-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pp9zQQMJnRRG7VDmd3tblHz7EYVXrdHVw7SPkU/u6ooGbNZ3P6iyZJO15oU7sj3x oF38QUkW233MzULd+N2iow== 0000840319-99-000012.txt : 19990615 0000840319-99-000012.hdr.sgml : 19990615 ACCESSION NUMBER: 0000840319-99-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APHTON CORP CENTRAL INDEX KEY: 0000840319 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 953640931 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19122 FILM NUMBER: 99645496 BUSINESS ADDRESS: STREET 1: 444 BRICKELL AVE STREET 2: STE 51-507 CITY: MIAMI STATE: FL ZIP: 33131 BUSINESS PHONE: 3053747338 MAIL ADDRESS: STREET 1: 444 BRICKELL AVE STREET 2: STE 51-507 CITY: MIAMI STATE: FL ZIP: 33131 10-Q 1 FOR THE QUARTER ENDED APRIL 30, 1999 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 Quarterly ended April 30, 1999 Commission File Number 0-19122 APHTON CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-3640931 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 444 Brickell Avenue, Suite 51-507 33131-2492 Miami, Florida (Zip Code) (address of principal executive offices) Registrant's telephone number, including area code (305) 374-7338 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. Yes X No -- -- The number of shares of Common Stock outstanding as of the close of business on June 1, 1999: Class Number of Shares outstanding Common Stock, $0.001 par value 14,433,384 APHTON CORPORATION Index Page Part I - Financial Information 3 Item 1. Financial Statements: Balance Sheets - April 30, 1999 and January 31, 1999 3 Statements of Operations - Three months ended April 30, 1999 and 1998 4 Statements of Cash Flows - Three months ended April 30, 1999 and 1998 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II - Other Information Item 1. Legal Proceedings 7 Item 2. Changes in Securities 7 Item 3. Defaults Upon Senior Securities 7 Item 4. Submission of Matters to a Vote of Security Holders 7 Item 5. Other Information 7 Item 6. Exhibits and Reports on Form 8-K 7 Signature Page 7 APHTON CORPORATION Part I - Financial Information The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the financial statements include all adjustments necessary to present fairly the financial position of the Company as of April 30, 1999 and January 31, 1999 and the results of its operations and its cash flows for the three months ended April 30, 1999 and 1998. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. APHTON CORPORATION Balance Sheets - April 30, 1999 and January 31, 1999 April 30, January 31, 1999 1999 Assets Current Assets: Cash and short-term cash investments $8,454,043 $10,164,069 Other assets (including current portion of unconditional supply commitment) 371,276 469,811 Total current assets 8,825,319 10,633,880 Equipment and improvements, at cost, net of accumulated depreciation and amortization 218,632 215,599 Unconditional supply commitment 8,650,000 8,650,000 Total assets $17,693,951 $19,499,479 Liabilities and Stockholders' Equity Liabilities: Current liabilities: Accounts payable and other $2,649,267 $2,947,951 Total current liabilities 2,649,267 2,947,951 Deferred revenue 10,000,000 10,000,000 Total liabilities 12,649,267 12,947,951 Commitment Stockholders' Equity: Common stock, $0.001 par value - Authorized: 30,000,000 shares Issued and outstanding: 14,433,384 shares at April 30, and January 31, 1999 14,434 14,434 Additional paid in capital 47,960,689 47,960,689 Purchase warrants 336,904 336,904 Accumulated deficit (43,267,343) (41,760,499) Total stockholders' equity 5,044,684 6,551,528 Total liabilities and stockholders' equity $17,693,951 $19,499,479 APHTON CORPORATION Statements of operations for the three months ended April 30, 1999 and 1998 Three Months Ended April 30, 1999 1998 Revenue: Dividend, interest and other income $102,987 $153,315 Total 102,987 153,315 Costs and Expenses: General and administrative expense 321,220 240,123 Research and development expense 1,288,611 2,224,891 Total costs and expenses 1,609,831 2,465,014 Net loss $(1,506,844) $(2,311,699) Per share data: Basic loss per common share $(0.10) $(0.16) Diluted loss per common share $(0.10) $(0.16) Weighted average number of common shares outstanding 14,433,384 14,191,217 APHTON CORPORATION Statements of cash flows for the three months ended April 30, 1999 and 1998 Decrease in cash and short-term cash investments Three Months Ended April 30, 1999 1998 Net cash used in operating activities $(1,688,350) $(2,009,473) Cash flows from investing activities: Capital expenditures (21,676) - _______ ______ Cash used in investing activities (21,676) - Decrease in cash and short-term cash investments (1,710,026) (2,009,473) Cash and short-term cash investments: Beginning of period 10,164,069 14,226,000 End of period $8,454,043 $12,216,527 Reconciliation of net loss to net cash used in operating activities Net loss $(1,506,844) $(2,311,699) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 18,643 15,518 Changes in- Decrease in other assets 98,535 20,267 Increase (decrease) in accounts payable (298,684) 266,441 Net cash used in operating activities $(1,688,350) $(2,009,473) Management's Discussion and Analysis of Financial Condition and Results of Operations General Aphton Corporation is a biopharmaceutical company developing products using its innovative vaccine-like technology for neutralizing hormones that participate in gastrointestinal system and reproductive system cancer and non-cancer diseases; and the prevention of pregnancy. Aphton has strategic alliances with Pasteur Merieux Connaught (Rhone-Poulenc Group), SmithKline Beecham, Schering-Plough Animal Health and the World Health Organization (WHO). Aphton's Web page, describing the company, its technology, products, strategic alliances and news releases, can be visited at: www.aphton.com. Results of Operations During the quarter ending April 30, 1999, the Company's strategic partners assumed research and development costs on certain products that were previously incurred by the Company, as described below. As a result, the Company's total costs and expenses decreased from $2,465,014 to $1,609,831 for the three months ended April 30, 1999 when compared to the corresponding period of the prior year. Research and development costs decreased from $2,224,891 for the quarter ended April 30, 1998 to $1,288,611 for the quarter ended April 30, 1999. The Company's future research and development expenditures will depend upon numerous factors, including the following: the progress of the Company's research and development program, preclinical testing and clinical trials; the timing and cost of obtaining regulatory approvals; the levels of resources that the Company devotes to product development, manufacturing and marketing capabilities; technological advances; competition; and collaborative arrangements or strategic alliances with other drug companies, including the further development, manufacturing and marketing of certain of the Company's products and the ability of the Company to obtain funds from such strategic alliances or from other sources. Results and Status Clinical Results Safety / Dose Ranging - See Aphton's Web page and Fiscal 1999 Form 10-K for previously announced results and on-going studies. Survival - See Aphton's Web page and Fiscal 1999 Form 10-K for previously announced results. Phase III Clinical Trial Programs - See Aphton's Web page and Fiscal 1999 Form 10-K for previously announced human trials which are under way. Recent Studies In May 1999, at the American Gastroenterological Association (AGA) annual meeting, scientists from the UK presented two key papers which resulted from collaborative studies with Aphton scientists. The first study showed that Aphton's anti-gastrin immunogen inhibits, in vivo, both of the major hormonal pathways, namely the endocrine and autocrine pathways, that fuel stomach (gastric) cancer. The second study showed that gastrin receptors are expressed in the early stages of development of colon cancer (as in gastric cancer) and that elevated levels of gastrin that are induced by the proton-pump inhibitor omeprazole enhance the growth of colonic adenomas. See Aphton's Web page under News Releases for more details. Strategic Alliances - See Aphton's Web page and Fiscal 1999 Form 10-K for further discussions. Year 2000 Many computer programs were written to use only two digits to identify the year. Thus, a computer program could read the digits "00" as the year 2000 or as the year 1900. In addition, microprocessors embedded in many operating facilities such as communication systems may cause equipment malfunctions because of the year 2000 date change. Failure by third parties upon which the Company relies (or by the Company) to address the year 2000 issue could cause material loss to the Company. Management has completed the awareness and assessment phase of a comprehensive program to address the year 2000 issue. The Company utilizes standard "off-the-shelf" software and will implement any necessary vendor upgrades and modifications to assure continued functionality. At present, management does not expect that material incremental costs will be incurred in the aggregate or in any single future year. The Company has also begun to assess the year 2000 compliance efforts of external parties upon which the Company relies. The Company is developing contingency plans for addressing any material failure to deal with the year 2000 date change that will address the Company's exposure to year 2000 noncompliance by third parties. Even though the Company's planned software and hardware modifications and system upgrades should adequately address year 2000 issues, there can be no assurance that unforeseen difficulties will not arise. There is no assurance that the failure of any external party to resolve its year 2000 issues would not have a material adverse effect on the Company. Other Issues Inflation and changing prices have not had a significant effect on continuing operations and are not expected to have any material effect in the foreseeable future. Dividend, interest and other income were primarily derived from money-market accounts. Liquidity and Capital Resources The Company had financed its operations since inception through the sale of its equity securities and, to a lesser extent, operating revenues from R&D limited partnerships to conduct research and development. These funds provided the Company with the resources to acquire staff, construct its research and development facility, acquire capital equipment and to finance technology and product development, manufacturing and clinical trials. The Company anticipates that its existing capital resources which are composed primarily of cash and short-term cash investments, including the proceeds of its private placements and interest thereon, and available capital sources, would enable it to maintain its currently planned operations into the year 2001. The Company's working capital and capital requirements will depend upon numerous factors, including the following: the progress of the Company's research and development program, preclinical testing and clinical trials; the timing and cost of obtaining regulatory approvals; the levels of resources that the Company devotes to product development, manufacturing and marketing capabilities; technological advances; competition; and collaborative arrangements or strategic alliances with other drug companies, including the further development, manufacturing and marketing of certain of the Company's products and the ability of the Company to obtain funds from such strategic alliances or from other sources. See Fiscal 1999 Form 10-K for further discussion of available funds from SmithKline Beecham strategic alliance. PART II - Other information Item 1. Legal Proceedings. Not applicable. Item 2. Changes in Securities. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. Item 6. Exhibits and Report on Form 8-K. a. Exhibit Numbers 27.1 Financial Data Schedule b. There were no reports on Form 8-K filed during the quarter ended April 30, 1999. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. Aphton Corporation Date: June 11, 1999 By: /s/ Frederick W. Jacobs -------------------------------- Frederick W. Jacobs Treasurer and Chief Accounting Officer EX-27 2 FDS FOR THE QUARTER ENDED APRIL 30, 1999
5 This schedule contains summary financial information extracted from the Annual Report on Form 10-K for the year ended January 31, 1999 and the Quarterly Report on Form 10-Q for the quarter and three months ended April 30, 1999 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS JAN-31-1999 FEB-1-1999 APR-30-1999 8,454 0 8,981 0 0 8,825 1,011 (792) 17,694 (2,649) 0 0 0 (14) (48,298) (17,694) 0 103 0 0 1,610 0 0 (1,507) 0 (1,507) 0 0 0 (1,507) (0.10) (0.10)
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