<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10 - QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDING JUNE 30, 1996
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 CORPORATE 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 June 30, 1996, there are 6,345,700 shares of common stock
outstanding.
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VYREX CORPORATION
FORM 10 - QSB
QUARTERLY REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Facing Sheet 1
Table of Contents 2
Part I FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheet 3
Statement of Operations 5
Statement of Cash Flows 6
Notes to Financial Statements 8
Item 2 - Management's Discussion and
Analysis of Financial Condition
And Results of Operations 9
Part II OTHER INFORMATION 11
Signature 12
</TABLE>
2
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VYREX CORPORATION
(A Development Stage Enterprise)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS June 30, 1996 December 31, 1995
------------- -----------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash - Banks and on hand $ 2,531,124 $ 65,995
Short - term investments 2,927,034 --
----------------- -----------------
Total current assets 5,458,158 65,995
Deferred offering costs -- 98,640
Furniture and equipment at cost, net of
accumulated depreciation of $44,682 in 52,174 8,391
1996 and $38,685 in 1995
Patents, trademarks and copyrights,
net of accumulated amortization of
$9,459 in 1996, and $7,953 in 1995 155,968 132,266
---------------- ----------------
Total assets $ 5,666,300 $ 305,292
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued liabilities $ 272,924 $ 122,382
Notes payable -- 300,000
---------------- ----------------
Total current liabilities 272,924 422,382
Commitments and contingencies
Stockholders' Equity (deficit):
Preferred stock $.001par value; 10,000,000
shares authorized; none issued -- --
Common stock, $.001 par value; 50,000,000
</TABLE>
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(balance sheets continued)
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
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 9,223,834 3,285,905
Deficit accumulated during development
stage (3,836,804) (3,408,199)
--------------- --------------
Total stockholders equity (deficit) 5,393,376 (117,090)
--------------- --------------
Total $ 5,666,300 $ 305,292
=============== ==============
</TABLE>
4
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VYREX CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1996
AND 1995 AND PERIOD FROM INCEPTION THROUGH JUNE 30, 1996
<TABLE>
<CAPTION>
Cumulative
Three Months Ended Six Months Ended Amount
June 30 June 30 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 $ -- $ -- $ -- $ -- $ 310,000
OPERATING EXPENSES:
Research & Development 53,796 55,603 114,244 122,366 1,638,217
General & Administrative 311,558 77,011 359,711 115,748 1,229,989
--------- --------- --------- --------- ----------
Totals 365,354 132,614 473,955 238,114 2,868,206
--------- --------- --------- --------- ----------
LOSS FROM OPERATIONS: (365,354) (132,614) (473,955) (238,114) (2,558,206)
OTHER INCOME (EXPENSE):
Interest Income 45,165 847 45,350 1,166 71,302
Charge from issuance of stock
options for arranging bridge
financing (1,349,900)
--------- --------- --------- --------- ----------
Totals 45,165 847 45,350 1,166 (1,278,598)
========= ========= ========= ========= ==========
Net Loss: $(320,189) $(131,767) $(428,605) $(236,948) $(3,836,804)
Loss per share $ (.05) $ (.02) $ (.07) $ (.04)
========= ========= ========= =========
Shares Used in computing loss per
share 6,308,954 6,137,020 5,805,566 6,137,020
========= ========= ========= =========
</TABLE>
5
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VYREX CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
SIX MONTH PERIODS ENDED JUNE 30, 1996, AND 1995
AND PERIOD FROM INCEPTION THROUGH JUNE 30, 1996
<TABLE>
<CAPTION>
Cumulative
Six Months Ended Amount
June 30, From
1996 1995 Inception
----------------- -------------- --------------
<S> <C> <C> <C>
Operating activities:
Net loss $ (428,605) $ (236,948) $ (3,836,804)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 7,503 6,375 53,856
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 150,542 64,614 272,924
----------------- -------------- --------------
Net cash used in operating
activities (270,560) (295,187) (2,059,501)
----------------- -------------- --------------
Investing activities:
Sale of U.S. Treasury bill 100,000
Purchases of:
U.S. Treasury bill (2,927,034) -- (3,026,054)
Furniture and equipment (49,780) -- (96,856)
Patent, trademark and copyright
costs -- -- (158,727)
Organization costs (25,208) -- (695)
----------------- -------------- --------------
Net cash used in investing
activities (3,002,022) -- (3,182,332)
----------------- -------------- --------------
Financing activities:
Advance from potential investor
group:
Proceeds -- -- 100,000
Repayments -- (100,000) (100,000)
</TABLE>
6
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(statement of cash flows continued)
<TABLE>
<CAPTION>
1996 1995 Cumulative
---------- -------- ----------
<S> <C> <C> <C>
Proceeds from notes payable -- -- 450,000
Repayment on note payable (50,000) -- (50,000)
Net proceeds from issuances of
common stock 5,787,711 313,470 7,372,957
---------- -------- ----------
Net cash provided by
financing activities 5,737,711 313,470 7,772,957
---------- -------- ----------
Net increase in cash 2,465,129 18,283 2,531,124
Cash, beginning of period 65,995 56,468 --
---------- -------- ----------
Cash, end of period $2,531,124 $ 74,751 $2,531,124
========== ======== ==========
</TABLE>
See Notes to Financial Statements
7
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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 developmental stage since its
inception. Its major activities through June 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 interior 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 financial statements
contain all adjustments necessary (consisting of normal
recurring accruals) for a fair presentation of the financial
position as of June 30, 1996, results of operations for the
three and six month periods ended June 30, 1996, and 1995.
The results of operations for the six months ended June 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 a $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 their over allotment
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 1996, in accordance with the terms of the notes, the
Company converted a notes payable of $250,000, plus accrued
interest of $4,392, into 84,798 shares of common stock.
8
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(notes to financial statements continued)
Note 4 - Per 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 the 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 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.
9
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Research and development expenses for the three-month period ended June 30,
1996 versus June 30, 1995 showed a slight reduction of $1,800 or 3% and for the
six-month period ended June 30, 1996, a decrease of $8,000 or 7% from the same
period in the prior year. These decreases were due to the postponement of
certain research and development projects in an effort to conserve corporate
resources.
General and administrative expenses increased considerably in both the three
and six-month periods ending June 30, 1996 by approximately $124,000 or 161%
and $134,000 or 115%, respectively, as compared to the same periods in the
prior year. These additional expenses resulted from increases in staffing
levels.
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 $5.2 million at June
30, 1996.
During the balance of the year, the Company's principal capital requirements
will be related to the capital expenditures associated with the renovation and
improvement of existing facilities, in addition to engaging the employment of
professional, 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.
10
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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) Not applicable
(b) Reports on Form 8-K
11
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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: August 14, 1996 By: /s/ John J. Roth
-------------------------
John J. Roth
Chief Financial Officer
(Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,458,158
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,548,158
<PP&E> 208,142
<DEPRECIATION> 44,682
<TOTAL-ASSETS> 5,666,300
<CURRENT-LIABILITIES> 272,924
<BONDS> 0
0
0
<COMMON> 9,230,180
<OTHER-SE> (3,836,804)
<TOTAL-LIABILITY-AND-EQUITY> 5,666,300
<SALES> 0
<TOTAL-REVENUES> 45,165
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 365,354
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (320,189)
<INCOME-TAX> 0
<INCOME-CONTINUING> (320,189)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (320,189)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>
