<PAGE>
<PAGE> 1 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
Commission File Number: 0-27072
HEMISPHERx BIOPHARMA, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-0845822
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1617 JFK Boulevard, Suite 660, Philadelphia, PA 19103
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(215) 988-0080
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(Registrant's telephone number, including area code)
Not Applicable
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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.
/X/ Yes / / No
21,073,751 shares of common stock issued and outstanding as of
March 31, 1998.
<PAGE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,965,714 $ 7,700,494
Short Term Investments 1,001,410 1,001,410
Prepaid expenses and other current assets 99,026 98,972
----------- ----------
Total current assets 10,066,150 8,800,876
Property and equipment, net 70,637 95,071
Patent and trademark rights, net 1,387,523 1,325,431
Security deposits 18,323 18,323
----------- ----------
Total assets $11,542,633 $10,239,701
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 465,166 $ 572,772
Accrued expenses 332,045 243,368
----------- ----------
Total current liabilities 797,211 816,140
Commitments and contingencies
Stockholders' equity:
Preferred stock 37 36
Common stock 21,042 21,073
Additional paid-in capital 65,255,571 65,389,167
Deferred compensation (137,132) (112,030)
Accumulated other comprehensive (loss) (2,183) (2,183)
Accumulated deficit (54,391,913) (55,872,502)
----------- ----------
Total stockholders' equity 10,745,422 9,423,561
----------- ----------
Total liabilities and stockholders' equity $11,542,633 $10,239,701
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 3
HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION> (Unaudited)
For the Three months ended
March 31
--------------------------
1997 1998
---------- ----------
<S> <C> <C>
Revenues:
Cost recovery - clinical trials $ 30,207 $ 85,911
---------- ----------
Total revenues 30,207 85,911
---------- ----------
Costs and expenses:
Research and development 656,255 919,608
General and administrative 523.516 784,659
Preferred stock conversion expense 1,227,864 -
---------- ----------
Total cost and expenses 2,407,635 1,704,267
Interest income 66,194 137,767
---------- ----------
Net loss $(2,311,234) $(1,480,589)
========== ==========
Basic loss per share $ (0.14) $ (0.07)
========== ==========
Weighted average shares outstanding 15,581,592 21,055,705
========== ==========
Diluted loss per share $ (0.14) $ (0.07)
========== ==========
Weighted average common and dilutive
equivalent shares outstanding 15,581,592 21,055,705
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 4
HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY(DEFICIT)
For the three months ended March 31, 1998
<TABLE>
<CAPTION>
Preferred Common Preferred C/S .001 Additional Deferred Accumulated Accumulated Total
stock stock stock Par value paid-in Compensation other deficit stockholders'
shares shares capital comprehensive equity
loss (deficit)
------- ------ --------- --------- --------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance 12/31/97 3,650 21,042,606 $37 $21,042 $65,255,571 $(137,132) $(2,183) $(54,391,913) $10,745,422
Common stock issued 6,145 6 21,501 21,507
Preferred stock
converted (50) 25,000 (1) 25 (24) -
Repayment of lock up (79,587) (79,587)
Stock compensation 191,706 25,102 216,808
Net loss (1,480,589) (1,480,589)
------- ------ --------- --------- --------- ----------- ------------ ------------ -------------
Balance 12/31/98 3,600 21,073,751 $36 $21,073 $65,389,167 $(112,030) $(2,183) $(55,872,502) $ 9,423,561
======= ========== ========= ========= ========= =========== ============ ============ =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 5
HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
For the Three months ended
March 31
-------------------------
1997 1998
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,311,234) $(1,480,589)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of property and equipment 6,870 8,241
Amortization of patents rights 29,949 72,864
Write-off of patent rights 11,346 44,604
Preferred stock conversion expense 1,227,864 -
Stock option compensation expense - 216,808
Changes in assets and liabilities:
Prepaid expenses and other current assets ( 36,321) 54
Accounts payable 1,952 107,606
Accrued expenses ( 19,417) 13,222
Security deposits 10,000 -
--------- ---------
Net cash used in operating activities (1,078,991) (1,017,190)
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment - (32,675)
Additions to patent rights ( 34,472) (55,377)
--------- ---------
Net cash used in investing activities ( 34,472) (88,052)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of preferred stock 4,850,382 -
Preferred stock redeemed (5,000,000) -
Common stock issued - 21,507
Stock issuance cost - (181,485)
--------- ---------
Net cash used in financing activities (149,618) (159,978)
--------- ---------
Net decrease in cash and cash equivalents (1,263,081) (1,265,220)
Cash and cash equivalents at beginning of period 5,279,429 8,965,714
--------- ---------
Cash and cash equivalents at end of period $4,016,348 $7,700,494
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<PAGE> 6
HEMISPHERx BIOPHARMA, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Hemispherx BioPharma, Inc. (the "Company"), a Delaware corporation and all
its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The Company's interim consolidated
financial statements are unaudited.
In the opinion of management, all adjustments necessary for a fair presentation
of such consolidated financial statements have been included. Such adjustments
consist of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The interim consolidated financial statements and notes thereto are presented
as permitted by the Securities and Exchange Commission (SEC), and do not
contain certain information which will be included in the Company's annual
consolidated financial statements and notes thereto.
These consolidated financial statements should be read in conjunction with
the Company's 1997 consolidated financial statements included in the Company's
Form 10K statement filed with the SEC on March 27, 1998.
NOTE 2: SERIES E CONVERTIBLE PREFERRED STOCK
On March 7, 1997, the Company used the services of an investment banking
firm to privately place $5 million of Series E Convertible Preferred Stock.
The proceeds from placement were used to retire the $5 million balance of
Series D Convertible Stock issued on July 3, 1996. In conjunction with this
transaction, the Company issued 200,000 shares of common stock with a value
of $6.00 per share in exchange for a lock-up in the shares through November
30, 1997. Consequently, the Company incurred a $1.2 million charge which
had no effect on the total stockholders' equity as it was offset by an increase
in additional paid-in capital. On January 15, 1998, the Company paid GFL
Advantage Fund ("GFL") $181,486 and issued 100,000 registered shares as
settlement of the amount due GFL for the difference between the actual selling
price and the $6.00 value.
<PAGE>
<PAGE> 7
NOTE 3: STOCK COMPENSATION:
The Company recorded stock/warrant compensation expense of $216,808 during
the quarter ended March 31, 1998 for warrants granted to purchase Common
stock to non-employees of the Company. This expense had no effect on
shareholder equity as it was offset by an increase in additional paid-in
capital.
In January 1998, the Company granted 1,065,000 stock warrants to certain
employees in recognition of services performed and services to be performed.
The warrants are exercisable at prices ranging from $3 - $6 per share. The
share price at the grant date was $3.75 per share. The Company applies APB
Opinion No. 25 in accounting for stock-based compensation of its employees
and, accordingly, no compensation cost has been recognized for stock purchase
warrants issued to employees in the financial statements.
NOTE 4: NEW ACCOUNTING PRONOUNCEMENTS:
In January, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income ("Statement 130"), Statement
130 establishes new rules for the reporting and display of comprehensive
income and its components; however, the adoption of this Statement had no
impact on the Company's net loss or stockholders' equity. Statement 130
requires unrealized gains or losses in the Company's available-for-sale short-
term securities, which prior to adoption were reported separately in
stockholders' equity, to be included in other comprehensive income (loss).
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. It includes all changes in equity during a period
except those resulting from investments by owners and distributions to owners.
The term "other comprehensive income" refers to revenues, expenses, gains
and losses that under generally accepted accounting principles are included
in comprehensive income but excluded from net income. Total comprehensive
income (loss) equals net income for the three months ended March 31, 1998
and 1997, respectively, as all revenues, expenses, gains and losses were
included in net income.
In February, 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share", which was effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods. This statement establishes standards for computing and presenting
<PAGE>
<PAGE> 8
earnings per share (EPS) and applies to entities with publicly held common
stock or potential common stock. This Statement simplifies the standards
for computing earnings per share previously found in APB Opinion NO. 15,
"Earnings Per Share," and makes them comparable to international EPS standards.
It replaces the presentation of primary EPS with a presentation of basic
EPS. It also requires dual presentation of basic and diluted EPS on the face
of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted EPS
computation. This Statement requires restatement of all prior-period EPS
data presented. The adoption of this Statement by the Company in 1997 did
not have any impact on the Company's EPS disclosure, as the Company's stock
options and warrants are anti-dilutive and are excluded from the denominator
of loss per share; thus, loss per common share is equal to basic loss per
share as computed under SFAS No. 128.
ITEM 2: Managements Discussion and Analysis of Financial Condition and
Results of Operations.
GENERAL
Hemispherx Biopharma, Inc. (the "Company") is working to develop the Ampligen
and Oragen families of RNA drugs for the treatment of viral diseases and
certain cancers. Ampligen, its lead parental drug product, is in advanced
human clinical development for various therapeutic indications. Based on
the results of pre-clinical studies and clinical trials, the Company believes
that Ampligen may have anti-viral and anti-cancer activities. It has been
clinically evaluated as an investigational drug in over 350 patients for
different therapeutic indications to determine its most promising therapeutic
roles. The clinical profile that is emerging from these studies is that
the drug has broad-spectrum antiviral and immune modulating activity and
is generally well tolerated.
Ampligen is being developed clinically for use in treating three anti-viral
indications: myalgic encephalomyelitis, also known as chronic fatigue syndrome
("ME/CFS"), chronic hepatitis B virus ("HBV") infection, human immunodeficiency
virus ("HIV") associated disorders. Also, the Company has clinical experience
with treating patients with certain cancers. ME/CFS treatment constitutes
the primary clinical thrust of the Company within the United States and
European community. There are approximately 500,000 patients with ME/CFS
in the United States and a similar number in the European Union. The Company's
<PAGE>
<PAGE> 9
business strategy is designed around seeking the required regulatory approvals
which will allow the progressive introduction of Ampligen for ME/CFS and
HIV followed by HBV in the U.S., Canada, Europe and Japan. Ampligen has
received Orphan Drug designation from the FDA for four indications (AIDS,
renal cell carcinoma, chronic fatigue syndrome and invasive malignant
melanoma). The Company is also developing a second generation RNA drug
technology, termed Oragen compounds, which the Company believes offers the
potential for broad spectrum antiviral activity by oral administration.
The Company expects to continue its research and clinical efforts for the
next several years with significant benefit accruing as a result of certain
revenues expected from various cost recovery treatment programs, notably
in Canada, Belgium and the United States. However, the Company may continue
to incur losses over the next several years due to clinical costs incurred
in the continued development of Ampligen for commercial application. Possible
losses may fluctuate from quarter to quarter as a result of differences in
the timing of significant expenses incurred and receipt of licensing fees
and/or cost recovery treatment revenues in Belgium, Canada and the United
States. The Company is also pursuing similar programs in other countries,
especially within the European Union where resources have been substantially
increased with respect to pursuing regulatory approvals.
As part of its research and development activities, the Company has entered
into various collaborative and sponsored research agreements with researchers,
universities and government agencies. The Company believes that these
agreements provide the Company with access to physicians and scientists with
expertise in the fields of clinical medicine, virology, molecular biology,
biochemistry, immunology and cellular biology.
The Company's policy is to file or license patent applications on a worldwide
basis to protect technology, inventories and improvements that are considered
important to the development of its business. Over the years, Hemispherx
has secured a significant patent estate consisting of 24 issued U.S. patents
and over 300 derivative international filings; Ten additional U.S. patent
filings are pending along with their international counterparts. The Company
has also in-licensed, on an exclusive base, a large set of additional issued
patents and patent applications from Temple University ("the Oragen
technology"). These patents primarily cover the Company's technology platform
that involves modifications of nucleic acid polymers to achieve specifically
configured base pairs, or to alter nucleic acid structures to trigger dormant
components of the body's own immune/antiviral system and/or to inhibit
<PAGE>
<PAGE> 10
selectively certain human viruses such as hepatitis viruses, herpes viruses,
etc.
The development of the Company's products has required and will continue
to require the commitment of substantial resources to conduct the
time-consuming research, preclinical development, and clinical trials necessary
to bring pharmaceutical products to market and establish commercial production
and marketing capabilities. Accordingly, the Company may need to raise
additional funds through additional equity or debt financing, collaborative
arrangements with corporate partners, off balance sheet financing or from
other sources in order to complete the necessary clinical trials and the
regulatory approval processes and begin commercializing its products.
In 1994, the Company entered into an agreement with Bioclones, Ltd
("Bioclones"), a subsidiary of South African Breweries, Ltd., with respect
to the co-development of various RNA drugs, including Ampligen ("Bioclones
Agreement"). Pursuant to the Bioclones Agreement, Ribotech, Ltd. ("Ribotech"),
was formed in 1994 to produce the raw materials for Ampligen. Ribotech is
jointly owned by Bioclones (75.1%) and the Company (24.9%).
In 1996, the Company worked with Bioclones in the establishment of a pilot
plant to produce the raw materials needed for increasing the production of
Ampligen. Development of this plant establishes a second major source of
raw materials. In addition, the Company explored and established production
sources and processes to complement the existing lyophilization, drug release
testing and pharmacy services. In terms of research and clinical efforts,
the Company established with the FDA a comprehensive roadmap of research
and clinical studies to be conducted for product registration. These studies
included additional animal toxicity and further clinical studies in HIV and
ME/CFS. The comprehensive animal toxicity studies were started in 1996 and
the in-life component was completed by year end 1997 in time to support various
other regulatory initiatives of the Company in North America and Europe.
The Company is presently exploring distribution relationships for the European
and U.S. markets, and signed a letter of intent regarding a novel treatment
regimen for hepatitis B infection with a France-based multinational
pharmaceutical company termed Beaufour Ipsen. The Company retained in
November, 1997, regulatory consultants and a team of clinical experts to
assist in preparing a marketing application for the European Union and
commenced regular meetings with the EMEA (European Medical Evaluation Agency)
staff.
<PAGE>
<PAGE> 11
In 1997, the FDA approved the Company's ME/CFS Treatment Cost Recovery Protocol
which allows the enrollment of ME/CFS patients for treatment with Ampligen
on the basis of charging the patients for the cost of the drug. At this
time, this protocol allows a limited number of patients to have access to
treatment. Other significant clinical research events in 1997 include the
start of a Phase II clinical trial in Texas studying the activity of Ampligen
in treating HIV patients and completion of the in-life component of the animal
toxicity studies initiated in 1996.
The Company's South African affiliate (Ribotech, Ltd.) produced production
runs of raw materials that were accepted for use in the manufacture of
Ampligen. The Company worked with Ribotech to complete and file the Drug
Master File (DMF) with the FDA. These documents were successfully filed
with the FDA in the first quarter of 1998. The Company owns 24.9% of the
affiliate's stock.
A liquid formulation process for Ampligen was initiated at Cook Imaging,
a major U.S.-based facility for preparing large volume parenteral drug products
under GMP ("Good Manufacturing Practice").. This liquid process is more
efficient and allows for greater volume manufacturing production needed to
meet projected requirements. Results with the product liquid format to date
have been encouraging with respect to product stability and ease of handling.
The liquid formulation format also eliminates the need for a major pharmacy
function nearby the clinical treatment site.
In the fourth quarter of 1997, the FDA authorized the Company to commence
a confirmatory placebo-controlled clinical study of the Company's proprietary
drug, Ampligen, in patients suffering from ME/CFS. This trial is expected
to commence shortly at major medical centers in the United States with a
target of eventually enrolling more than 200 patients with the severely
debilitating forms of the ME/CFS disorder.
Recent Developments
In the first quarter of 1998, the Food and Drug Administration ("FDA")
authorized the expansion of the ME/CFS Cost-Recovery Treatment Program.
The program is being expanded in major metropolitan centers including: New
York City, Houston, San Diego, Philadelphia, Los Angeles, Charlotte, Reno
and Washington D.C.
In April 1998, the Company initiated actions to incorporate a wholly owned
<PAGE>
<PAGE> 12
subsidiary in Belgium for the purpose of establishing a physical presence
in Europe. The staff of this European Company will bring organization and
focus to completing the regulatory process of obtaining commercial approval
of Ampligen in Europe.
In March 1998, the Company entered into a research collaboration agreement
with R.E.D. Laboratories, a Belgium company dedicated to the development
and commercialization of CFS diagnostics. R.E.D. has developed a new test,
designated REDD, that appears to identify a subset of CFS patients who are
severely ill with ME/CFS disorders. The Company plans to utilize the test
in the United States on a research basis.
In February 1998, the Company entered into an agreement with Kimberly Home
Health Care, Inc. d/b/a Olsten Health Services ("Olsten"). This agreement
appoints Olsten as a distributor of products to U.S. patients enrolled in
the CFS cost recovery protocol (AMP 511). Olsten agreed to purchase Ampligen
for treating these patients. In addition, Olsten agreed to provide initially
up to $500,000 of support for other clinical trial efforts including
identification of medical and economic benefits to patients receiving Ampligen.
The Company agreed to compensate Olsten for certain services in connection
with conducting clinical trials.
In October, 1997 the Company raised an aggregate of $10,005,000 in gross
proceeds through two private offerings pursuant to Regulation D of the
Securities Act of 1933, as amended ("Act"), and Rule 506 promulgated
thereunder. All investors represented that they were accredited pursuant
to Rule 501 of the Act. The Company intends to use the proceeds from the
offering for general working capital and operating funds and to advance its
various clinical initiatives, including build-up of drug inventory and
streamlining various aspects of the over all manufacturing process.
RESULTS OF OPERATIONS
Three months ended March 31, 1998 versus three months ended March 31, 1997
The Company reported a net loss of $1,480,589 for the three months ended
March 31, 1998 versus a net loss of $2,311,234 for the same period in 1997.
Several factors contributed to the $830,645 reduction in losses in 1998.
First Quarter 1997 results include a one time non-cash preferred stock
conversion expense of $1,227,864 primarily due to the buy back and settlement
of the Series D Preferred Stock. No such expense was incurred in the first
<PAGE>
<PAGE> 13
quarter of 1998.
Revenues were up $55,704 for the three months of 1998 due to the increased
enrollment of patients in the Cost Recovery Clinical Treatment Program's
being conducted in Belgium, Canada and the United States for the treatment
of ME/CFS.
Research and development costs increased $263,353 in the first quarter.
This increase reflects the expenses associated with increased drug production
efforts and the increase in personnel necessary to support the forthcoming
clinical programs in Europe and the United States.
General and administrative expenses in the first three months of 1998 increased
by $261,143. This is due primarily to a common stock compensation expense
of $216,808 which is included in general and administrative expense. Interest
income increased $71,573 in the three months ended March 31, 1998 compared
to the same period in 1997 due to higher cash and cash equivalents available
for short term investments.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at March 31, 1998 was $7,700,494 compared to
$8,965,714 at December 31, 1997, reflecting a net cash use of $1,265,220
to support operations in the first quarter. In addition to the cash and
cash equivalents of $7,700,494 at March 31, 1998, the Company has $1,001,410
in short term investments. In October, 1997 the Company received net proceeds
of $9.4 million from two separate private placements of equity. Because
of the Company's long-term capital requirements, it may seek to access the
public equity market whenever conditions are favorable, even if it does not
have an immediate need for additional capital at that time. Any additional
funding may result in significant dilution and could involve the issuance
of securities with rights which are senior to those of existing stockholders.
The Company may also need additional funding earlier than anticipated, and
the Company's cash requirements in general may vary materially from those
now planned, for reasons including, but not limited to, changes in the
Company's research and development programs, clinical trials, competitive
and technological advances, the regulatory process, and higher than anticipated
expenses and lower than anticipated revenues from certain of the Company's
clinical trials for which cost recovery from participants has been approved.
The Company presently receives cash flow benefit from proceeds generated
<PAGE>
<PAGE> 14
by the ME/CFS Clinical Treatment Cost Recovery Programs now underway in the
United States, Canada and Belgium. This cash flow benefit should increase
as the program in the United States and Europe is allowed to expand.
In October, 1997 the Company completed two (2) private offerings of 4,840,000
shares of Common stock for and aggregate of $10,005,000 in gross proceeds.
Both transactions were handled by placement agents, who earned 6% commissions.
In March, 1997, the Company used the services of an investment banking firm
to privately place $5 million of Series E Convertible Preferred Stock. The
proceeds from this placement were used to retire the balance of Series D
Convertible Stock issued in July of 1996. As a result of this transaction
in 1997, the Company incurred a $1.2 million stock conversion cost; however,
this had no effect on the net equity of the Company as it was offset by an
increase in additional paid-in capital. The holders of Series E Convertible
Preferred Stock shall receive cumulative dividends when and if declared by
the board of directors at the rate of $60 per share. Holders of Series E
Convertible Preferred Stock upon surrender of the certificates shall have
the right to convert the Series E Preferred into fully paid and non-assessable
share of Common Stock.
The Company recognizes the need to ensure that its operations will not be
adversely impacted by the Year 2000 hardware and software issues. The Company
intends to confirm its compliance regarding Year 2000 issues for both internal
and external information systems by the end of 1998. This process will entail
communicating with significant suppliers, financial institutions, insurance
companies and other parties that provide significant services to the Company.
Expenditures required to make the Company Year 2000 compliant will be expensed
as incurred and are not expected to be material to the Company's consolidated
financial position or results of operations.
<PAGE>
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None
ITEM 2: Changes in Securities
In February, 1998, the Company filed a Registration Statement with the
Securities and Exchange Commission (SEC) to register the common stock placed
in the September 1997 private placements. The statement included common
stock underlying certain stock purchase warrants with registration rights.
In October, 1997, the Company's shares of common stock and Class A warrants
were listed with the American Stock Exchange and will trade under the symbols
HEB and HEBW respectively. Accordingly, the shares were delisted from the
Nasdaq SmallCap Market.
ITEM 3: Defaults in Senior Securities
None
ITEM 4: Submission of Matters to a Vote of Security Holders
None
ITEM 5:Other Information
None
ITEM 6: Exhibits and Reports on Form 8K
Reports on Form 8K - None
<PAGE>
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEMISPHERx BIOPHARMA, INC.
/s/ William A. Carter
---------------------------
Date: May 14, 1998 William A. Carter, M.D.
Chief Executive Officer & President
/s/ Robert E. Peterson
--------------------------
Date: May 14, 1998 Robert E. Peterson
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,700,494
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,800,876
<PP&E> 734,543
<DEPRECIATION> (639,472)
<TOTAL-ASSETS> 10,239,701
<CURRENT-LIABILITIES> 816,140
<BONDS> 0
0
36
<COMMON> 21,073
<OTHER-SE> 9,402,452
<TOTAL-LIABILITY-AND-EQUITY> 10,239,701
<SALES> 0
<TOTAL-REVENUES> 223,678
<CGS> 0
<TOTAL-COSTS> 1,704,267
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,480,589)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,480,589)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
