U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR
15 (d) OF THE EXCHANGE ACT OF 1934 For
the transition period from to
-------------
Commission file number: 333-34765
Ixion Biotechnology, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
-------------
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
-------------
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 April 30, 2000 was 3,140,564.
<PAGE>
4
Ixion Biotechnology, Inc
Index to Form 10QSB
Part 1 - Financial Information Page
----
Item 1. Financial Statements (unaudited)
Condensed Balance Sheet - March 31, 2000.............................2
Condensed Statements of Operations - Three
Months Ended March 31, 2000 and 1999 and
for the period March 25, 1993
(Date of Inception) through March 31, 2000...........................3
Condensed Statements of Cash Flows - Three
Months Ended March 31, 2000 and 1999 and
for the period March 25, 1993
(Date of Inception) through March 31, 2000...........................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 2. Changes in Securities and Use of Proceeds............................15
Item 6. Exhibits and Reports on Form 8-K....................................15
Signatures...................................................................16
Exhibit Index................................................................16
1
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheet
March 31, 2000
Unaudited
Assets
Current Assets:
Cash and cash equivalents $ 179,956
Accounts receivable 298
Prepaid expenses 6,075
Other current assets 500
----------
Total current assets 186,829
----------
Property and Equipment, net 121,799
----------
Other Assets:
Patents and patents pending, net 389,099
Other 7,571
----------
Total other assets 396,670
----------
Total Assets $ 705,298
==========
Liabilities and Capital Deficiency
Current Liabilities:
Accounts payable $ 35,504
Bridge loans payable to officers 316,400
Current portion of notes payable 8,817
Accrued expenses 130,517
Deferred rent - current 1,612
Interest payable 41,842
---------
Total current liabilities 534,692
---------
Long-Term Liabilities:
Notes payable 710,695
Liability under research agreement 42,317
Deferred rent, including accrued interest 23,540
Deferred fees and salaries, including accrued interest 993,642
---------
Total long-term liabilities 1,770,194
---------
Total liabilities 2,304,886
---------
Capital Deficiency:
Common stock, $.01 par value; authorized 20,000,000,
issued and outstanding 3,102,964 shares at March 31 31,029
Additional paid-in capital 2,894,539
Receivable from shareholder 6,000
Deficit accumulated during the development stage (4,302,059)
Less unearned compensation (217,097)
-----------
Total capital deficiency (1,599,588)
-----------
Total Liabilities and Capital Deficiency $ 705,298
============
See accompanying notes to condensed financial statements
2
<PAGE>
For the Period
March 25,
Statements of Operations 1993 (Date
......... of inception)
......... Three Months Ended through
......... March 31, March 31,
......... 2000 1999 2000
---- ---- -----------
......... Unaudited Unaudited
Revenues:
Income under research agreement $ 2,450 $ 0 $ 305,284
Income from research grants 43,924 0 207,227
Interest income 869 48 26,422
Other income 0 445 18,834
--------- ---- ----------
Total revenues 47,243 493 557,767
----------- ------ ----------
Expenses:
Operating, general and
administrative 114,088 89,001 2,029,995
Research and development 174,383 110,354 2,310,449
Interest 41,443 37,170 519,382
Total expenses 329,914 236,525 4,859,826
--------- ------- ---------
Net Loss. $ (282,671) $ (236,032) $(4,302,059)
========== ========= =========
Net Loss per Share (Basic) $ (0.09) (0.09)
========== =========
Weighted Average Common Shares 2,990,272 2,513,991
=========== ==========
See accompanying notes to condensed financial statements
3
<PAGE>
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Period
March 25, 1993
Three Months (Date of inception)
Ended March 31, through
2000 1999 March 31, 2000
---- ---- -----------------
Unaudited Unaudited
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (282,671) $ (236,032) $(4,302,059)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 8,368 5,200 76,536
Amortization 2,410 774 15,280
Write-off of abandoned patents - - 13,045
Amortization of debt discount 14,292 14,292 204,852
Stock warrants issued under license agreement - - 20,465
Stock, options or warrants issued for
consulting services 1,880 - 33,880
Stock compensation 25,005 40,725 541,306
Decrease (increase) in prepaid expenses and
other current assets (1,852) (641) (6,521)
Decrease (increase) in accounts receivable 27,834 - (177)
Increase (decrease) in liability under
research agreement - - 42,317
Increase (decrease) in accounts payable and
accrued expenses (32,381) 11,049 74,369
Increase in deferred fees and salaries 49,600 64,580 967,090
Increase in deferred rent 1,409 13,783 25,151
Increase in interest payable 2,399 6,590 62,219
------- -------- ----------
Net cash used in operating activities (183,707) (79,680) (2,132,247)
--------- --------- -----------
Cash Flows from Investing Activities:
Purchase of property and equipment (18,214) - (143,685)
Organization Costs - - (436)
Payments for patents and patents pending (13,429) (113) (401,295)
-------- -------- ---------
Net cash used in investing activities (31,643) (113) (545,416)
-------- --------- ---------
Cash Flows from Financing Activities:
Loans from officers - 90,000 445,307
Proceeds from issuance of convertible notes payable - - 1,087,270
Proceeds from issuance of common stock 376,200 1,000 1,508,100
Principal reductions in notes payable (2,204) (4,897) (41,247)
Payment of deferred offering costs (1,051) (4,821) (130,731)
Payment of loan costs - - (11,080)
------- ------ --------
Net cash provided by (used in)
financing activities 372,945 81,282 2,857,619
------- ------ ----------
Net Increase (Decrease) In Cash and Cash Equivalents 157,595 1,490 179,956
Cash and Cash Equivalents at Beginning of Period 22,361 18,633 -
------ ------ ---------
Cash and Cash Equivalents at End of Period $ 179,956 $ 20,123 $ 179,956
=========== ======== =======
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE>
Notes to Condensed Financial Statements
Three Month Period Ended March 31, 2000
1. Basis Of Presentation:
The accompanying unaudited condensed financial statements for the three
months ended March 31, 2000 and 1999, respectively, and for the period
March 25, 1993 (date of inception) through March 31, 2000, 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, 1999
financial statements and related notes included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1999. 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 March 31, 2000 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 March 31, 2000:
Deferred compensation $ 392,500
Net operating loss carryforward 1,307,500
----------
Deferred tax asset 1,700,000
Valuation allowance $ (1,700,000)
Net deferred tax asset $ 0
============
3. Stock Options:
On January 1, 2000, the Company granted ten-year options under the 1994
Stock Option Plan to purchase 8,000 shares of Common Stock at an exercise
price of $4.00 per share. Stock options are exercisable only when vested.
Options vest at the rate of 20% per year and are exercisable generally
within ten years after date of grant.
4. Stockholder's Equity
The Company has sold 150,000 shares and received gross proceeds of $600,000
through March 31, 2000 in the public offering that commenced December 10,
1997 and terminated on March 31, 2000. Offering costs of $135,870 have been
offset against the proceeds of the offering through the termination date of
the offering, March 31, 2000.
Through March 31, 2000, Q-Med, A.B. has been issued a total of 450,000
shares of restricted common stock for $900,000 as part of the on-going
transaction with Q-Med.
Because there are not yet revenues from operations, the Company will be
required to obtain additional funds through equity or debt financing,
strategic alliances with corporate partners, research grants or through
other sources.
The Company's ability to continue as a going concern depends upon obtaining
additional financing; however, there can be no assurance that the Company
will be successful in obtaining the required financing.
5
<PAGE>
5. Related Party Transactions
The Chairman/Chief Executive Officer and President of the Company each
entered into a revolving agreement to extend the Company bridge loans.
Interest on bridge loans is at 8%, but can be reset annually, at the
election of either party, to prime rate in effect on January 1 of any given
year, plus 3%. In March, the officers purchased 24,650 shares of common
stock in the public offering at the public offering price of $4.00 per
share. In payment, the officers cancelled $98,600 in principal amount of
the bridge loans. This transaction was treated as a repayment of debt and
subsequent equity investment, having no income or cash flow effect. At
March 31, 2000, $356,445 in principal and interest was outstanding under
these agreements and is due on demand. These officers have no commitment to
lend additional funds in the future.
6. Subsequent Events
From April 1, 2000 through April 24, 2000, the Company received an
additional $75,000 from Q-Med in exchange for 37,500 shares of restricted
common stock.
On April 1, 2000, options to purchase 86,900 at $4.00 per share were issued
to current holders of options with exercise prices greater than $4.00 per
share. Acceptance of the new options was conditioned on an agreement
shortening the term of the old options to December 31, 2000. The new
options expire ten years from the date of issue and immediately vest the
same number of shares that were fully vested under the old options on April
1, 2000. The remaining unvested shares will vest under the same schedule as
the old options.
6
<PAGE>
Special Note Regarding Forward-Looking Statements
This quarterly report on Form 10-QSB of Ixion Biotechnology, Inc. for
the quarter ended March 31, 2000 contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 194, as amended, which are
intended to be covered by the safe harbors created thereby. To the extent that
such statements are not recitations of historical fact, such statements
constitute forward-looking statements which, by definition, involve risks and
uncertainties. In particular, statements under Part I, Item 2, Management's
Discussion and Analysis or Plan of Operations, contain forward-looking
statements. Where, in any forward-looking statement, Ixion expresses an
expectation or belief as to future results or events, such expectation or belief
is expressed in good faith and believed to have reasonable basis, but there can
be no assurance that the statement of expectation or belief will result or be
achieved or accomplished.
Statements in this report regarding the dates on which we anticipate
commencing clinical trials or filing for regulatory approval, constitute
forward-looking statements under the federal securities laws. Such statements
are subject to risks and uncertainties that could cause the actual timing of
such clinical trials or filings to differ materially from those we project. With
respect to such dates, we have made assumptions regarding, among other things,
o the successful and timely completion of preclinical tests,
o the approval of investigational new drug applications for each of our
drug candidates by the FDA,
o the availability of a simplified application way to seek market
clearance from the FDA for our molecular diagnostic test,
o the availability of adequate clinical supplies,
o the absence of delays in patient enrollment, and
o the availability of the capital resources necessary to complete the
preclinical tests and conduct the clinical trials.
Our ability to commence clinical trials or file for regulatory approval
on the dates anticipated is subject to risks. You should not rely on the dates
on which we anticipate filing regulatory approval or commencing clinical trials.
Statements regarding our research and development plans also constitute
forward-looking statements. Actual research and development activities may vary
significantly from the current plans depending on numerous factors including
o changes in the costs of such activities from current estimates,
o the results of the programs,
o the results of clinical studies referred to above,
o the timing of regulatory submissions, technological advances,
o determinations as to commercial potential, and
o the status of competitive products.
All of the above estimates are based on the current expectations of our
management team, which may change in the future due to a large number of
potential events, including unanticipated future developments.
The following factors are factors that could cause actual results or events to
differ materially from those anticipated, and include, but are not limited to:
general economic, financial and business conditions; labor difficulties;
competition for customers in the biotechnology and pharmaceutical industries;
the costs of research and development of chemical compounds and products; and
changes in and compliance with governmental regulations
7
<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. Our 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
Ixion is a development stage, biotechnology company. We are in the
development stage because we are devoting substantially all of our efforts to
establishing our business, and our planned principal operations have not
commenced.
Since we were founded in March of 1993, we have principally been doing
research and development, securing patent protection, and raising capital. We
have not received any revenues from the sale of products. In June 1998, we
reached an agreement in principal with the University of Florida Diagnostic
Referral Laboratories for them to provide a service to physicians using our
molecular diagnostic test, the XEntrIx TM Oxalobacter formigenes Monitor. We
have received no revenue to date under this agreement, and a definitive
agreement has not been executed. We do not expect any of our drug or device
product candidates, which require regulatory approval, to be commercially
available for at least several years; however our nutritional supplement
product, OX-Control(TM), is scheduled for launch in 2000. From inception through
March 31, 2000, we incurred cumulative losses of $4,302,059. These losses were
due primarily to expenditures on research and development, patent preparation
and prosecution, general and administrative activities, and interest charges.
We expect to continue to incur substantial research and development costs
resulting from
o ongoing research and development programs,
o manufacturing of products for use in clinical trials and preclinical
and clinical testing of our products.
We also expect that general and administrative costs, including
o amortization of patents,
o costs of additional administrative personnel;
o legal and regulatory costs necessary to support preclinical
development and clinical trials, and
o costs associated with the creation of a marketing and sales
organization, if warranted,
will increase in the future, assuming we can finance the increased requirements.
Accordingly, we expect to incur operating losses for the foreseeable future.
Our operating expenses will depend on several factors, including the
level of research and development expenses and our success in raising capital.
Research and development expenses will depend on the progress and results of our
product development efforts, which we cannot predict. We may sometimes 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, we believe that period-to-period comparisons in the future are
not necessarily meaningful
8
<PAGE>
Results of Operations
Three Months Ended March 31, 2000 and 1999
Total revenues increased from $493 in the first quarter of 1999 to
$47,243 in the first quarter of 2000 mainly as a result of the following:
o Three NIH research contracts;
o One research support agreement, with corporate collaborators.
o An increase in interest income generated from the investment of
increased cash flows.
We expect revenue to continue to increase in 2000 because of
o Two NIH grants awarded in 1999 which will provide approximately
$85,000 of income in 2000,
o The extension of another NIH grant for an additional $100,000
beginning on September 1, 2000,
o Another NIH grant awarded on March 30, 2000 for $100,000
o Further activity under the research support agreements
o Increased interest income from investments of excess cash generated
from increased cash flows.
Operating, general, and administrative expenses increased 30% from
$89,001 in the first quarter of 1999 to $115,605 in the first quarter of 2000.
These increased expenses reflect:
o increased personnel and related payroll expenses
o increased supplies and computer-related expenses
o increased utilities usage
o increase in travel
o support of increased research activities.
We expect our operating, general and administrative expenses to continue to
increase in 2000 as a result of increased research activities resulting in a
need for increased administrative personnel.
Research and development expenditures consist primarily of:
o payroll-related expenses of research and development personnel
o laboratory and animal supplies
o laboratory rent and associated utilities
o depreciation on laboratory equipment
o development activities
o payments for sponsored research
o scientific advisors
o regulatory consultants fees
o interest on the purchase of laboratory equipment and deferred fees and
salaries for research personnel
o amortization of capitalized patent costs.
Research and development expenses increased 57% from $110,384 in the
first quarter of 1999 to $172,867 in the first quarter of 2000. These increased
expenses reflect
o increased laboratory personnel and related payroll expenses
9
<PAGE>
o increased laboratory rent and associated utilities
o interest charges on the purchase of lab equipment and on deferred fees
and salaries
o increased consultant's fees
o increased laboratory-related supplies and expenses
o increased amortization of patents
o increased depreciation on laboratory equipment
offset somewhat by a reduction in regulatory and preclinical expenses. Our
research and development expenses will continue to increase in 2000 due to an
increase in the scale of operations as a result of the receipt of the research
grants referred to above.
Interest expense is comprised only of non-R&D-related interest.
R&D-related interest is accounted for as an expense under research and
development. Interest expense increased 11% from $37,170 in the first quarter of
1999 to $41,443 in the first quarter of 2000 due primarily to interest on bridge
loans from officers, and the compounding of interest on deferred administrative
fees and salaries, including deferred interest, payable to related parties.
Liquidity and Capital Resources
During the first quarter of 2000, our development activities have been
funded primarily by the proceeds from the offering, research grants and
agreements, and $225,000 invested by Q-Med in exchange for 112,500 shares of
common stock. Through April 15, 2000 we have received a total of $975,000 in
investments from Q-Med, A.B. and issued a total of 487,500 shares of common
stock in accordance with the agreement in principle with Q-Med, A.B. We do not
have any bank financing arrangements. Our long-term indebtedness consists
primarily of deferred fees and salaries payable to related individuals and our
unsecured convertible notes. Our executive officers continue to defer a portion
of their fees and salaries each month.
The Company has sold 150,000 shares and received gross proceeds of
$600,000 through March 31, 2000 in the public offering that commenced December
10, 1997 and terminated on March 31, 2000. In March, the officers purchased
24,650 shares of common stock in the public offering at the public offering
price of $4.00 per share. In payment, the officers cancelled $98,600 in
principal amount of the bridge loans
On June 5, 1999, we were awarded a $100,000 Phase I grant under the
Small Business Technology Transfer Program for research in our oxalate
technology entitled "Enteric Elimination of Oxalic Acid". We began drawing on
these funds in July, 1999. We subcontracted a large portion of the grant to the
University of California, Irvine, but there is $4,600 still remaining available
during the second quarter of 2000 to support oxalate research at Ixion. In
September 1999 we also received an award of $200,000 (covering a 23-month
period) from the NIH to support our diabetes research entitled "Islets from
Islet Progenitor/Stem Cells for Implantation". We have subcontracted $25,000
under this grant, but have approximately $133,000 available to support diabetes
research through August 31, 2001. In February 2000 we received notice that we
had been awarded another $100,000 NIH Phase I grant under the SBIR program for
research in our oxalate technology entitled "Digestion of Food Oxalate". We
began drawing on these funds in February. We have subcontracted approximately
$30,000 to Wake Forest University, but have approximately $66,000 available to
support oxalate research at Ixion through February 28, 2001. In March 2000 we
received notice of an additional NIH SBIR award for research entitled "M3
Receptor: Diagnostic Marker for Sjogren's Syndrome". We will subcontract $45,000
to the University of Florida, leaving approximately $55,000 to support Ixion
research through September 2000. We have other grant applications pending.
It has not been necessary to borrow additional funds from officers
since the first quarter of 1999. The bridge loans total $356,445 at March 31,
2000, including accrued interest, and are due on demand. Interest on the bridge
loans from officers is currently 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%. We have no agreement with the officers to advance further
10
<PAGE>
funds, however, the officers have funded operating requirements voluntarily, in
the past, to meet working capital needs. Although additional bridge loans may
not be necessary in 2000 because of the Q-Med transaction, and awarded and
pending NIH grants, we cannot assure you that, should such loans be necessary in
the future, the officers will continue to voluntarily fund them.
At March 31, 2000, we had $179,956 in cash and cash equivalents. Until
required for operations, our policy is to invest any excess 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.
Through March 31, 2000, we have paid offering-related expenses of
$135,870 which have been applied against the proceeds of the public offering. We
expect further offering-related expenses to be modest.
In connection with a sponsored research agreement with Genetics Institute, Inc.
which was concluded during 1997, some patent-related expenses were reimbursed by
Genetics Institute. We may be contractually obligated to repay these reimbursed
expenses in installments over a 36 month period upon a notice to or by Genetics
Institute to the effect that their option to negotiate for a license to our
technology, contained in the sponsored research agreement has expired. We have
not given nor received such notice, and, accordingly, reimbursement has not
commenced. We have accrued $42,317 as a long-term liability pending final notice
under the agreement.
We expect that annual lease expenses, which include repayment of funds
provided by lessor for tenant improvements and an emergency generator, to be
approximately $104,000 for 2000. We will continue to have a need to purchase
additional laboratory equipment and estimate that we will need to purchase at
least $100,000 of capital laboratory equipment in the coming year.
We have incurred negative cash flows from operations since our
inception. We have spent and expect to continue to spend, substantial funds to
complete our planned product development efforts, commence clinical trials, and
diversify our technology. Our future capital requirements and the adequacy of
available funds will depend on numerous factors, including
o the exercise of Q-Med's option to acquire approximately $5.4 million
of Ixion stock on or before July 1, 2000.
o the successful commercialization of Ox-Control(TM)(our nutritional
supplement) the XEntrIx(TM)Oxalobacter formigenes Monitor (our
diagnostic test), and IxC1-62/47 (our lead therapeutic compound),
o the successful commercialization of our islet replacement therapy
products,
o progress in our product development efforts,
o the magnitude and scope of development efforts,
o progress with preclinical studies and clinical trials,
o the cost of contract manufacturing and research organizations,
o cost of filing, prosecuting, defending, and enforcing patent claims
and other intellectual property rights,
o competing technological and market developments, and
o the development of strategic alliances for the development and
marketing of our products
We cannot assure you that Q-Med will exercise its option on or before
July 1, 2000, or that it will otherwise complete the contingent elements of the
pending transaction on satisfactory terms, or at all. In the event our plans
change or our assumptions change or prove to be inaccurate or we fail to
complete the Q-Med transaction, we will require additional financing. We will be
required to obtain additional funds in any event through equity or debt
financing, strategic alliances with corporate partners and others, mergers or
the sale of substantially all our assets, or through other sources in order to
bring our drug and device products through regulatory approval to
commercialization. We do not have any material committed sources of additional
financing. We cannot assure you
11
<PAGE>
that additional funding, consolidation, or alliance, if necessary, will be
available on acceptable terms, if at all. If adequate funds are not available,
we may be required to further delay, scale-back, or eliminate certain aspects of
our operations or attempt to obtain funds through arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our technologies, product candidates, products, or potential markets.
If adequate funds are not available, our business, financial condition, and
results of operations will be materially and adversely affected.
Product Research and Development Plan
Our plan of operation for 2000 consists primarily of research and
development and related activities, resources permitting, including:
o further research into the biology of islet and islet stem
cell growth and differentiation, aimed at developing cell
lines of functioning islets for transplantation into
diabetic patients;
o further research into identifying and characterizing novel
growth factors associated with islets to discover factors
important in islet cell differentiation and possible
regulation of diabetes and to identify stem cell markers
to which we hope to produce monoclonal antibodies useful
in stem cell isolation
o differential gene expression studies on differentiated islet cells;
o further research into encapsulation materials for transplantation of
islets;
o development of OX-Control(TM), a nutritional supplement product not
requiring regulatory approval;
o further preclinical development of a quantitative and/or kit version
of our molecular diagnostic test, the XEntrIx TM) Oxalobacter
formigenes Monitor,
o further preclinical development of our oxalate therapeutic compound,
IxC1-62/47;
o continuing the prosecution and filing of patent applications
o hiring additional employees.
Our actual research and development and related activities may vary
significantly from current plans depending on numerous factors, including
changes in the costs of such activities from current estimates, the results of
our 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, most important,
our success in raising capital. The focus and direction of our operations will
also be dependent upon the establishment of collaborative arrangements with
other companies, and other factors.
We can not assure you that we will be able to commercialize our
technologies or that profitability will ever be achieved. We expect that our
operating results will fluctuate significantly from quarter to quarter in the
future and will depend on a number of factors, most of which are outside our
control.
Part II - Other Information
Item 2. Changes in Securities and Use of Proceeds
As of March 31, 2000, a total of 150,000 shares of common stock at an
aggregate price of $600,000 have been sold in the public offering. From the
effective date of the offering to March 31, 2000, $200 in expenses and $2,682 in
commissions have been paid to Unified Management Company as broker and there
have been no finders' fees. Other offering related expenses through March 31,
2000, amounted to $132,988, all of which have been offset against proceeds. No
payments were made to directors, officers, general partners of the Company, or
to their associates in connection with the offering.
12
<PAGE>
Net offering proceeds as of March 31, 2000 amounted to $464,130. The
net proceeds were used entirely to fund the operations of the Company as
reflected in the financial statements included elsewhere in this report. The use
of proceeds still to be received from the offering is not expected to vary
materially from the use of proceeds described in the amended registration
statement
The consulting agreement with Dr. Ammon B. Peck, chief scientist, was
renewed as of March 6, 2000 and terminates on December 31, 2002.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Description Page
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession None
(3) Articles of Incorporation None
(4) Instruments defining the Rights of Security Holders None
*10.45 Consulting Agreement with Dr. Ammon B. Peck,
dated March 6, 2000
(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
*Filed herewith
(b) Reports on Form 8-K
None
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.
13
<PAGE>
Ixion Biotechnology, Inc.
Dated: May 15, 2000 By: /s/ Weaver H. Gaines
----------------------
Weaver H. Gaines
Chairman and Chief Executive Officer
Dated: May 15, 2000 By: /s/ David C. Peck
-----------------
David C. Peck
President and Chief Financial Officer
(Principal Financial Officer)
Dated: May 15, 2000 By: /s/ Kimberly A. Ramsey
----------------------
Kimberly A. Ramsey
Vice President and Controller
(Principal Accounting Officer)
Exhibit Index
Exhibit Description Page
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession None
(3) Articles of Incorporation None
(4) Instruments defining the Rights of Security Holders None
*10.45 Consulting Agreement with Dr. Ammon B. Peck,
dated March 6, 2000
(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
Published Report re: Matters Submitted to Vote of
(22) Security Holders None
(23) Consents of Experts and Counsel None
(24) Power of Attorney None
*(27) Financial Data Schedule
(99) Additional Exhibits None
*Filed herewith
<PAGE>
THIS CONSULTING AGREEMENT, dated March 6, 2000 is between Dr. Ammon B.
Peck, Department of Pathology, University of Florida College of Medicine ("you")
and Ixion Biotechnology, Inc., a Delaware corporation with principal offices at
12085 Research Drive, Alachua, Florida 32615 ("we" or the "Company").
WHEREAS, you have been performing consulting services for us pursuant
to a consulting agreement dated October 6, 1994, and
WHEREAS, we propose that you continue to perform consulting services for
us, and
WHEREAS, we understand you are willing to perform such services for us,
upon revised terms and conditions set forth below.
NOW, THEREFORE, we agree with you as follows:
1. You will perform such consulting services as we may request during
the term of this Agreement as Chief Scientist of the Company and as Chairman of
the Company's Scientific Advisory Board. You will be available to perform such
services at reasonable times during the term of this Agreement as may be
determined by you in your discretion taking into account your obligations as a
full-time professor in the Department of Pathology at the University of Florida
College of Medicine. In no event shall you be obligated to perform services
hereunder for a total of more than four days in any calendar month during the
term of this agreement.
2. In full compensation for your services and agreements hereunder, we
will pay you at the rate of $50,000.00 per year. Should your services exceed the
48 days referred to above, an appropriate adjustment will be made in your
payments. In addition, we will reimburse you (as discussed below) for all
reasonable traveling and living expenses necessarily incurred by you while you
are away from your regular place of business or at our premises at our request
and are engaged in the performance of services for us under this Agreement. You
will submit invoices promptly showing any disbursements for reasonable and
necessary expenses incurred on this engagement.
3. The manner in which you render services to us will be within your sole
control and discretion.
4. You will observe our rules, policies, and regulations with respect
to conduct, scientific misconduct, and the health, safety, and protection of
persons and property, while on our premises. You will comply with all
governmental laws, ordinances, rules and regulations applicable to your services
hereunder, or to the performance thereof.
<PAGE>
5. All of the following sections 5 and 6 are subject to your
obligations to the University of Florida under its patent policy (including the
University's policy respecting publication of the results of scientific
investigation). All inventions, improvements, discoveries, patent applications,
patents, trade secrets, know-how, biological material, data, reagents, or other
intellectual property, patentable or unpatentable ("invention"), which are made
or conceived by you during the term of this Agreement (i) relating to
Oxalobacter formigenes, oxalate, or oxalate-related disorders, (ii) relating to
islet progenitor/stem cells ("IPSCs"), or (iii) relating to any other invention,
provided rights thereto shall be waived or not owned by the University of
Florida, shall be our sole and exclusive property throughout the world. Promptly
upon conception of such invention, you will disclose it us, and we shall have
full power and authority to file and prosecute patent applications throughout
the world thereon and to procure and maintain patents thereon. You shall, at our
request and expense, execute documents and perform such acts as our counsel may
deem advisable, to confirm in us all right, title, and interest throughout the
world, in and to, such invention, discovery, or idea, and all patent
applications, patents, and copyrights thereon, and to enable and assist us in
procuring, maintaining, enforcing and defending patents, petty patents,
copyrights, and other applicable statutory protection throughout the world on
any such invention, discovery, or idea which may be patentable or copyrightable.
6. All information and know-how which you in any way obtain from us and
all inventions which shall become our property pursuant to this Agreement, shall
be held secret and confidential by you and shall not be used or revealed by you
unless, until, and to the extent we shall consent thereto in writing, or such
information, know-how, inventions, discoveries, and ideas are generally
available to the public through no action or inaction of yours.
7. You will not disclose to us any knowledge, information, inventions,
discoveries, or ideas which you possess under an obligation of secrecy to a
third party.
8. You do not have any express or implied obligation to a third party
which in any way conflicts with any of your obligations under this Agreement,
except your obligations as an employee of the University of Florida, of which we
are aware.
9. It is understood that we will have the royalty-free and unrestricted
right to use and disclose to third parties, any inventions disclosed to us by
you in the course of your services under this Agreement.
10. All written information, drawings, documents and materials prepared
by you in the course of your service hereunder shall be our sole and exclusive
property, and will be delivered to us by you promptly after expiration or
termination of this Agreement, together with all written information, drawings,
documents and materials, if any, furnished by us to you in connection with your
services hereunder and not consumed by you in the performance of such services.
11. You assume all risk and liability for loss of, or damage to, your
property, and for personal injury, sickness and/or disease, including death
resulting therefrom, sustained by you, if or where such loss or damage is
incurred or such injury, sickness, or disease is sustained, in connection with
your presence on our property and/or any services hereunder, unless caused by
our negligence or the negligence of our employees or agents.
<PAGE>
12. During the term of this Agreement, you agree not to perform for a
third party any services which are in the field of this Agreement. During the
period of this Agreement, and for the two years thereafter, you will not,
directly or indirectly, engage in any business which is substantially
competitive with any business then actively being conducted by us, or
contemplated by us in the near future, nor will you consult with or advise any
such competitive business or otherwise, directly or indirectly, engage in any
activity which is substantially competitive with or in any way adversely affects
any material activity of ours.
13. The term of this Agreement shall commence on the date first above
mentioned, and shall terminate a) on December 31, 2002, or b) upon thirty days
notice by either party, unless sooner terminated by your death, or in accordance
with the terms of this Agreement.
14. The provisions of paragraphs 5, 6, 7, 9, 10, 11, and 16 shall
survive and continue after expiration or termination of this Agreement.
15. Any assignment by you of this Agreement or of any of the rights or
obligations hereunder, without our written consent, shall be void. No
modifications of this Agreement or waiver of any of the terms or conditions
contained hereunder shall be binding unless in writing and signed by both
parties. This Agreement shall be governed by the laws of the State of Florida.
16. We will have the sole and exclusive power to determine when we have
adequate resources available to pay your cash compensation, otherwise, such
compensation shall be deferred.
If you agree to the foregoing, please indicate your acceptance thereof
by signing the enclosed duplicate copy of this Agreement and returning it to us.
Very truly yours,
Ixion Biotechnology, Inc.
/s/Kimberly A. Ransey
By -----------------------------
Kimberly A. Ramsey
Vice President and Controller
Accepted and Agreed
/s/ Ammon B. Peck Ph.D.
- -----------------------
Ammon B. Peck, Ph.D.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Financial Statements for the three months ended March 31, 2000, and is
qualified in its entirety by reference to such form 10QSB for quarterly period
ended March 31, 2000.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-END> Mar-31-2000
<CASH> 36,737
<SECURITIES> 0
<RECEIVABLES> 7,066
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,529
<PP&E> 167,586
<DEPRECIATION> (56,395)
<TOTAL-ASSETS> 541,184
<CURRENT-LIABILITIES> 603,883
<BONDS> 0
<COMMON> 2,225,327
0
0
<OTHER-SE> (3,932,354)
<TOTAL-LIABILITY-AND-EQUITY> 541,184
<SALES> 0
<TOTAL-REVENUES> 19,175
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 266,981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,559
<INCOME-PRETAX> (285,365)
<INCOME-TAX> 0
<INCOME-CONTINUING> (285,365)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (285,365)
<EPS-BASIC> (.11)
<EPS-DILUTED> 0
</TABLE>
