<PAGE> 1
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 ending March 31, 1996
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
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 ISSUERS
State the number of shares outstanding of each of the Issuer's classes of common
stock, as of the latest practicable date.
As of March 31, 1996, there are 6,203,805 shares of common stock
outstanding.
<PAGE> 2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-QSB
QUARTERLY REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Facing Sheet 1
Table of Contents 2
Part 1 Financial Information
Item 1 Financial Statements
Balance Sheet 3
Statement of Operations 4
Statement of Cash Flows 5
Notes to Financial Statements 6
Item 2 Management Discussion & Analysis of
Financial Condition and Results of Operation 7
Part 2 Other Information 8
Signature 9
</TABLE>
<PAGE> 3
VYREX CORPORATION
(A Development Stage Enterprise)
BALANCE SHEET
(Unaudited)
MARCH 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets - cash $ 5,579,879
Furniture and equipment, at cost, net of
accumulated depreciation of $39,862 7,214
Patents, trademarks and copyrights, net of
accumulated amortization of $8,593 131,626
-----------
Total $ 5,718,719
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 48,651
Notes payable 300,000
-----------
Total current liabilities 348,651
-----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value; 10,000,000
shares authorized; none issued
Common stock, $.001 par value; 50,000,000
shares authorized; 6,203,805 shares issued
and outstanding 6,204
Additional paid-in capital 8,880,479
Deficit accumulated during the development stage (3,516,615)
-----------
Total stockholders' equity 5,370,068
-----------
Total $ 5,718,719
===========
</TABLE>
See Notes to Financial Statements.
-3-
<PAGE> 4
VYREX CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
AND PERIOD FROM INCEPTION THROUGH MARCH 31, 1996
<TABLE>
<CAPTION>
Cumulative
Three Months Ended Amount
March 31, From
1996 1995 Inception
----------- ----------- -----------
<S> <C> <C> <C>
Revenue from licensing agreement
and sale of access to and option
to acquire technology $ 310,000
-----------
Operating expenses:
Research and development $ 60,448 $ 66,763 1,584,421
General and administrative 48,153 38,737 918,431
----------- ----------- -----------
Totals 108,601 105,500 2,502,852
----------- ----------- -----------
Other income (expense):
Interest income 185 319 26,137
Charge from issuance of stock
options for arranging bridge
financing (1,349,900)
----------- ----------- -----------
Totals 185 319 (1,323,763)
----------- ----------- -----------
Net loss $ (108,416) $ (105,181) $(3,516,615)
=========== =========== ===========
Net loss per common share $ (.02) $ (.02) $ (.76)
=========== =========== ===========
Weighted average number of common
shares outstanding 5,302,706 4,969,076 4,634,586
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
-4-
<PAGE> 5
VYREX CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED MARCH 31, 1995 AND 1995
AND PERIOD FROM INCEPTION THROUGH MARCH 31, 1996
<TABLE>
<CAPTION>
Cumulative
Three Months Ended Amount
March 31, From
1996 1995 Inception
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities:
Net loss $ (108,416) $ (105,181) $(3,516,615)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 1,817 3,188 48,170
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 (73,731) (38,350) 48,651
----------- ----------- -----------
Net cash used in operating
activities (180,330) (140,343) (1,969,271)
----------- ----------- -----------
Investing activities:
Sale of U.S. Treasury bill 100,000
Purchases of:
U.S. Treasury bill (99,020)
Furniture and equipment (47,076)
Patent, trademark and copyright
costs (133,519)
Organization costs (695)
-----------
Net cash used in investing
activities (180,310)
-----------
Financing activities:
Advance from potential investor
group:
Proceeds 100,000
Repayments (100,000) (100,000)
Proceeds from notes payable 450,000
Net proceeds from issuances of
common stock 5,694,214 302,190 7,279,460
--------- ------- ---------
Net cash provided by
financing activities 5,694,214 202,190 7,729,460
----------- ----------- -----------
Net increase in cash 5,513,884 61,847 5,579,879
Cash, beginning of period 65,995 56,468
----------- ----------- -----------
Cash, end of period $ 5,579,879 $ 118,315 $ 5,579,879
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
-5-
<PAGE> 6
VYREX CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
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 March 31, 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. Certain information and footnote 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 disclosures made are adequate to make the
information presented not misleading, and the financial
statements contain all adjustments necessary to present
fairly the financial position as of March 31, 1996, results
of operations for the three months ended March 31, 1996 and
1995 and cash flows for the three months ended March 31, 1996
and 1995.
The results of operations for the three months ended March
31, 1996 are not necessarily indicative of the results to be
expected
See Notes to Financial Statements.
-6-
<PAGE> 7
VYREX CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
for the full year.
Note 3 - Initial public offering:
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.
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.
* * *
-7-
<PAGE> 8
Item 2: Management's discussion and analysis of financial
condition and results of operations
Results of Operations:
Operating results of the first quarter ending March 31, 1996 vs. March
31, 1995 show a net loss of $108,601 vs. a net loss of $ 105,500, both being
unaudited figures for the respective period, a small increase of approximately
3% for 1996 over the same period in 1995.
Research and development expenses were $ 60,448 for 1996 as compared to
$ 66,765 for 1995 a decline of approximately $ 7,000 and general and
administrative expenses increased approximately $ 10,000 for the same periods
for the total net increase of $ 3,000 as reflected above.
The quarter period ending March 31, 1995 had no interest charges
compared to an interest expense of $ 4,336 for the quarter period ending March
31, 1996. This change represents accrual of simple interest at the rate of 7%
per annum on bridge loans of $ 250,000 provided during the later months of 1995
by five parties unaffiliated with the Company. The bridge loans and accrued
interest are convertible at the sole election of the Company into shares of
common stock. An amount of up to all the principal and accrued interest
remaining unpaid on the date of conversion may be paid in shares of common stock
at the rate of $ 3.00 per share.
Liquidity and Capital Resources
From its inception in 1991 through February 29, 1996, the Company
financed its operations primarily through private placement of equity securities
which provided net proceeds of approximately $ 1,844,000, bridge loans of $
350,000 and $ 300,000 in 1993 in exchange for providing access to certain
proprietary information concerning ongoing research and development projects by
the Company.
The working capital of the Company on March 31, 1995 was $ 24,434
compared to March 31, 1996 with working capital of $ 5,231,229. The increase
arising as a result of the Initial Public Offering made by the Company which was
effected March 21, 1996. The net proceeds of the Public Offering was $
5,696,250.
The Company believes that its current capital resources are sufficient
to cover its anticipated requirement for the next 12 months.
8
<PAGE> 9
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 - 7
(b) Reports on Form 8K
9
<PAGE> 10
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: May 13, 1996 By: /s/ JOHN J. ROTH
-------------------------------------
John J. Roth
Chief Financial Officer
(Principal Financial Officer)
10
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,579,879
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,579,879
<PP&E> 187,295
<DEPRECIATION> 48,455
<TOTAL-ASSETS> 5,718,719
<CURRENT-LIABILITIES> 348,651
<BONDS> 0
0
0
<COMMON> 8,886,683
<OTHER-SE> (3,516,615)
<TOTAL-LIABILITY-AND-EQUITY> 5,718,719
<SALES> 0
<TOTAL-REVENUES> 185
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 108,601
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (108,416)
<INCOME-TAX> 0
<INCOME-CONTINUING> (108,416)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (108,416)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
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