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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 333-34765
Ixion Biotechnology, Inc..
(Exact Name of Small Business Issuer as Specified in Its Charter)
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Delaware 59-3174033
State of incorporation) (I.R.S. Employer Identification
No.)
13709 Progress Blvd., Box 13
Alachua, FL 32615
(Address of principal executive offices)
Registrant's telephone number: 904-418-1428
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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
The number of shares of the registrant's common stock, par value $0.01 per
share, outstanding as of November 11, 1998 was 2,508,744.
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<PAGE>
Index to Form 10QSB
Part 1 - Financial Information Page
Item 1. Financial Statements (unaudited)
Condensed Balance Sheet September 30, 1998.........................2
Condensed Statements of Operations - Three and Nine Months Ended
September 30, 1998 and 1997 and for the period March 25, 1993
(Date of Inception) through September 30, 1998.......................3
Condensed Statements of Cash Flows - Nine Months Ended
September 30, 1998 and 1997 and for the period March 25, 1993
(Date of Inception) through September 30, 1998.......................5
Notes to Condensed Financial Statements..............................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations or Plan of Operation......................8
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
13
Item 6. Exhibits and Reports on Form 8-K....................................13
Signatures...................................................................14
Exhibit Index................................................................15
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Balance Sheet
September 30, 1998
Unaudited
Assets
Current Assets:
Cash and cash equivalents $ 39,073
Accounts receivable 1,811
Prepaid expenses 140
Other current assets 500
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Total current assets 41,524
Property and Equipment, net 30,349
Other Assets:
Patents and patents pending, net 280,466
Other, net 6,513
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Total other assets 286,979
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Total Assets $ 358,852
===================
Liabilities and Capital Deficiency
Current Liabilities:
Accounts payable $ 61,721
Bridge loans payable to officers 250,000
Current portion of notes payable 8,975
Accrued expenses 48,501
Interest payable 1,797
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Total current liabilities 370,994
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Long-Term Liabilities:
Notes payable 620,535
Liability under research agreement 42,317
Deferred rent, including accrued interest 17,822
Deferred fees and salaries, including accrued interest 666,385
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Total long-term liabilities 1,347,059
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Total liabilities 1,718,053
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Capital Deficiency:
Common stock, $.01 par value; authorized 4,000,000,
issued and outstanding 2,508,144 shares at September 30 25,081
Common stock warrants outstanding 35,494
Additional paid-in capital 1,571,322
Deficit accumulated during the development stage (2,649,623)
Less unearned compensation (341,475)
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Total capital deficiency (1,359,201)
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Total Liabilities and Capital Deficiency $ 358,852
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See accompanying notes to condensed financial statements
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended
September 30,
__1998__ __1997__
Unaudited
Revenues:
<S> ................................... <C> <C>
Income under research agreement .... $ 0 $ 0
Income from SBIR Grant ............. 0 53,650
Interest income .................... 152 1,744
Other income ....................... 981 954
Total revenues ............... 1,133 56,348
Expenses:
Operating, general and administrative 107,135 117,287
Research and development ............ 80,771 110,154
Interest ............................ 40,723 29,106
Total expenses ............... 228,629 256,547
Net Loss .............................. $ (227,496) $ (200,199)
Basic and Diluted Net Loss per Share .. $ (0.09) $ (0.08)
Weighted Average Common Shares ........ 2,505,361 2,464,644
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
<TABLE>
<CAPTION>
For the Period
March 25,
Statements of Operations 1993 (Date
of inception)
Nine Months Ended through
September 30, September 30,
__1998__ __1997__ ____1998____
Unaudited Unaudited
Revenues:
<S> ................................... <C> <C> <C>
Income under research agreement $ 0 $ 135,922 $ 275,001
Income from SBIR Grant 0 71,650 91,650
Interest income 367 9,223 23,334
Other income 3,257 2,752 17,805
Total revenues 3,624 219,547 407,790
Expenses:
Operating, general and administrative 307,097 290,271 1,405,038
Research and development 269,474 432,378 1,355,744
Interest 97,317 83,858 296,601
Total expenses 673,888 806,507 3,057,413
Net Loss $ (670,264) $ (586,960) $ (2,649,623)
Basic and Diluted Net Loss per Share $ (0.27) $ (0.24)
Weighted Average Common Shares 2,482,687 2,456,412
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Statements of Cash Flows
<TABLE>
<CAPTION>
For the period
March 25,
1993 (Date
of inception)
Nine Months Ended through
September 30, September 30,
__1998__ __1997__ ____1998____
Unaudited Unaudited
Cash Flows from Operating Activities:
<S> <C> <C> <C>
Net loss $ (670,264) $ (586,960) $ (2,649,623)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 8,412 8,542 32,812
Amortization 2,367 2,235 6,211
Amortization of debt discount 42,876 42,875 119,100
Stock warrants issued under license
agreement - - 20,465
Stock options/warrants issued for
consulting services - - 30,000
Stock compensation 68,274 121,640 325,087
Decrease (increase) in prepaid expenses
and other current assets 1,262 7,666 (465)
Decrease (increase) in accounts receivable (41) 3,637 (1,811)
Increase (decrease) in deferred revenue - (100,000) -
Increase (decrease) in liability under
research agreement - 42,317 42,317
Increase (decrease) in accounts payable
and accrued expenses 15,700 12,322 110,893
Increase in deferred fees and salaries 189,969 22,828 639,833
Increase in deferred rent 10,445 - 16,931
Increase in interest payable - 1,593 33,198
Net cash used in operating
activities (331,000) (421,305) (1,275,052)
Cash Flows from Investing Activities:
Purchase of property and equipment (2,302) (5,758) (34,199)
Organization Costs - - (436)
Payments for patents and patents pending (62,154) (50,450) (271,924)
Net cash used in investing
activities (64,456) (56,208) (306,559)
Cash Flows from Financing Activities:
Bridge loans payable to officers 175,000 - 280,307
Proceeds from issuance of convertible
notes payable - - 787,270
Proceeds from issuance of common stock 275,500 - 698,200
Principal reductions in notes payable (6,482) (9,874) (17,452)
Deferred registration costs IPO - (42,049) -
Payment of deferred registration costs - IPO (53,932) - (116,561)
Decrease (increase) in note receivable from
shareholder - 6,000 -
Payment of loan costs - - (11,080)
Net cash provided by (used in)
financing activities 390,086 (45,923) 1,620,684
Net Increase (Decrease) In Cash and Cash Equivalents (5,370) (523,436) 39,073
Cash and Cash Equivalents at Beginning of Period 44,443 611,539 -
Cash and Cash Equivalents at End of Period $ 39,073 $ 88,103 $ 39,073
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Notes to Condensed Financial Statements
Nine Month Period Ended September 30, 1998
1. Basis Of Presentation:
The accompanying unaudited condensed financial statements for the three and nine
months ended September 30, 1998 and 1997, and for the period March 25, 1993
(date of inception) through September 30, 1998 have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These interim financial statements should be read in conjunction with the
December 31, 1997 financial statements and related notes included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997. In
the opinion of the Company, the accompanying unaudited condensed financial
statements contain all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the Company's financial position, results
of operations, and cash flows for the periods presented. The results of
operations for the interim period ended September 30, 1998 are not necessarily
indicative of the results to be expected for the full year.
2. Income Taxes:
The components of the Company's net deferred tax asset and the tax effects of
the primary temporary differences giving rise to the Company's deferred tax
asset are as follows as of September 30, 1998:
Deferred compensation ......... $ 263,000
Net operating loss carryforward 783,000
Deferred tax asset ............ 1,046,000
Valuation allowance ........... $(1,046,000)
Net deferred tax asset ........ $ __0__
3. Stockholder's Equity
In December, 1997, the Company commenced the public offering of up to 400,000
Units of newly-issued securities for an aggregate of $4,000,000. Each Unit
consists of one share of Common Stock, $0.01 par value, and a .25 Charitable
Benefit Warrants. Each whole Charitable Benefit Warrant entitles the holder to
purchase one share of the Common Stock at a price of $20.00 per share. The
Company requires the proceeds of the public offering to meet its planned
operating requirements through December 31, 1998. The Company had received
proceeds of $285,500 through September 30, 1998. The offering will continue
until all Units have been sold or until December 10, 1998, unless sooner
terminated or extended. If the proceeds from the offering prove to be
insufficient, then the Company would be required to obtain additional funds
through equity or debt financing, strategic alliances with corporate partners,
or through other sources.
There can be no assurance that the Company will be successful in obtaining the
required financing. Under current circumstances, the Company's ability to
continue as a going concern depends upon obtaining additional financing.
Offering costs of $116,561 have been offset against the proceeds of the offering
through September 30, 1998.
In February of 1998, 8,400 shares of stock previously issued to an employee in
exchange for services to be rendered were returned to the Company when the
employee resigned. This resulted in a reversal of paid-in capital and unearned
compensation, but had no net effect on capital deficiency.
On July 1, 1998, the Company granted an additional 17,000 shares of stock under
the Board Retainer Plan. Compensation expense recognized in connection with
these awards for the nine months ended September 30, 1998 was $18,500 and
unearned compensation of $151,500 remains to be recognized.
4. Stock Options
On July 1, 1998, the Company granted ten-year options under the 1994 Stock
Option Plan to purchase 62,000 shares of Common Stock at an exercise price of
$10.00 per share. Stock options are exercisable only if vested. 12,500 of such
options, granted to members of the Scientific Advisory Board, vest over one
year; the remainder vest over five years. In addition, as of September 30, 1998,
5,500 options previously granted to terminated employees expired unexercised.
5. Related Party Transactions
In 1997, the Company engaged the services of a printer in connection with its
public offering. The printer is partially-owned by the Companys President, who
is also CEO of the printer. Through September 30, 1998, the printer has charged
$13,033 in connection with its services.
In addition, the Chairman and Chief Executive Officer and the President of the
Company have agreed to extend the Company not less than $150,000 and not less
than $155,000, respectively, in bridge loans. Interest on the bridge loans from
officers is at 8% but can be reset annually, at the election of either party, to
the prime rate in effect on January 1 of any given year, plus 3%. Under these
agreements, the Company borrowed a total of $250,000, which was still
outstanding at September 30, 1998.
6. Subsequent Events
Through November 11, 1998, the Company has received proceeds of $291,500 by
selling 29,150 units of Common Stock and Charitable Benefit Warrants in its
initial public offering at $10.00 per unit
On October 8, 1998, upon the expiration of its lease at the Biotechnology
Development Institute, the Company relocated to comparable rental facilities
across the street from its former location. The new lease will be for increased
space and rent and for a three-year term with two one-year renewal options. The
estimated annual payments under the new lease (including amortization of tenant
improvements and an emergency generator) will be approximately $84,000 per year
(not including utilities) compared to the current annual rent (including
utilities) of $43,200. The Company will continue to have access, as a graduate
affiliate, to the Biotechnology Development Institute's specialized facilities,
centralized equipment, and core laboratories. Relocation will not materially
affect the Company's research and development operations; however, the Company
has incurred relocation expenses and will be obliged to purchase or lease
laboratory and office furnishings and equipment. The Company estimates that the
principal amount of such lease or purchase is approximately $100,000.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations or Plan of Operations.
The following discussion and analysis should be read in conjunction with
the Condensed Financial Statements and the related Notes thereto included
elsewhere in this report. This report contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
These and additional risk factors are identified in our annual report to the
Securities and Exchange Commission filed on forms 10-KSB and in other SEC
filings.
Overview
The Company is a development stage, biotechnology company. The Company is
considered to be in the development stage because it is devoting substantially
all of its efforts to establishing its business and its planned principal
operations have not commenced.
Since its inception in March of 1993, the Company's efforts have been
principally devoted to research and development, securing patent protection, and
raising capital. The Company has not received any revenues from the sale of
products. In June 1998, the Company reached an agreement in principle with the
University of Florida Diagnostic Referral Laboratories (the "DRL"), pursuant to
which the DRL is offering the Company's initial product, a molecular diagnostic
test, the XEntrIx TM Oxalobacter formigenes Monitor, to physicians. Under this
agreement, the Company may generate revenue during 1998; however it does not
expect any of its other product candidates to be commercially available for at
least the next several years. From inception through September 30, 1998, the
Company has sustained cumulative losses of $2,649,623. These losses have
resulted primarily from expenditures incurred in connection with general and
administrative activities, research and development, patent preparation and
prosecution, and interest.
The Company expects to continue to incur substantial research and
development costs in the future resulting from ongoing research and development
programs, manufacturing of products for use in clinical trials and preclinical
and clinical testing of the Company's products. The Company also expects that
general and administrative costs, including patent and regulatory costs,
necessary to support clinical trials, research and development, manufacturing,
and the creation of a marketing and sales organization, if warranted, will
increase in the future, assuming the Company can finance the increased
requirements. Accordingly, the Company expects to incur increasing operating
losses for the foreseeable future. There can be no assurance that the Company
will ever achieve profitable operations.
The Company has only a limited operating history upon which an evaluation
of the Company and its prospects can be based. The risks, expenses and
difficulties encountered by companies at an early stage of development must be
considered when evaluating the Company's prospects. To address these risks, the
Company must, among other things, successfully develop and commercialize its
product candidates, secure all necessary proprietary rights, respond to
competitive developments, and continue to attract, retain and motivate qualified
persons. There can be no assurance that the Company will be successful in
addressing these risks.
The operating expenses of the Company will depend on several factors,
including the level of research and development expenses and its success in
raising capital. Research and development expenses will depend on the progress
and results of the Company's product development efforts, which the Company
cannot predict. Management may in some cases be able to control the timing of
development expenses in part by accelerating or decelerating preclinical testing
and clinical trial activities. As a result of these factors, the Company
believes that period-to-period comparisons in the future are not necessarily
meaningful and should not be relied upon as an indication of future performance.
Due to all of the foregoing factors, it is possible that the Company's operating
results will be below the expectations of market analysts, if any, and
investors. In such event, the prevailing market price, if any, of the Common
Stock would likely be materially adversely affected.
Results of Operations
Three Months Ended September 30, 1998 and 1997
Income from a Small Business Innovation Research ("SBIR") grant decreased
from $53,650 in the third quarter of 1997 to $0 in the third quarter of 1998.
The SBIR grant expired at the end of 1997. Interest income decreased 91% from
$1,744 in the third quarter of 1997 to $152 in the third quarter of 1998. This
decrease was attributable to the expenditure of the proceeds from the 1996 sale
of Unsecured Convertible Notes which were invested during 1997. Interest income
relating to the proceeds of the Unsecured Convertible Notes ceased in 1998.
Operating, general and administrative expenses decreased 8.7% from $117,287
in the third quarter of 1997 to $107,135 in the equivalent period of 1998. These
decreased expenses reflect decreased personnel, offset by increased advertising
and promotion expense, and increased legal expenses in the third quarter of 1998
compared to the third quarter of 1997. The Company expects its general and
administrative expense to slightly increase during the remainder of 1998 as a
result of increased amortization of capitalized patent costs as new patents are
issued, continued amortization of capitalized private placement expenses, and
increased legal and accounting expenses resulting from filings with the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
Research and development expenditures consist primarily of payroll-related
expenses of research and development personnel, laboratory supplies, animal
supplies, laboratory rent, depreciation on laboratory equipment, development
activities, payments for sponsored research, and payments to scientific and
regulatory consultants. Research and development expenses decreased 26.7% from
$110,154 in the third quarter of 1997 to $80,771 in the third quarter of 1998,
mainly due to a reduction of one technician (and accompanying reduction in lab
supplies), the termination of the Company's consulting contract with its
regulatory advisor, and a significant reduction in the compensation of the
Company's scientific advisors resulting from a decline in stock compensation
expense. The Company anticipates that its research and development expenses will
increase slightly during the remainder of 1998.
Interest expense increased 39.9% from $29,106 in the third quarter of 1997
to $40,723 in the third quarter of 1998 due primarily to interest on bridge
loans from officers, and the compounding of interest on deferred fees and
salaries, including deferred interest, payable to related parties. Interest
expense will continue to increase during 1998, as a result of the continued
compounding of interest on deferred fees and salaries accounts and additional
bridge loans and other working capital loans the Company expects to receive.
Nine Months Ended September 30, 1998 and 1997
The Company's revenues under a research agreement with Genetic Institute
("GI") decreased from $135,922 in the nine months ended September 30 of 1997 to
$0 for that period in 1998.. Revenues under the Company's SBIR grant declined
from $71,650 in the first nine months of 1997 to $0 for that period in 1998.
Revenues under the GI agreement and the SBIR ceased at the end of 1997.
Interest income decreased 96% from $9,223 in the first nine months of 1997
to $367 in the first nine months of 1998. This decrease was attributable to the
expenditure of the proceeds from the sale of Unsecured Convertible Notes in the
last quarter of 1996, which proceeds had been invested during 1997. Interest
income relating to the investment of proceeds of the Unsecured Convertible Notes
ceased in the first quarter of 1998.
Operating, general and administrative expenses increased 1.4% from $302,771
in the first nine months of 1997 to $307,097 in the equivalent period of 1998.
These increased expenses reflect increased legal expenses, increased advertising
and promotion, and increased legal and accounting fees relating to Securities
and Exchange Commission filing and reporting, offset to some degree by decreased
directors' fees, compared to the first nine months of 1997. The Company expects
its general and administrative expense to modestly increase during 1998 as a
result of increased amortization of capitalized patent costs as new patents are
issued, and increased legal and accounting expenses resulting from filings with
the Securities and Exchange Commission under the Securities Exchange Act of
1934.
Research and development expenditures consist primarily of payroll-related
expenses of research and development personnel, laboratory supplies, animal
supplies, laboratory rent, depreciation on laboratory equipment, development
activities, payments for sponsored research, and payments to scientific and
regulatory consultants. Research and development expenses decreased 35% from
$419,878 in the first nine months of 1997 to $269,474 in the first nine months
of 1998, primarily as a result of a temporary reduction in research and
development personnel during the first quarter of 1998, and concomitant
reduction in lab supplies, together with a reduction of one technician for most
of 1998, the termination of the Company's consulting contract with its
regulatory advisor, and a significant reduction in the compensation of the
Company's scientific advisors resulting from a decline in stock compensation
expense.
Interest expense increased 16% from $83,858 in the first nine months of
1997 to $97,317 in the first nine months of 1998 due primarily to interest on
bridge loans from officers, and the compounding of interest on deferred fees and
salaries, including deferred interest, payable to related parties. Interest
expense will continue to increase during 1998, as a result of the continued
compounding of interest on deferred fees and salaries accounts and additional
bridge loans from officers that the Company expects to receive.
Liquidity and Capital Resources
In December, 1997, the Company commenced the public offering of 400,000
Units of newly issued securities, for an aggregate of $4,000,000. Each Unit
consists of one share of Common Stock, $0.01 par value, and .25 Charitable
Benefit Warrants. Each whole Charitable Benefit Warrant entitles the holder to
purchase one share of Common Stock at a price of $20.00 per share. The Offering
is being made in ten states, primarily over the Internet, directly by the
Company, except in Florida where sales must be made through a broker. There is
no minimum number of Units to be sold in the Offering, and all funds received
will go immediately to the Company. The offering will be terminated upon the
earliest of: the sale of all Units, December 10, 1998 (unless extended), or the
date on which the Company decides to close the offering. At November 11, 1998, a
total of 29,150 Units ($291,500) had been sold pursuant to the offering.
During 1997, the Company's development activities were funded primarily by
a private placement transaction in which it sold Unsecured Convertible Notes for
an aggregate gross consideration of $787,270. In addition, the Chairman and
Chief Executive Officer and the President of the Company have entered into
agreements to extend the Company up to $150,000 and up to $140,000,
respectively, in bridge loans. Interest on the bridge loans from officers is at
8% but can be reset annually, at the election of either party, to the prime rate
in effect on January 1 of any given year, plus 3%. Under these agreements, the
Company borrowed a total of $250,000, which was still outstanding at September
30, 1998. The Company expects to borrow and repay under these facilities from
time to time to meet working capital needs. The Company does not have any bank
financing arrangements. The Company's long-term indebtedness consists primarily
of deferred fees and salaries payable to related individuals and the Unsecured
Convertible Notes.
At September 30, 1998, the Company had $39,073 in cash and cash
equivalents. Until required for operations, the Company's policy is to invest
any cash reserves in bank deposits, money market funds, certificates of deposit,
commercial paper, corporate notes, U.S. government instruments and other
investment-grade quality instruments.
On January 1, 1996, the Company purchased laboratory equipment pursuant to
a chattel mortgage agreement in the amount of $32,309. The agreement calls for
monthly payments of $897, commencing August 1, 1996. At September 30, 1998,
$8,975 in principal remains outstanding under this agreement..
In connection with the GI sponsored research agreement referred to above,
certain patent-related expenses were paid by the Company and reimbursed by GI.
The Company is contractually obligated to repay these reimbursed expenses in
installments over a 36 month period upon a determination by GI not to exercise
an option contained in the sponsored research agreement. Reimbursement has not
commenced, and the Company has accrued $42,317 as a long term liability pending
final action under the agreement.
Through September 30, 1998, the Company had paid offering-related expenses
of $116,561 which have been applied against the proceeds of the public offering.
On October 8, 1998, upon the expiration of its lease at the Biotechnology
Development Institute, the Company relocated to comparable rental facilities
across the street from its former location. The new lease will be for increased
space and rent and for a three-year term with two one-year renewal options. The
estimated annual payments under the new lease (including amortization of tenant
improvements and an emergency generator) will be approximately $84,000 per year
(not including utilities) compared to the current annual rent (including
utilities) of $43,200. The Company will continue to have access, as a graduate
affiliate, to the Biotechnology Development Institute's specialized facilities,
centralized equipment, and core laboratories. Relocation will not materially
affect the Company's research and development operations; however, the Company
has incurred relocation expenses and will be obliged to purchase or lease
laboratory and office furnishings and equipment. The Company estimates that the
principal amount of such lease or purchase is approximately $100,000.
The Company has incurred negative cash flows from operations since its
inception, and has expended and expects to continue to expend in the future,
substantial funds to complete its planned product development efforts, commence
clinical trials, and diversify its technology. The Company's future capital
requirements and the adequacy of available funds will depend on numerous
factors, including the success of the continuing public offering of its
securities, the successful commercialization of the XEntrIx (TM) Oxalobacter
formigenes Monitor (the Company's new diagnostic test) and IxC1-62/47 (the
Company's lead therapeutic compound), progress in its product development
efforts, the magnitude and scope of such efforts, progress with preclinical
studies and clinical trials, the cost of contract manufacturing and research
organizations, cost of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights, competing technological and
market developments, and the development of strategic alliances for the
development and marketing of its products. The Company requires all of the
proceeds of the public offering commenced in December 1997 to meet its planned
operating requirements through December 31, 1998. Shortfalls in the proceeds of
the public offering have forced a curtailment in the Company's planned operating
requirements to adjust to reduced resources. In the event the Company's plans
change or its assumptions change or prove to be inaccurate or the proceeds of
the offering continue to be insufficient to fund operations at the planned level
(due to further unanticipated expenses, delays, problems or otherwise), the
Company will be required to seek additional financing. The Company will be
required to obtain additional funds in any event through equity or debt
financing, strategic alliances with corporate partners and others, or through
other sources in order to bring its products through regulatory approval to
commercialization. The terms and prices of any equity or debt financings may be
significantly more favorable to new investors than those of the units sold in
the offering resulting in significant dilution to current investors. The Company
does not have any material committed sources of additional financing, and there
can be no assurance that additional funding, if necessary, will be available on
acceptable terms, if at all. If adequate funds are not available, the Company
may be required to further delay, scale-back, or eliminate certain aspects of
its operations or attempt to obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies, product candidates, products, or
potential markets. If adequate funds are not available, the Company's business,
financial condition, and results of operations will be materially and adversely
affected.
Product Research and Development Plan
The Company's plan of operation for 1998-1999 consists primarily of
research and development and related activities including:
C further development of the Company's IPSC research programs aimed at
proprietary populations of functioning islets for transplantation into
diabetic patients;
C continuing the funding of the ongoing discovery program in which the
Company intends to identify and characterize novel growth factors
associated with the IPSCs, to discover factors important in islet cell
differentiation and possible regulation of diabetes and to identify stem
cell markers to which the Company hopes to produce antibodies useful in
stem cell isolation;
C further preclinical development of a quantitative version of the Company's
molecular diagnostic, the XEntrIx (TM) Oxalobacter formigenes Monitor,
C further development of IxC1-62/47, including formulation, product
characterization, method development, testing (including toxicology), cell
line characterization, process development, clinical lot manufacturing,
stability, research protocols, and preclinical studies for the Company's
proposed products, primarily its oxalate-related products;
C continuing the prosecution and filing of patent applications; and
C hiring additional employees.
The actual research and development and related activities of the Company
may vary significantly from current plans depending on numerous factors,
including changes in the costs of such activities from current estimates, the
results of the Company's research and development programs, the results of
clinical studies, the timing of regulatory submissions, technological advances,
determinations as to commercial potential, the status of competitive products,
and the Company's success in raising capital. The focus and direction of the
Company's operations will also be dependent upon the establishment of
collaborative arrangements with other companies, and other factors.
There can be no assurance that the Company will be able to commercialize
its technologies or that profitability will ever be achieved. The Company
expects that its operating results will fluctuate significantly from quarter to
quarter in the future and will depend on a number of factors, many of which are
outside the Company's control.
<PAGE>
Part II - Other Information
Item 4. Submission of matters to a Vote of Security Holders.
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
ExhibitDescription ....................................... Page
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession ......................... None
(4) Instruments defining the Rights of Security Holders None
(10) Material Contracts ................................ None
(11) Statement re: Computation of Per Share Earnings ... None
(15) Letter re: Unaudited Interim Financial Information None
(18) Letter re: Change in Accounting Principles ........ None
(19) Report Furnished to Security Holders .............. None
(22) Published Report re: Matters Submitted to Vote of
Security Holders .................................. None
(23) Consents of Experts and Counsel ................... None
(24) Power of Attorney ................................. None
(27) Financial Data Schedule
(99) Additional Exhibits ............................... None
(b) Reports on Form 8-K ............................... None
<PAGE>
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.
Ixion Biotechnology, Inc.
Dated: November 11, 1998 By: /s/ Weaver H. Gaines
Weaver H. Gaines
Chairman and Chief Executive Officer
Dated: November 11, 1998 By: /s/ David C. Peck
David C. Peck
President and Chief Financial Officer
(Principal Financial Officer)
Dated: November 11, 1998 By /s/ Kimberly A. Ramsey
Kimberly A. Ramsey
Controller (Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Financial
Statements for the 9 months ended September 30, 1998, and is qualified in its
entirety by reference to such Financial Statements filed with form 10QSB and for
the 9 month period ended September 30, 1998.
<MULTIPLIER> 1
<PERIOD-START> JAN-01-1998
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 39,073
<SECURITIES> 0
<RECEIVABLES> 1,811
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41,524
<PP&E> 61,002
<DEPRECIATION> 30,653
<TOTAL-ASSETS> 358,862
<CURRENT-LIABILITIES> 370,994
<BONDS> 0
<COMMON> 25,081
0
0
<OTHER-SE> 1,384,282
<TOTAL-LIABILITY-AND-EQUITY> 358,852
<SALES> 0
<TOTAL-REVENUES> 1,133
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 187,906
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,723
<INCOME-PRETAX> (227,496)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (227,496)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> 0
</TABLE>