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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-27578
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SUNPHARM CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware F593097048
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4651 Salisbury Road, Suite 205
Jacksonville, Florida 32256
(Address of principal executive offices)
Issuer's telephone number: (904) 296-3320
------------------------------------
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 |_|
Number of shares of the issuer's Common Stock outstanding as of August
14, 1996: 3,304,003.
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1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The following unaudited financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and notes disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to these rules and regulations. However, the Company
believes that the disclosures made herein are adequate, and accordingly, the
Company believes the information presented is not misleading. These financial
statements should be read in conjunction with the financial statements for the
year ended December 31, 1995 included in the Company's 1995 Form 10-KSB filed
pursuant to Section 15(d) of the Securities Exchange Act of 1934.
2
SUNPHARM CORPORATION
(A Development Stage Company)
BALANCE SHEETS
Pro Forma
June 30, 1996
December 31, June 30, 1996 (unaudited)
------------ ------------- -----------
1995 (unaudited) (See Note 3)
---- ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 331,069 $502,595 $2,225,536
Investments................................................ 1,290,464 -- --
Account receivable -- 500,000 --
Prepaid expenses and other current assets.................. 159,857 52,187 52,187
--------- --------- ---------
Total current assets................................. 1,781,390 1,054,782 2,277,723
--------- --------- ---------
Receivable from stockholder................................... 13,114 10,000 10,000
Other assets.................................................. 14,237 12,853 12,853
--------- --------- ---------
$ 1,808,741 $1,077,635 $2,300,576
=========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable........................................... $ 360,722 $773,434 $773,434
Accrued liabilities........................................ 177,483 190,007 340,007
Accrued legal fees......................................... 300,000 48,000 48,000
Notes payable.............................................. 87,834 39,703 39,703
--------- --------- ---------
Total current liabilities............................ 926,039 1,051,144 1,201,144
--------- --------- ---------
Commitments and contingencies
Stockholders' equity:
Undesignated series preferred stock,
$.001 par value, 2,500,000 shares authorized,
none issued and outstanding................................ -- -- --
Common stock, $.0001 par value 25,000,000 shares
authorized, 2,884,535, 2,934,535 (unaudited) and
3,304,003 (pro forma) issued and outstanding,
respectively............................................. 288 293 330
Additional paid-in capital.................................... 9,642,434 9,967,429 11,040,333
Deficit accumulated during development stage.................. (8,760,020) (9,941,231) (9,941,231)
---------- ----------- -----------
Total stockholders' equity .......................... 882,702 26,491 1,099,432
$ 1,808,741 $1,077,635 $2,300,576
=========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
SUNPHARM CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
--------------------------
June 30,
--------
1995 1996
---- ----
Sponsored research/sublicensing revenues............ $ __ $ 500,000
Interest income..................................... 54,147 8,692
------- -------
Total revenues................. 54,147 508,692
------- -------
Expenses:
Research and development........................ 474,430 361,736
General and administrative...................... 417,799 674,703
Royalty......................................... -- --
------- -------
Total expenses.......................... 892,229 1,036,439
------- -------
Net loss............................................ $ (838,082) $ (527,747)
========= =========
Net loss per share.................................. $ (0.29) $ ( 0.18)
========= =========
Shares used in computing loss per share............. 2,892,325 2,890,579
========= =========
The accompanying notes are an integral part of these financial statements.
4
SUNPHARM CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
For the Six Months Ended from Inception
------------------------ (May 3, 1990)
June 30, Through June 30,
-------- ----------------
1995 1996 1996
---- ---- ----
Sponsored research/sublicensing revenues............ $ __ $ 500,000 $ 2,385,000
Interest income..................................... 92,985 25,776 188,433
--------- --------- ----------
Total revenues................. 92,985 525,776 2,573,433
--------- --------- ----------
Expenses:
Research and development........................ 840,319 699,391 6,367,623
General and administrative...................... 1,605,051 1,007,596 5,937,041
Royalty......................................... __ __ 210,000
--------- --------- ----------
Total expenses.......................... 2,445,370 1,706,987 12,514,664
--------- --------- ----------
Net loss............................................ $ (2,352,385) $ (1,181,211) $(9,941,231)
========= ========= =========
Net loss per share.................................. $ (0.84) $ (0.41)
========= ========= =========
Shares used in computing loss per share............. 2,785,223 2,887,557
========= =========
The accompanying notes are an integral part of these financial statements.
5
SUNPHARM CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Period
from Inception
(May 3, 1990)
Through
For the Six Months Ended June 30, June 30,
---------------------------------
1995 1996 1996
---- ---- ----
Cash flows from operating activities:
Net loss............................................ ($2,352,385) ($1,181,211) ($9,941,231)
Adjustments to reconcile net loss to net
cash used in operating activities -
Depreciation and amortization................... 1,720 1,800 71,706
Expenses related to issuance
of stock for services......................... -- -- 43,750
Compensation expense related to options
and warrants issued........................ 50,000 -- 865,246
Offering costs incurred in connection with
10% Convertible Secured Notes................. 775,000 -- 775,000
Write-off of patents............................. -- -- 70,120
Increase in accounts receivable.................. -- (500,000) (500,000)
(Increase) decrease in receivable from
stockholder................................ (3,771) 3,114 (10,000)
(Increase) decrease in prepaid expenses
and other assets............................. 32,416 107,670 (53,828)
Increase (decrease) in accounts payable......... (716,836) 412,712 773,434
Increase (decrease) in accrued liabilities..... (285,011) 12,524 171,257
Increase in accrued liabilities................ -- 73,000 373,000
---------- -------- --------
Total adjustments............................. (146,482) 110,820 1,929,685
---------- ---------- -----------
Net cash used in operating activities.................. (2,498,867) (1,070,391) (7,361,546)
---------- ---------- -----------
Cash flows from investing activities:
Purchase of short-term investments................ (2,284,642) -- (3,324,062)
Sale of short-term investments................... -- 1,290,464 3,324,062
Purchases of office equipment..................... (2,876) (416) (17,614)
Payment of patent costs........................... -- -- (67,424)
---------- ---------- -----------
Net cash (used) in provided by investing
activities................................. (2,287,518) 1,290,048 (85,038)
---------- ---------- -----------
Cash flows from financing activities:
Payments of notes payable......................... (1,562,073) (48,131) (60,297)
Decrease in deferred offering costs............... -- -- (597,348)
Issuance of Series A redeemable
convertible preferred stock................... -- -- 513,525
Issuance of Series B redeemable
convertible preferred stock................... -- -- 450,000
Issuance of common stock.......................... 7,637,349 -- 7,643,299
Proceeds from payable to stockholders............. 25,000 -- 542,500
Repayment of payable to stockholders.............. (200,000) -- (542,500)
---------- ---------- -----------
Net cash provided by (used in)
financing activities.................... 5,900,276 (48,131) 7,949,179
---------- ---------- -----------
Net change in cash..................................... 1,113,891 171,526 502,595
Cash at beginning of period............................ -- 331,069 --
---------- -------- --------
Cash at end of period $1,113,891 $502,595 $502,595
========== ======== ========
Supplemental information:
Cash paid for interest............................ $13,103 $ 2,349 $164,259
Deferred compensation for stock $131,000 -- --
appreciation rights...........................
The accompanying notes are an integral part of these financial statements.
6
SUNPHARM CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
The balance sheet at June 30, 1996 and the related statements of operations
for the three month and six month periods ended June 30, 1996 and 1995 and the
period from inception (May 3, 1990) through June 30, 1996 and statements of cash
flows for the six month periods ended June 30, 1996 and 1995 and the period from
inception (May 3, 1990) through June 30, 1996 are unaudited. These interim
financial statements should be read in conjunction with the December 31, 1995
financial statements and related notes. The unaudited interim financial
statements reflect all adjustments which are, in the opinion of management,
necessary for a fair statement of results for the interim periods presented and
all such adjustments are of a normal recurring nature.
Interim results are not necessarily indicative of results for a full year.
Net Loss Per Share
Net loss per share is computed based on the weighted average shares of
common stock outstanding for the period.
Patent Costs
The Company reimburses the University of Florida Research Foundation, Inc.
(UFRI), for direct expenses relating to the Company's patents. Patent costs
consist of legal fees and other direct costs incurred in obtaining patents.
These costs are charged to research and development expense or general and
administrative expense when incurred.
Research and Development
Sponsored research revenue is recognized as revenue when the payments
are earned or received and the research has been performed. Research and
development expenses are charged to operations when incurred. Research and
development expenses include, among other things, consulting fees and cost
reimbursements to UFRI.
2. STATUS OF FINANCINGS
In April 1996, the Company received notice from The Nasdaq Stock Market
("Nasdaq") that the Company's total assets and capital and surplus as of
December 31, 1995, did not meet the minimum requirements for continued listing
on the Nasdaq Small Cap Market and that the Company's Common Stock, Warrants and
Units were subject to delisting. Nasdaq requested that the Company provide a
specific plan demonstrating how the Company will achieve ongoing compliance with
Nasdaq's minimum requirements of $2,000,000 of total assets and $1,000,000 of
capital and surplus. The Company provided a plan to Nasdaq which contemplated
cash inflows to the Company through the private placement of equity and other
sources in an amount sufficient to bring the Company into compliance by June 15,
1996, the date established by Nasdaq for final determination. On June 17, 1996,
the Company filed a Current Report on Form 8-K which established that the
Company had met the minimum requirements on such date for continued listing on
Nasdaq, as a result of the following events:
7
SUNPHARM CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
(i) the receipt in escrow of $370,480 of proceeds in connection with the
offering of Common Stock and warrants in the private placement; (ii) the
exercise of outstanding warrants from current warrantholders and the issuance of
additional warrants to such individuals, in an amount equal to $468,301; (iii)
payment of $500,000 from Warner-Lambert as a progress payment on the Phase I
clinical trials of DENSPM for cancer; and (iv) the settlement of a lawsuit with
Dean L. Rider, M.D. ("Rider Settlement") pursuant to which the Company issued to
Rider 50,000 shares of Common Stock. After the filing of the Current Report on
Form 8-K, the Company received additional proceeds and conducted an initial
closing on July 19, 1996, in which the Company received an aggregate of $623,605
of proceeds (including the amount previously held in escrow). Since the initial
closing, the Company has received an additional $106,500 of proceeds from the
private placement and $24,535 of proceeds from the exercise of warrants. The
Company has received subscription agreements and commitments in connection with
the private placement for an additional $250,000, from which the Company expects
to receive additional proceeds in subsequent closings. There can be no assurance
that SunPharm will receive the funds related to the subscription agreements and
commitments of $250,000. In the event such funds are not received, SunPharm will
have to raise funds from other sources. Based on all of the above, there can be
no assurance that the Company will be successful in maintaining its continued
listing on the Nasdaq Small Cap Market. In the event that the Company's
securities are delisted, the market value of such securities may be adversely
affected.
3. PRO FORMA BALANCE SHEET
Of the transactions discussed in Note 2, the issuance of Common Stock in
connection with the Rider Settlement and the recording of an accounts receivable
from Warner-Lambert in connection with their agreement to pay SunPharm $500,000
for work previously performed by SunPharm with respect to the Phase I human
clincal trials of DENSPM have been recorded in the interim financial statements
as of June 30, 1996. The other transactions discussed in Note 2, including the
receipt of the Warner-Lambert payment, which was received by the Company on July
12, 1996, have been reflected as pro forma adjustments in the Pro Forma balance
sheet. The additional subscription agreements and commitments of $250,000
referenced in Note 2, however, have not been taken into account in the Pro Forma
balance sheet. Although certain proceeds from the private placement and warrant
exercises were received in June 1996, the minimum requirements to break escrow
were not met until July 1996; therefore all of such proceeds have been treated
as pro forma adjustments in the interim unaudited financial statements.
8
SUNPHARM CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
* The pro forma adjustments to cash, accrued liabilities and stockholders'
equity reflected in the pro forma balance sheet are as follows:
Accounts Accrued Stockholders'
Cash Receivable Liabilities Equity
---- ---------- ----------- ------
1. Recording of proceeds of $730,105 and
the issuance of 132,747 shares of
Common Stock from the private placement
discussed in Note 2........................... $ 730,105 $ -- $ -- $ 730,105
2. Recording of proceeds of $492,836 and
the issuance of 236,722 shares of
Common Stock from the exercise of
warrants discussed in Note 2.................... 492,836 -- -- 492,836
3. To record the payment from Warner-
Lambert discussed in Note 2 and the
corresponding decrease to accounts
receivable...................................... 500,000 (500,000) -- --
4. To record $150,000 of placement fees,
legal fees and other costs incurred in
connection with the above transactions.......... -- -- 150,000 (150,000)
---------- --------- -------- ----------
Total Pro Forma Adjustments..................... $1,722,941 $(500,000) $150,000 $1,072,941
========== ========== ======== ==========
As a result of these transactions, the Company has $2,301,000 of total assets
and $1,099,000 of equity on a pro forma basis as of June 30, 1996.
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. The Quarterly Report on Form 10-QSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of
a number of important factors. For a discussion of important factors that could
affect the Company's results, please refer to the discussions below, and to the
discussions in the Company's 1995 Annual Report on Form 10- KSB under the
caption "Item 1. Business - Risk Factors."
OVERVIEW
Since its inception in May 1990, SunPharm has devoted substantially all of
its efforts and resources to research and development conducted on its own
behalf and through collaborations with clinical institutions. The Company's drug
development strategy emphasizes conducting most of its research and clinical
activities at the University of Florida. Consequently, the Company believes that
its research and development expenditures have been lower than other comparable
development stage pharmaceutical companies. The Company has incurred cumulative
net losses of $9,941,231 from its inception through June 30, 1996. The Company
expects to incur additional significant operating losses for at least the next
several years principally as a result of its continuing anticipated research and
development and clinical trial expenditures.
Results of Operations
Three Months Ended June 30, 1995 and 1996
The Company recorded licensing revenues during the three months ended June
30, 1996 of $500,000, as a result of an agreement with Warner-Lambert which
called for Warner-Lambert to make a progress payment for work previously
performed by SunPharm on the Phase I clinical trials of DENSPM for cancer. This
agreement was executed in June 1996, and the payment from Warner-Lambert was
received in July 1996.
The Company's research and development expenses decreased $112,000 from
$474,000 in the three months ended June 30, 1995 to $362,000 in the comparable
1996 period. These expenses consisted of expenditures for research and
development conducted by Dr. Bergeron at the University of Florida, the cost of
human clinical trials and costs related to other tests and studies performed in
connection with the Company's pharmaceutical compounds. The period ending June
30, 1995 included a considerable expense for toxicology studies, accounting for
most of the decrease in research and development expenses. Although research and
development expenses decreased from period to period, the Company expects its
research and development expenses to increase during the remainder of 1996 and
1997, reflecting anticipated increased expenses related to ongoing research,
preclinical studies and Phase I and Phase II human clinical trials.
General and administrative expenses increased from $418,000 in the three
months ended June 30, 1995 to $675,000 in the comparable 1996 period. The
increase is primarily attributable to the the settlement of a lawsuit with Dean
L. Rider, M.D. ("Rider Settlement") pursuant to which the Company issued to
Rider 50,000 shares of Common Stock valued at $325,000.
Six Months Ended June 30, 1995 and 1996
The Company recorded licensing revenues during the six months ended June
30, 1996 of $500,000, as a result of an agreement with Warner-Lambert described
above.
10
The Company's research and development expenses decreased $141,000 from
$840,000 in the six months ended June 30, 1995 to $699,000 in the comparable
1996 period. This decrease results from the toxicology studies performed in
1995, as discussed above.
General and administrative expenses decreased from $1,605,000 in the six
months ended June 30, 1995 to $1,008,000 in the comparable 1996 period. The
decrease is primarily attributable to issuance costs of $775,000 ($600,000 of
which were non-cash costs) incurred in connection with the issuance in 1994 of
the 10% Convertible Secured Notes, which were expensed in 1995 upon the
repayment of such notes and other costs incurred in the 1995 period which
related to the Company's initial public offering, offset by the costs associated
with the Rider Settlement in the 1996 period.
Liquidity and Capital Resources
Since its inception, the Company has financed its operations primarily
through collaborative research and sublicense agreements with its strategic
alliance partners and the issuance of debt and equity securities. Through
December 31, 1995 the Company had received $1,885,000 of cumulative sponsored
research and sublicensing revenues, approximately $1,000,000 in consideration of
the private placement of equity securities, and $1,697,500 in consideration of
the placement of debt securities. On January 12, 1995, the Company completed an
initial public offering (the "Offering") of 1,100,000 units ("Unit") at $7.00
per Unit. Each Unit consists of one share of the Company's Common Stock and one
Redeemable Common Stock Purchase Warrant ("Warrant"), which entitles the holder
to purchase one share of Common Stock at $8.75 per share. Additionally, on
February 16, 1995, the Representative exercised an option to purchase an
additional 165,000 Units at $7.00 per Unit. Proceeds from the Offering were
approximately $7,200,000 of cash, net of underwriting costs and other Offering
costs of $1,655,000. Of such net proceeds, approximately $1,793,000 was used to
repay the outstanding indebtedness (including accrued interest and certain fees)
of the Company. On July 12, 1996, the Company received a $500,000 payment from
Warner-Lambert in connection with the Phase I DENSPM human clinical trials. Such
payment was accrued as licensing revenues for the period ended June 30, 1996.
During the six month period ended June 30, 1996, the net cash used in
operating activities was $1,070,000. During the comparable 1995 period, cash
used by operating activities was $2,499,000. The decrease in cash used in
operations is primarily attributable to the payment in the 1995 period of
$700,000 of accounts payable and $210,000 of royalties both of which were
delayed until the completion of the Company's initial public offering. At June
30, 1996, the Company had cash and cash equivalents of $503,000. The Company had
net working capital of only $3,000 at June 30, 1996. The Company will require
substantial funds for research and development performed by the University of
Florida and to perform preclinical testing and clinical trials of its potential
products.
In April 1996, the Company received notice from The Nasdaq Stock Market
("Nasdaq") that the Company's total assets and capital and surplus as of
December 31, 1995, did not meet the minimum requirements for continued listing
on the Nasdaq Small Cap Market and that the Company's Common Stock, Warrants and
Units were subject to delisting. Nasdaq requested that the Company provide a
specific plan demonstrating how the Company will achieve ongoing compliance with
Nasdaq's minimum requirements of $2,000,000 of total assets and $1,000,000 of
capital and surplus. The Company provided a plan to Nasdaq which contemplated
cash inflows to the Company through the private placement of equity and other
sources in an amount sufficient to bring the Company into compliance by June 15,
1996, the date established by Nasdaq for final determination. On June 17, 1996,
the Company filed a Current Report on Form 8-K which established that the
Company had met the minimum requirements on such date for continued listing on
Nasdaq, as a result of the following events: (I) the receipt in escrow of
$370,480 of proceeds in connection with the offering of Common Stock and
warrants in the private placement; (ii) the exercise of outstanding warrants
from current warrantholders and the issuance of additional warrants to such
individuals, in an amount equal to $468,301; (iii) payment of $500,000 from
Warner-Lambert as a progress payment on the Phase I clinical trials of DENSPM
11
for cancer; and (iv) the settlement of a lawsuit with Dean L. Rider, M.D.
("Rider Settlement") pursuant to which the Company issued to Rider 50,000 shares
of Common Stock. After the filing of the Current Report on Form 8-K, the Company
received additional proceeds and conducted an initial closing on July 19, 1996,
in which the Company received an aggregate of $623,605 of proceeds (including
the amount previously held in escrow). Since the initial closing, the Company
has received an additional $106,500 of proceeds from the private placement and
$24,535 of proceeds from the exercise of warrants. The Company has received
subscription agreements and commitments in connection with the private placement
for an additional $250,000, from which the Company expects to receive additional
proceeds in subsequent closings. There can be no assurance that SunPharm will
receive the funds related to the subscription agreements and commitments of
$250,000. In the event such funds are not received, SunPharm will have to raise
funds from other sources. The Company will continue to raise funds under the
aforementioned private placement through, at least, September 30, 1996. Based on
all of the above, there can be no assurance that the Company will be successful
in maintaining its continued listing on the Nasdaq Small Cap Market. In the
event that the Company's securities are delisted, the market value of such
securities may be adversely affected.
On a pro forma basis, the Company had $2,301,000 of total assets,
$1,099,000 of equity, $2,226,000 of cash and $1,077,000 of working capital at
June 30, 1996 (see Pro Forma Balance Sheet and Note 3 to unaudited interim
financial statements).
The Company will require significant levels of additional capital, which it
intends to raise through additional equity or debt financing, additional
arrangements with corporate partners or from other sources. No assurance can be
given that the necessary funds will be available for the Company to finance its
development on acceptable terms or at all. If adequate funds are not available
from operations or additional sources of financing, the Company's business will
be materially and adversely affected.
The Company has incurred losses since inception and, therefore, has not
been subject to federal income taxes. As of December 31, 1995, the Company had
net operating loss ("NOL") and tax credit carryforwards for income tax purposes
of approximately $6,458,000 and $260,000, respectively, which may be available
to reduce future taxable income and future tax liabilities. These carryforwards
begin to expire in 2008. The Tax Reform Act of 1986 provides for an annual
limitation on the use of NOL and credit carryforwards (following certain
ownership changes) that could significantly limit the Company's ability to
utilize these carryforwards. The Company has made no determination concerning
whether there has been such a cumulative change in ownership. It is possible
that such a change in ownership occurred following the completion of the
Offering and exercise of the Representative's over-allotment option or as a
result of the Company's 1996 private placement. Accordingly, the Company's
ability to utilize the aforementioned carryforwards to reduce future taxable
income and tax liabilities may be limited. Additionally, because United States
tax laws limit the time during which these carryforwards may be applied against
future taxes, the Company may not be able to take full advantage of these
attributes for federal income tax purposes.
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On December 20, 1995, Dean L. Rider, M.D., ("Rider") a stockholder of the
Company, filed suit against the Company and Stefan Borg in Superior Court for
the City and County of San Francisco, California, seeking compensatory damages
of over $41 million and punitive damages based upon an alleged agreement between
SunPharm and Dr. Rider. In June 1996, the Company settled this litigation with
Rider by issuing Rider 50,000 shares of SunPharm Common Stock. The Company
further agreed to file an S-3 registration statement to register such shares for
resale. The Company believes that the claims made by Rider were without merit,
and did not admit to any wrongdoing in connection with the settlement. The
Company agreed to the settlement because it believed the cost of the settlement
to be more economical than the cost of continuing to incur significant legal
expenses to defend this matter.
Item 4. Matters Submitted for Shareholder Approval.
The Company's annual meeting was held on May 14, 1996. The shareholders of
the Company elected directors of the Company to serve until the next annual
meeting and ratified the selection of Deloitte & Touche LLP as independent
accountant for its fiscal year ended December 31, 1996.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Number Exhibit
------ -------
11.1 Statement of computation of net loss per share
27. Financial Data Schedule
(b) Reports on Form 8-K.
Report on Form 8-K filed June 17, 1996 reporting status of compliance with The
NASDAQ Stock Market minimum requirements for total assets and capital and
surplus.
13
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.
SUNPHARM CORPORATION
Date: August 14, 1996 By: /s/ Stefan Borg
------------------------------
President and Chief Executive Officer
(Principal Executive, Financial and
Accounting Officer)
14
EXHIBIT 11.1
SUNPHARM CORPORATION
CALCULATION OF LOSS PER SHARE
For the Three Months Ended June 30, 1996
Weighted Average Shares Outstanding:
Total Shares # Days Outstanding
------------ ------------------
2,884,535 x 80 = 230,762,800
2,934,535 x 11 = 32,279,885
--------- --- --------------
91 263,042,685/ 91 = 2,890,579
Net Loss (527,747) = $(0.18) Per Share
---------
Weighted Average Shares 2,890,579
For the Three Months Ended June 30, 1995
Weighted Average Shares Outstanding:
Total Shares # Days Outstanding
------------ ------------------
2,892,325 x 91 = 263,201,575 / 91 = 2,892,325
Net Loss (838,082) = $(0.29) Per Share
----------
Weighted Average Shares 2,892,325
15
SUNPHARM CORPORATION
CALCULATION OF LOSS PER SHARE
For the Six-Months Ended June 30, 1996
Weighted Average Shares Outstanding:
Total Shares # Days Outstanding
------------ ------------------
2,884,535 x 171 = 493,255,485
2,934,535 x 11 = 32,279,885
--------- --- --------------
182 525,535,370/ 182 = 2,887,557
Net Loss (1,181,211) = $(0.41) Per Share
----------
Weighted Average Shares 2,887,557
For the Six-Months Ended June 30, 1995
Weighted Average Shares Outstanding:
Total Shares # Days Outstanding
------------ ------------------
1,780,847 x 12 = 21,370,164
2,719,535 x 35 = 95,183,725
2,892,325 x 134 = 387,571,550
--- -----------
181 504,125,439 / 181 = 2,785,223
Net Loss (2,352,385) = $(0.84) Per Share
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Weighted Average Shares 2,785,223
16