the Business Corporation Law,
to effect the following amendment:
The authorized capital of the corporation is reduced from Twenty
Million (20,000,000) to Twelve Million (12,000,000) shares of Common Stock,
par value One Hundredth ($.0001) of a cent, which the corporation shall have
the authority to use.
FOURTH: To further accomplish such amendment Paragraph "FOURTH"
of the certificate of the incorporation relating to the capital stock of the
corporation is hereby amended as follows:
"FOURTH: The aggregate number of shares which
the corporation shall have the authority to issue is
Twelve Million (12,000,000), all of which shall have
a par value of One Hundredth ($.0001) of a Cent."
FIFTH: The stated capital of the corporation is reduced from
$1,000 to $200 by a change of Ten Million (10,000,000) authorized and issued
shares of Common Stock par value One Hundredth ($.0001) of a Cent into Two
Million (2,000,000) issued shares of Common Stock of the same par value at a
rate of five shares into one share, a rate of one-fifth (1/5) of a new share
for each share issued and outstanding. The Ten Million (10,000,000)
authorized and unissued shares of Common Stock par value One Hundredth
($.0001) of a cent remains unchanged.
SIXTH: The foregoing amendment of the certificate of
incorporation of the corporation was authorized by the vote in writing of all
the members of the Board of Directors of the corporation, followed by the vote
of the holders of at least a majority of all the outstanding shares of the
Corporation entitled to vote on the said amendment of the certificate of
incorporation.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained herein have been examined by us and are true and correct.
August 30, 1994
/s/ David Zaretsky
------------------
David Zaretsky, President
/s/ Norman Eisner
-----------------
Norman Eisner, Secretary
1
<PAGE>
CERTIFICATE OF INCORPORATION
PANAX PHARMACEUTICAL COMPANY LTD.
Under Section 402 of the Business Corporation Law.
The undersigned, for the purpose of forming a corporation pursuant to
Section 402 of the Business Corporation Law of the State of New York, does
hereby certify and set forth:
FIRST: The name of the corporation is PANAX PHARMACEUTICAL
COMPANY LTD.
SECOND: The purposes for which the corporation is formed are:
To engage in any lawful act or activity for which corporations may be
organized under the business corporation law, provided that the corporation is
not formed to engage in any act or activity which requires the act or approval
of any state official, department, board, agency or other body without such
approval or consent first being obtained.
To carry on a general mercantile, industrial, investing and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export,
license as licensor or licensee, lease as lessor or lessee, distribute, job,
enter into, negotiate, execute, acquire, and assign contracts in respect of,
acquire, receive, grant, and assign licensing arrangements, options,
franchises, and other rights in respect of and generally deal in and with at
wholesale and retail, as principal, and as sales, business, special, or
general agent, representative, broker, factor, merchant, distributor, jobber,
advisor, or in any other lawful capacity, goods, wares, merchandise,
commodities, and unimproved, improved, finished, processed and other real,
personal and mixed property of any and all kinds, together with the
components, resultants, and by-products thereof.
To create, manufacture, contract for, buy, sell, import, export,
distribute, job and generally deal in and with, whether at wholesale or
retail, and as principal, agent, broker, factor, commission merchant,
licensor, licensee or otherwise, any and all kinds of goods, wares, and
merchandise, and in connection therewith or independent thereof, to establish
and maintain, by any manner or means, buying offices, distribution centers,
specialty and other shops, stores, mail-order establishments, concessions,
leased departments, and any and all other departments, sites and locations
necessary, convenient or useful in the furtherance of any business of the
corporation.
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To develop, experiment with, manufacture, fabricate, produce,
assemble, buy, lease or otherwise acquire, hold, own, operative, use, install,
equip, maintain, service, process, possess, repossess, remodel recondition,
transport, import, export, sell, lease or otherwise dispose of any generally
to deal in and with any and all kinds of raw materials, products, manufactured
articles and products, equipment, machinery, devices, systems, parts, tools
and implements, apparatus, and goods, wares merchandise and tangible property
of every kind, used or capable of being used for any purpose whatsoever, and
wheresoever located.
To establish, maintain and conduct a general service organization to
purchase, promote and exploit technology from all over the world, particularly
from the Commonwealth of Independent States (CIS) especially Russia; to
exploit and patent such technology in the CIS and the rest of the world; and
to deal in various chemical technologies, particularly those having to do with
unstable regimes. To maintain executive and operating personnel for the
aforementioned purpose and generally to do everything ordinarily done by those
engaged in a similar line of business.
To establish, maintain and conduct a general service organization to
utilize, collect, analyze, synthesize and use various plants, trees and bark
found in the Commonwealth of Independent States (CIS), especially Russia, and
also to deal in all ways of ethnobotanicals including using them medically.
Nothing herein shall be deemed to authorize this corporation to practice the
profession of medicine or any other profession required to be licensed under
Title VIII of the Education Law.
To acquire by purchase, subscription, underwriting or otherwise, and
to own, hold for investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property
of every sort and description and Wheresoever situated, including shares of
stock, bonds, debentures, notes, scrip, securities, evidences of indebtedness,
contracts or obligations of any corporation or association, whether, domestic
or foreign, or of any firm or individual or of the United States or any state,
territory or dependency of the United States or any foreign country, or any
municipality or local authority within or without the United States, and also
to issue in exchange therefor, stocks, bonds or other securities or evidences
of indebtedness of this corporation and, while the owner or holder of any such
property, to receive, collect and dispose of the interest, dividends and
income on or from such property and to possess and exercise in respect thereto
all of the rights, powers and privileges of ownership, including all voting
powers thereon.
To construct, build, purchase, lease or otherwise acquire, equip,
hold, own, improve, develop, manage, maintain, control, operate, lease,
mortgage, create liens upon, sell, convey or otherwise dispose of and turn to
account, any and all plants, machinery, works, implements and things or
property, real and personal, of every kind and description, incidental to,
2
<PAGE>
connected with, or suitable, necessary or convenient for any of the purposes
enumerated herein, including all or any part or parts of the properties,
assets, business and goodwill of any persons, firms, associations or
corporations.
The powers, rights and privileges provided in this certificate are
not to be deemed to be in limitation of similar, other or additional powers,
rights and privileges granted or permitted to a corporation by the Business
Corporation Law, it being intended that this corporation shall have all
rights, powers and privileges granted or permitted to a corporation by such
statute.
THIRD: The office of the corporation is to be located in the
County of New York, State of New York.
FOURTH: The aggregate number of shares which the corporation
shall have the authority to issue is Twenty Million (20,000,000), all of which
shall have a par value of One Hundredth ($0.0001) of a Cent.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the corporation served on him is:
505 Park Avenue
Eighth Floor
New York, New York 10022
SIXTH: The personal liability of directors to the corporation or
its shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment or other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or
a knowing violation of law or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled or that his
acts violated Section 719 of the Business Corporation Law.
IN WITNESS WHEREOF, this certificate has been subscribed to this 26th day
of May, 1993 by the undersigned who affirms that the statements made herein
are true under the penalties of perjury.
/s/ Gerald Weinberg
-------------------
GERALD WEINBERG
90 State Street
Albany, New York
3
<PAGE>
