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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10 - QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING SEPTEMBER 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
VYREX CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0271109
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or Organization)
2159 Avenida de la Playa, La Jolla, California 92037
(Address of principal executive offices)
(619) 454-4446
(Issuer's telephone number)
(Former name, former address and former year, if changed since inception)
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 filing requirements for the past 90 days.
Yes X No
---- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes _____ No_____
APPLICABLE ONLY TO CORPORATIE ISSUES
State the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
As of September 30, 1996, there are 6, 345,700 shares of common stock
outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (check one)
Yes No X
---- -----
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VYREX CORPORATION
FORM 10 - QSB
QUARTERLY REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Facing Sheet 1
Table of Contents 2
Part I FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 7
Item 2 - Management's Discussion and
Analysis of Financial Condition
And Results of Operations 8
Part II OTHER INFORMATION 9
Signature 10
Exhibit Index 11
</TABLE>
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VYREX CORPORATION
(A Development Stage Enterprise)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
------------ -----------
<S> <C> <C>
Assets
Current Assets
Cash $1,994,911 $ 65,995
Short - term investments 2,958,840 --
---------- -----------
Total current assets 4,953,751 65,995
Deferred offering costs -- 98,640
Furniture and equipment, net of
accumulated depreciation of $49,484 in
1996 and $38,685 in 1995 51,111 8,391
Patents, trademarks and copyrights,
net of accumulated amortization of
$10,212 in 1996, and $7,953 in 1995 200,510 132,266
---------- -----------
Total assets $5,205,372 $305,292
========== ===========
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable and accrued liabilities 163,042 $122,382
Notes payable _ 300,000
---------- -----------
Total current liabilities 163,042 422,382
Commitments and contingencies
Stockholders' Equity (deficit):
Preferred stock $.001 par value; 10,000,000
shares authorized; none issued -- --
Common stock, $.001 par value; 50,000,000
Shares authorized; 6,345,700 shares out-
standing in 1996 and 5,203,805 shares
outstanding in 1995 6,346 5,204
Additional paid-in capital 9,227,530 3,285,905
Deficit accumulated during development
stage (4,191,546) (3,408,199)
---------- -----------
Total stockholders equity (deficit) 5,042,330 (117,090)
---------- -----------
$ 5,205,372 $305,292
========== ===========
</TABLE>
See accompanying notes
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VYREX CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996
AND 1995 AND PERIOD FROM INCEPTION THROUGH SEPTEMBER 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Cumulative
September 30 September 30 Amount
----------------------- ----------------------- From
1996 1995 1996 1995 Inception
--------- ------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Revenue from licensing agreement
and sales of access to and option to
acquire technology $ -- $10,000 $ -- $10,000 $310,000
Operating expenses:
Research and development 144,213 58,710 258,457 181,076 1,782,430
General and administrative 285,333 17,711 645,044 133,459 1,515,322
--------- -------- --------- --------- -----------
429,546 76,421 903,501 314,535 3,297,752
--------- -------- --------- --------- -----------
Loss from operations (429,546) (66,421) (903,501) (304,535) (2,987,752)
Other income (expense):
Investment income 54,422 -- 63,808 -- 63,808
Interest income 20,382 167 56,346 1,333 82,298
Charge from issuance of stock
options for arranging bridge
financing -- -- -- -- (1,349,900)
74,804 167 120,154 1,333 (1,203,794)
--------- -------- --------- --------- -----------
Net loss: $(354,742) $(66,254) $(783,347) $(303,202) $(4,191,546)
========= ======== ========= ========= ===========
Loss per share $(0..06) $(0.01) $(0.13) $(0.05)
Shares used in computing loss per
share 6,345,700 6,137,020 5,486,925 6,137,020
========= ========= ========= =========
</TABLE>
See accompanying notes
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VYREX CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996, AND 1995
AND PERIOD FROM INCEPTION THROUGH SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Nine Months Ended Cumulative
September 30, Amount
------------------------- From
1996 1995 Inception
----------- ---------- -----------
<S> <C> <C> <C>
Operating activities:
Net loss $(783,347) $(303,202) $(4,191,546)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 13,058 9,562 59,411
Charges to expenses for value of
notes, stock and stock options
issued as compensation -- -- 1,450,523
Changes in operating assets and liabilities:
Accounts payable and accrued
liabilities 40,660 (18,408) 163,042
----------- --------- -----------
Net cash used in operating activities (729,629) (312,048) (2,518,570)
Investing activities:
Sale of U.S. Treasury bill -- -- 100,000
Purchases of:
Short-term investments (2,958,840) -- (3,057,860)
Furniture and equipment (53,519) -- (100,595)
Patent, trademark and copyright
costs (70,503) -- (204,022)
Organization costs -- -- (695)
Net cash used in investing activities (3,082,862) -- (3,263,172)
----------- ---------- -----------
</TABLE>
5
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(Statements of cash flows continued)
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995 Cumulative
------------- ----------- -----------
<S> <C> <C> <C>
Financing activities:
Advance from potential investor groups:
Proceeds -- -- 100,000
Repayments -- (100,000) (100,000)
Proceeds from notes payable -- -- 450,000
Repayment on note payable (50,000) -- (50,000)
Net proceeds from issuance
of common stock 5,791,407 391,947 7,376,653
---------- -------- ----------
Net cash provided by
financing activities 5,741,407 291,947 7,776,653
---------- -------- ----------
Net increase in cash 1,928,916 (20,101) 1,994,911
Cash, beginning of period 65,995 58,468 --
---------- -------- ----------
Cash, end of period $1,994,911 $ 36,367 $1,994,911
---------- -------- ----------
</TABLE>
See accompanying notes
6
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VYREX CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Organization and business:
Vyrex Corporation (the "Company") was incorporated on January 2,
1991 in the State of Nevada. The Company's operations focus
primarily on the discovery and development of biopharmaceuticals for
the treatment and prevention of various disorders including AIDS,
asthma, cancer and aging. It is involved in various stages of the
investigation and development of several potential therapeutic
products based on its research efforts in biology, chemistry and
medicine.
The Company has been in the development stage since its inception.
Its major activities through September 30, 1996 have been limited to
conducting research and development related to its proposed products
and raising funds for such activities.
Note 2 - Basis of presentation:
The accompanying financial statements have been prepared by the
Company in accordance with generally accepted accounting principles
for interim financial information. Certain information and
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of the Company's management,
the unaudited financial statements contain all adjustments necessary
(consisting of normal recurring accruals) for a fair presentation of
the financial position as of September 30, 1996, and the results of
operations for the three and nine month periods ended September 30,
1996 and 1995. The results of operations for the periods ended
September 30, 1996 are not necessarily indicative of the results to
be expected for the full year.
Note 3 - Stockholders' equity:
In March 1996, the Company sold one million units to the public at $
6.50 per unit resulting in net proceeds to the Company, after
offering costs, of approximately $ 5,700,000. In May 1996, the
Underwriters exercised a portion of their overallotment which
resulted in additional net proceeds to the Company of $ 323,811.
Each unit consists of one share of Vyrex common stock and one
warrant to purchase an additional share of Vyrex common stock at an
exercise price of $ 8 per share.
In June of 1996, in accordance with the terms of the notes, the
Company converted notes payable of $ 250,000, plus accrued interest
of $ 4,392, into 84,798 shares of common stock.
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Note 4 - Share information:
For the periods prior to the initial public offering completed on
March 22, 1996, per share information was computed pursuant to the
rules of the Securities and Exchange Commission (SEC), which require
that common and preferred stock issued by the Company during the 12
months immediately preceding the Company's initial public offering,
plus a number of common shares issuable pursuant to the grant of
stock options during the same period, be included in the calculation
of the shares outstanding using the treasury stock method.
For the periods subsequent to the consummation of the initial public
offering, per share information is computed using the weighted
average number of common shares and common share equivalents
outstanding when applying the treasury stock method. Common share
equivalents result from the outstanding options and warrants to
purchase common stock. Common share equivalents have not been
included in computing net loss per share since the effect would have
been antidilutive.
Note 5 - Subsequent events:
The Company announced that it had entered into a letter of intent to
purchase Nutrition 21, a California limited partnership effective
October 30, 1996. Nutrition 21 is involved in the sale of trace
mineral nutrients, such as selenium and chromium and is the
exclusive supplier of chromium picolinate. The Company has agreed
to purchase Nutrition 21 for $ 18 million in a combination of cash
and notes (which are convertible into Vyrex Common Stock) payable
over a period of four years. The letter is subject to numerous
conditions precedent including due diligence and preparation and
approval of definitive agreements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations:
Loss from operations was $ 429,546 for the period ended September
30, 1996 as compared to $ 66,421 for the similar period in 1995.
The composition of these figures analyzed in their respective
functional areas is as follows: (1) for the three month period of
1996, research and development expenses amounted to $ 144,213 as
compared to $ 58,710 in the similar period of 1995, an increase of $
85,503 and (2) general and administrative expenses in the same
period of 1996 versus 1995 were $ 285,333 compared to $ 17,711
amounting to an increase of $ 267,622.
Other income for the three month periods ended September 30, 1996
and September 30, 1995 were $ 78,804 and $ 167, respectively. For
the nine month periods it was $ 120,154 versus $ 1,333,
respectively. The difference resulted primarily from interest
income.
Liquidity and capital resources:
The Company had a working capital deficit of approximately $ 356,000
at December 31, 1995. As a result of the Company's initial public
offering of its common stock effective March 22, 1996, which netted
proceeds of approximately $ 5.7 million, the Company has working
capital of approximately $ 4.79 million as of September 30, 1996.
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During the balance of this year, the Company's principal capital
requirements will be related to engaging the employment of
professional and other qualified personnel for research projects and
other corporate positions.
The Company believes that its current capital resources are
sufficient to cover its anticipated requirements through 1997.
PART II: OTHER INFORMATION
Item 1 - Legal proceedings
Not applicable
Item 2 - Changes in securities
Not applicable
Item 3 - Defaults upon senior securities
Not applicable
Item 4 - Submission of matters to a vote of security holders
Not applicable
Item 5 - Other information
Not applicable
Item 6 - Exhibits and reports on Form 8-K
(a) Exhibit 27
(b) Reports on Form 8-K
9
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Vyrex Corporation
Date: November 14, 1996 By: /s/ JOHN J. ROTH
------------------------
John J. Roth
Chief Financial Officer
(Principal Financial Officer)
10
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EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,953,751
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,953,751
<PP&E> 251,620
<DEPRECIATION> 49,484
<TOTAL-ASSETS> 5,205,372
<CURRENT-LIABILITIES> 163,042
<BONDS> 0
0
0
<COMMON> 9,233,876
<OTHER-SE> (4,191,546)
<TOTAL-LIABILITY-AND-EQUITY> 5,205,372
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 429,546
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (354,742)
<INCOME-TAX> 0
<INCOME-CONTINUING> (354,742)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (354,742)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> 0
</TABLE>
