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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
Commission File Number 0-9314
ACCESS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 83-0221517
- ------------------------ --------------------------
(State of Incorporation) (I.R.S. Employer I.D. No.)
2600 Stemmons Frwy, Suite 176, Dallas, TX 75207
--------------------------------------------------
(Address of principal executive offices)
Telephone Number (214) 905-5100
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 requirement for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
Common stock outstanding as
of November 14, 1997 31,991,324 shares, $0.04 par value
---------------- ----------
Total No. of Pages 12
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PART I -- FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
The response to this Item is submitted as a separate section of this report.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Access Pharmaceuticals, Inc, ("Access" or the "Company") is a Delaware
corporation in the development stage. The Company is a polymer based
therapeutics company providing a new dimension in drug delivery through the
rational design of polymer/drug complexes to control site directed targeting,
localized release and clearance of therapeutic drugs, imaging agents and
radiopharmaceuticals. Through patented technology and core competencies in
polymer/drug delivery formulation, product and technology development, Access
technology platforms have the potential to significantly enhance the
therapeutic efficacy and reduce the toxicity of products via novel formulation
and drug delivery solutions.
Except for the historical information contained herein, the following
discussions and certain statements in this Form 10-Q are forward-looking
statements that involve risks and uncertainties. In addition to the risks and
uncertainties set forth in this Form 10-Q, other factors could cause actual
results to differ materially, including but not limited to Access's
research and development focus, uncertainties associated with research and
development activities, future capital requirements, anticipated option and
licensing revenues, dependence on others, and other risks detailed in the
Company's reports filed under the Securities Exchange Act, including but not
limited to the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
Since its inception in February 1988, Access has devoted its resources
primarily to fund its research and development programs. The Company has been
unprofitable since inception and to date has not received any revenues from the
sale of products. No assurance can be given that the Company will be able to
generate sufficient product revenues to attain profitability on a sustained
basis or at all. The Company expects to incur losses for the next several
years as it continues to invest in product research and development,
preclinical studies, clinical trials and regulatory compliance. At September
30, 1997, the Company's accumulated deficit was approximately $18.1 million.
RECENT DEVELOPMENTS
On May 29, 1997, the Company's Shareholders gave their approval to amend
Access' Certificate of Incorporation, as amended, to effect a recapitalization
(the "Recapitalization") of the Company through a one-for-four reverse stock
split of Access common stock (the "Common Stock") and decrease the number of
authorized shares of Common Stock from 60.0 million shares, par value $.04 per
share to 25.0 million shares, par value $.01 per share. The Recapitalization
would in fact proportionately increase the number of authorized but unissued
shares when compared with the number of issued and outstanding shares before
and after the Recapitalization. This proposal, when effective, would decrease
the number of outstanding shares of Common Stock from
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approximately 32.0 million to 8.0 million. As of November 14, 1997 the
Recapitalization has not been implemented and the Company does not intend to
implement the Recapitalization unless and until it meets all of the
qualifications for listing on the NASDAQ SmallCap Market or an exchange.
The Company believes that securing a NASDAQ or an exchange listing together
with the Recapitalization would improve Access' ability to finance the
Company's research activities under more favorable terms since institutional
investors and investment community members generally have restrictions on
investing in unlisted companies. If the Company implements the
Recapitalization, there can be no assurances that the market price of the
Company's Common Stock immediately after the implementation of the proposed
Recapitalization will increase, and if it does increase, there can be no
assurance that such increase can be maintained for any period of time, or
that such market price will approximate four times the market price before
the proposed reverse stock split. The Company currently does not meet the
listing requirements for the NASDAQ SmallCap Market and there
can be no assurances that the Company will be listed on the NASDAQ SmallCap
Market or any exchange.
On May 23, 1997, Access executed a definitive agreement to acquire Tacora
Corp., a privately-held pharmaceutical Company based in Seattle. The
transaction is expected to close shortly. Under the terms of the definitive
agreement, the purchase price is contingent upon the achievement of certain
milestones. In addition to cash of $250,000 and $100,000 in Common Stock to
be paid at closing, stock up to a maximum value of $14,000,000 could be
payable to Tacora's shareholders over a 30 month period on an escalating value
over the milestone period. The closing of the transaction is subject to
customary conditions to closing.
On August 1, 1997, the Company announced that it had signed an agreement to
enter into collaboration with The Dow Chemical Company ("Dow") for the
development of products incorporating Dow's chelation technology and Access'
bioresponsive polymer systems. The collaboration will focus on the development
of MRI contrast agents and radiopharmaceutical diagnostics and therapeutics.
The advancement of the Access developments in these areas are dependent on
securing chelation technology, which encapsulates metals to avoid adverse
effects on the body.
Liquidity and Capital Resources
Since its inception, the Company's expenses have significantly exceeded its
revenues, resulting in an accumulated deficit of $18,095,000 at September 30,
1997. The Company has funded its operations primarily through private sales of
its equity securities, contract research payments from corporate alliances and
the merger with Chemex Pharmaceuticals, Inc. At September 30, 1997, the Company
had working capital of $1.2 million and cash, cash equivalents and short-term
investments of $1.3 million. Net cash used in the Company's operating
activities was $2.9 million for the nine months ended September 30, 1997.
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. The
Company expects that its existing capital resources will not be adequate to
fund the Company's operations through the next twelve months. The Company is
dependent on raising additional capital to fund its development of technology
and to implement its business plan. Such dependence will continue at least
until the Company begins marketing its new technologies.
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Based on its current plans, the Company believes that its available cash, and
anticipated option and licensing revenues including proceeds from projected
interest income, will be sufficient to meet the Company's operating expenses
and capital requirements into the second quarter of 1998. If the anticipated
revenues are delayed or do not occur or the Company is unsuccessful in raising
additional capital on acceptable terms, the Company would be required to
curtail research and development and general and administrative expenditures
so that working capital would cover operations into the second quarter of 1998.
There can be no assurance, however, that changes in the Company's operating
expenses will not result in the expenditure of such resources before such time.
The Company will require substantial funds to conduct research and development
programs, preclinical studies and clinical trials of its potential products.
The Company's future capital requirements and adequacy of available funds will
depend on many factors including: the successful commercialization of
amlexanox; the ability to establish and maintain collaborative arrangements
for research, development and commercialization of products with corporate
partners; continued scientific progress in the Company's research and
development programs; the magnitude, scope and results of preclinical
testing and clinical trials; the costs involved in filing, prosecuting
and enforcing patent claims; competing technological developments; the
cost of manufacturing and scale-up; and, the ability to establish and
maintain effective commercialization activities and arrangements.
The Company intends to seek additional funding through research and development
or licensing arrangements with potential corporate partners, public or private
financing, or from other sources. The Company does not have any committed
sources of additional financing and there can be no assurance that additional
financing will be available on favorable terms, if at all. In the event that
adequate funding is not available, the Company may be required to delay, reduce
or eliminate one or more of its research or development programs or obtain funds
through arrangements with corporate collaborators or others that may require
the Company to relinquish greater or all rights to product candidates at an
earlier stage of development or on less favorable terms than the Company would
otherwise seek. Insufficient financing may also require the Company to
relinquish rights to certain of its technologies that the Company would
otherwise develop or commercialize itself. If adequate funds are not available,
the Company's business, financial condition and results of operations will be
materially and adversely effected.
The Company's business is subject to significant risks, including, without
limitation, uncertainties associated with the length and expense of the
regulatory approval process, uncertainty associated with obtaining and enforcing
patents and risks associated with dependence on corporate partners. Although
certain of the Company's products may appear promising at an early stage of
development, they may not be successfully commercialized for a number of
reasons, such as the possibility that the potential products will be determined
to be ineffective during clinical trials, fail to receive necessary approvals,
or be precluded from commercialization by proprietary rights of third parties.
Further, there can be no assurance that any collaborations will be initiated,
continued or result in successfully commercialized products.
Third Quarter 1997 Compared to Third Quarter 1996
- -------------------------------------------------
The Company had $113,000 in licensing revenue in the third quarter of 1997 as
compared to no revenues in the third quarter 1996. Third quarter 1997 revenues
were comprised of licensing income from an ongoing agreement with an emerging
pharmaceutical company which provides for royalty payments if a product
is developed from this technology.
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Total research and development spending for the third quarter of 1997 was
$787,000 as compared to $430,000 for the same period in 1996, an increase of
$357,000. The increase in research and development spending was the result of
the increase in external contract research costs- $362,000, primarily due to
the new Dow Agreement; additional staffing for projects- $25,000; increased
internal lab costs- $23,000; and other costs- $15,000; offset by lower
relocation costs for scientists in the third quarter 1997 of $68,000. If the
Company is successful in raising additional capital and receives anticipated
licensing revenues, research spending is expected to increase in future
quarters as the Company has hired additional scientific management and staff
and will accelerate activities to develop the Company's product candidates.
If the Company is not successful in raising additional capital or does not
receive anticipated licensing revenues, research spending will be curtailed.
Total general and administrative expenses were $425,000 for the third quarter
of 1997, a decrease of $29,000 as compared to the same period in 1996. The
decrease in spending was due primarily to the following: decreased professional
fees- $25,000; salaries and salary related expenses- $10,000; shareholder
expenses- $10,000; and other costs- $9,000; offset by increases in patent
costs- $25,000. If the Company is not successful in raising additional capital
or does not receive anticipated licensing revenues, general and administrative
spending will be curtailed.
Interest and miscellaneous income was $23,000 for the third quarter of 1997 as
compared to $58,000 for the same period in 1996, a decrease of $35,000. The
decrease was due to lower interest income resulting from lower cash balances in
the 1997 period.
Accordingly, total expenses exceeded revenues, resulting in a loss for the
third quarter of $1,112,000, or $.04 per share.
Nine Months ended September 30, 1997 Compared to Nine Months ended
September 30, 1996
- ------------------------------------------------------------------
Net revenues for the nine months ended September 30, 1997 were $301,000 as
compared to $165,000 in the same period in 1996, an increase of $136,000. 1997
revenues were comprised of licensing income from an ongoing agreement with an
emerging pharmaceutical company which provides for royalty payments if a
product is developed from the technology whereas 1996 revenues were from
an option agreement for rights to certain of the Company's radiopharmaceutical
technology that terminated in April 1996.
Research and development spending for the nine months ended September 30, 1997
was $1,829,000 as compared to $887,000 for the same period in 1996, an increase
of $942,000. The increase in research and development expenses was due to:
increased external research spending- $587,000, primarily due to the new Dow
Agreement; additional scientific staff- $243,000; additional project travel
expenses- $50,000; increased equipment costs- $39,000; internal lab costs-
$27,000 and other increases of $40,000 offset by lower relocation costs for
scientists in 1997- $44,000. If the Company is successful in raising
additional capital and receives anticipated licensing revenues, research
spending is expected to increase in future quarters as the Company has hired
additional scientific management and staff and will accelerate activities to
develop the Company's product candidates. If the Company is not successful in
raising additional capital or does not receive anticipated licensing revenues,
research spending will be curtailed.
General and administrative expenses were $1,254,000 for the nine months ended
September 30, 1997, an increase of $109,000 as compared to the same period in
1996. The increase was due to the following: salaries and related expenses of
newly hired employees- $101,000; general business consulting fees and expenses-
$73,000; and other increases- $7,000; offset by lower patent expenses- $42,000;
and lower moving costs during 1997- $30,000. If the Company is not successful
in raising additional capital or does not receive its anticipated revenues
general and administrative spending will be curtailed.
Excess purchase price over the fair value of Chemex Pharmaceuticals, Inc.'s
("Chemex") net
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assets of $8,314,000 was recorded and written off in the first quarter of 1996,
due to an immediate impairment of the excess purchase price.
Accordingly, total expenses exceeded revenues, which resulted in a loss for the
nine months ended September 30, 1997 of $2,788,000, or $.09 per share.
PART II -- OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
On July 11, 1997 the Company issued 600,000 shares of Common Stock to
The Dow Chemical Company in connection with the License Agreement.
The Company relied on Rule 506 and Section 4(2) of the Securities
Act of 1933 as exemption from the Registration thereunder.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibits: EX 10.12 License Agreement between The Dow Chemical
Company and the Company dated June 30, 1997.
(Confidential Treatment Requested)
Reports on Form 8-K: None
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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.
ACCESS PHARMACEUTICALS, INC.
Date: November 14, 1997 By: /s/ Kerry P. Gray
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Kerry P. Gray
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 14, 1997 By: /s/ Stephen B. Thompson
-------------- -------------------------
Stephen B. Thompson
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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ACCESS PHARMACEUTICALS, INC.
a development stage company
Balance Sheets
Assets September 30, 1997 December 31,
1996
- ------ ------------------ -----------------
Current Assets
Cash and cash equivalents $ 1,348,000 $ 4,428,000
Accounts receivable 88,000 1,000
Prepaid expenses and other current assets 130,000 190,000
------------- -------------
Total current assets 1,566,000 4,619,000
------------- -------------
Property and Equipment, at cost 673,000 585,000
Less accumulated depreciation (371,000) (285,000)
------------- -------------
302,000 300,000
------------- -------------
Licenses 500,000 -
Other Assets 8,000 9,000
------------- -------------
Total Assets $ 2,376,000 $ 4,928,000
============= =============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses $ 214,000 $ 449,000
Accrued insurance premium - 74,000
Current portion of obligations under
capital leases 134,000 152,000
------------- -------------
Total current liabilities 348,000 675,000
------------- -------------
Obligations under capital leases,
net of current portion 46,000 83,000
Note payable 110,000 110,000
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Total Liabilities 504,000 868,000
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Stockholders' Equity
Preferred stock, at September 30, 1997 and
December 31, 1996 $.01 par value,
authorized 10,000,000 shares,
none issued or outstanding; - -
Common stock, $.04 par value,
60,000,000 shares authorized,
31,691,324 and 31,391,324 shares issued
and outstanding for 09/30/97
and 12/31/96, respectively 1,280,000 1,256,000
Additional paid-in capital 18,687,000 18,111,000
Deficit accumulated during the
development stage (18,095,000) (15,307,000)
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Total Stockholders' Equity 1,872,000 4,060,000
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Total Liabilities and Stockholder's
Equity $ 2,376,000 $ 4,928,000
============= =============
- ---------------------------------------------
See accompanying notes to financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
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ACCESS PHARMACEUTICALS, INC.
a development stage company
Statements of Operations
Three Months ended Nine Months ended
September 30, September 30, February 24, 1988
---------------------- ---------------------- (inception) to
1997 1996 1997 1996 September 30, 1997
---------- ---------- ---------- ---------- -------------
Revenues
Sponsored Research and
development $ - $ - $ - $ - $ 2,711,000
Licensing revenue 113,000 - 188,000 - 188,000
Option income - - - - -
---------- ---------- ---------- ----------- ---------
113,000 - 301,000 165,000 2,039,000
---------- ---------- ---------- ----------- ----------
Expenses
Research and development 787,000 430,000 1,829,000 887,000 8,005,000
General and administrative 425,000 454,000 1,254,000 1,145,000 6,333,000
Depreciation and amortization 31,000 36,000 93,000 108,000 987,000
Write off of excess purchase price - - - 8,314,000 8,314,000
---------- ---------- ---------- ---------- -----------
Total Expenses 1,243,000 920,000 3,176,000 10,454,000 23,639,000
---------- ---------- ---------- ---------- -----------
Loss from operations (1,130,000) (920,000) (2,875,000) (10,289,000) (18,588,000)
---------- ---------- ---------- ----------- -----------
Other Income (Expense)
Interest and miscellaneous income 23,000 58,000 107,000 138,000 762,000
Interest expense (5,000) (10,000) (20,000) (37,000) (142,000)
---------- ---------- ---------- ----------- -----------
18,000 48,000 87,000 101,000 620,000
Loss before income taxes (1,112,000) (872,000) (2,788,000)(10,188,000) (17,968,000)
Provision for income taxes - - - - 127,000
---------- ---------- ---------- ---------- -----------
Net loss $(1,112,000) $(872,000) $(2,788,000)$(10,188,000)$(18,095,000)
========== ========== =========== ========== ===========
Loss per share $(0.04) $(0.03) $(0.09) $(0.35)
========== ========== ========== ==========
Average number of common and equivalent
common shares outstanding 31,919,585 31,386,405 31,569,346 29,326,544
========== ========== ========== ==========
- ----------------------------------------------
See accompanying notes to financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations
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ACCESS PHARMACEUTICALS, INC.
a development stage company
Statements of Cash Flows
Nine Months ended September 30, February 24,
1988
------------------------------ (inception) to
1997 1996 June 30, 1997
------------ ------------ ---------------
Cash Flows form Operating Activities
Net loss $(2,788,000) $ (10,188,000) $ (18,095,000)
Adjustments to reconcile
net loss to cash used in
operating activities:
Write off of excess
purchase price - 8,314,000 8,314,000
Consulting expense related
to warrants granted - - 344,000
Research expenses related
to stock granted 100,000 - 100,000
Depreciation and amortization 93,000 108,000 987,000
Change in assets and liabilities:
Accounts receivable (87,000) (3,000) (88,000)
Prepaid expenses and other
current assets 60,000 (126,000) (131,000)
Other assets 1,000 - (6,000)
Accounts payable and accrued
expenses (309,000) 41,000 167,000
Unearned revenue - (150,000) -
---------- --------- ---------
Net Cash Used in
Operating Activities (2,930,000) (1,998,000) (8,408,000)
----------- --------- ---------
Cash Flows From Investing Activities
Capitalized expenditures (95,000) (14,000) (1,243,000)
----------- --------- ---------
Net Cash Used in
Investing Activities (95,000) (14,000) (1,243,000)
----------- --------- ---------
Cash Flows From Financing Activities
Payments of principal on obligations
under capital leases (127,000) (89,000) (403,000)
Proceeds from notes payable 72,000 119,000 793,000
Proceeds from merger with
Chemex Pharmaceuticals - 1,587,000 1,587,000
Proceeds from stock issuances,
net - 5,525,000 9,022,000
---------- --------- ---------
Net Cash Provided By (Used in)
Financing Activities (55,000) 7,142,000 10,999,000
---------- --------- ----------
Net Increase (Decrease) in Cash
and Cash Equivalents (3,080,000) 5,130,000 1,348,000
Cash and Cash Equivalents at
Beginning of Period 4,428,000 30,000 -
---------- --------- ----------
Cash and Cash Equivalents at
End of Period $1,348,000 $5,160,000 $1,348,000
========== ========= ==========
Supplemental disclosure of
non cash transactions:
Eliminations of note payable
to Chemex Pharmaceutical
due to merger $ - $ 100,000 $ 100,000
Licensing fee $ 500,000 $ - $ 500,000
- ----------------------------------------------
See accompanying notes to financial statements and Managements Discussion and
Analysis of Financial Condition and Results
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ACCESS PHARMACEUTICALS, INC.
a development stage company
Notes to Financial Statements
Nine Months Ended September 30, 1997 and 1996
(1) Interim Financial Statements
The balance sheet as of September 30, 1997 and the statements of
operations and cash flows for the nine months ended September 30, 1997 and 1996
were prepared by management without audit. In the opinion of management, all
adjustments, including only normal recurring adjustments necessary for the fair
presentation of the financial position, results of operations, and changes in
financial position for such periods, have been made. Certain reclassifications
have been made to prior year financial statements to conform with the September
30, 1997 presentation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the year ended December 31, 1996. The
results of operations for the period ended September 30, 1997 are not
necessarily indicative of the operating results, which may be expected for a
full year. The balance sheet as of December 31, 1996 contains financial
information taken from the audited financial statements as of that date.
(2) The Company expects that its existing capital resources will not be
adequate to fund the Company's operations through the next twelve months. The
Company is dependent on raising additional capital to fund its development of
technology and to implement its business plan. Such dependence will continue
at least until the Company begins marketing its new technologies.
Based on its current plans, the Company believes that its available cash, and
anticipated option and licensing revenues including proceeds from projected
interest income, will be sufficient to meet the Company's operating expenses
and capital requirements into the second quarter of 1998. If the anticipated
revenues are delayed or do not occur or the Company is unsuccessful in raising
additional capital on acceptable terms, research and development and general
and administrative expenditures would be curtailed so that working capital
would cover operations into the second quarter of 1998. There can be no
assurance, however, that changes in the Company's operating expenses will not
result in the expenditure of such resources before such time.
(3) SFAS No. 125. "Accounting For Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after December
31, 1996 was adopted by the Company and does not have a material impact on the
Company's financial position, results of operations, or liquidity. This
Statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities based on
consistent application of a financial-components approach that focuses on
control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings.
(4) On May 29, 1997, the Company's Shareholders gave their approval to amend
Access' Certificate of Incorporation, as amended, to effect a recapitalization
(the "Recapitalization") of the Company
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through a one-for-four reverse stock split of Access common stock (the "Common
Stock") and decrease the number of authorized shares of Common Stock from 60.0
million shares, par value $.04 per share to 25.0 million shares, par value $.01
per share. The Recapitalization would in fact proportionately increase the
number of authorized but unissued shares when compared with the number of
issued and outstanding shares before and after the Recapitalization. This
proposal, when effective, would decrease the number of outstanding shares
of Common Stock from approximately 32.0 million to 8.0 million.
As of November 14, 1997 the Recapitalization has not been implemented
and the Company does not intend to implement the Recapitalization unless
and until it meets all of the qualifications for listing on the NASDAQ
SmallCap Market or an exchange.
The Company believes that securing a NASDAQ or an exchange listing together
with the Recapitalization would improve Access' ability to finance the
Company's research activities under more favorable terms since
institutional investors and investment community members generally
have restrictions on investing in unlisted companies. If the
Company implements the Recapitalization, there can be no assurances
that the market price of the Company's Common Stock immediately after
the implementation of the proposed Recapitalization will increase, and if it
does increase, there can be no assurance that such increase can be maintained
for any period of time, or that such market price will approximate four times
the market price before the proposed reverse stock split. The Company
currently does not meet the listing requirements for the NASDAQ SmallCap
Market and there can be no assurances that the Company will be listed on the
NASDAQ SmallCap Market or any exchange.
(5) On August 1, 1997, the Company announced that it had signed an agreement
to enter into collaboration with The Dow Chemical Company ("Dow") for the
development of products incorporating Dow's chelation technology and Access'
bioresponsive polymer systems. The collaboration will focus on the development
of MRI contrast agents and radiopharmaceutical diagnostics and therapeutics.
The advancement of the Access developments in these areas are dependent on
securing chelation technology, which encapsulates metals to avoid adverse
effects on the body.
(6) On May 23, 1997, Access executed a definitive agreement to acquire Tacora
Corp., a privately-held pharmaceutical Company based in Seattle. The
transaction is expected to close shortly. Under the terms of the definitive
agreement, the purchase price is contingent upon the achievement of certain
milestones. In addition to cash of $250,000 and $100,000 in Common Stock paid
at closing, stock up to a maximum value of $14,000,000 could be payable to
Tacora's shareholders over a 30 month period on an escalating value over the
milestone period. The closing of the transaction is subject to customary
conditions to closing.
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