SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the Quarterly Period Ended September 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________
Commission File No. 1-14778
ENDOREX CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 41-1505029
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
28101 BALLARD DRIVE, SUITE F, LAKE FOREST, IL 60045
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (847) 573-8990
900 NORTH SHORE DRIVE, LAKE BLUFF, IL 60044
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities 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 [ ]
At November 13, 1998 9,936,000 shares of the registrant's common stock
(par value, $.001 per share) were outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
PART I. - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
ENDOREX CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Sept 30,
1998
ASSETS
Current assets:
Cash and cash equivalents $14,103,207
Prepaid expenses 104,147
Deferred costs 1,580,000
------------
Total current assets 15,787,354
Leasehold improvements and equipment,
net of accumulated amortization of
$916,110 429,294
Deferred costs 71,509
Patent issuance costs, net of accumulated
amortization of $44,701 368,585
------------
TOTAL ASSETS $16,656,742
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 687,984
Stockholders' equity:
Preferred stock, $.05 par value,
300,000 shares authorized, none
issued and outstanding
Series B convertible preferred stock,
$.05 par value, 200,000 shares authorized,
80,100 issued and outstanding at redemption
and liquidation value 8,448,905
Common stock, $.001 par value,
50,000,000 shares authorized, 10,054,642
issued, 9,936,000 outstanding 10,055
Additional paid-in capital 33,683,075
Deficit accumulated during the
development stage (25,729,527)
------------
16,412,508
Less:
Treasury stock, at cost, 118,642 shares (443,750)
------------
Total stockholders' equity 15,968,758
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $16,656,742
============
See accompanying condensed notes to financial statements.
ENDOREX CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative from
Nine Months February 15, 1985
Ended Sept. 30, (date of inception)
1998 1997 to Sept. 30, 1998
SBIR contract revenue $ -- $ -- $ 100,000
Expenses:
SBIR contract
research and
development -- -- 86,168
Proprietary research
and development 2,283,829 1,103,003 12,153,153
General and
administrative 2,588,170 738,889 7,011,081
------------- ------------ -------------
Total operating expenses 4,871,999 1,841,892 19,250,402
------------- ------------ -------------
Loss from operations (4,871,999) (1,841,892) (19,150,402)
Equity in loss from
joint venture (8,010,000) (8,010,000)
Other income -- -- 1,512
Interest income 629,962 19,597 1,636,559
Interest expense (13,483) (4,929) (207,196)
------------- ------------ -------------
Net loss $(12,265,520) $(1,827,224) $(25,729,527)
============= ============ =============
Basic and diluted
net loss per share
available to common
stockholders $ (1.28) $ (1.36) $ (27.91)
Basic and diluted
weighted average common
shares outstanding 9,943,532 1,329,322 937,651
See accompanying condensed notes to financial statements.
ENDOREX CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months
Ended Sept. 30,
1998 1997
Expenses:
Proprietary research
and development $ 854,367 $ 369,006
General and
administrative 845,098 226,211
----------- ----------
Total operating expenses 1,699,465 595,217
----------- ----------
Loss from operations (1,699,465) (595,217)
Interest income 182,964 11,648
Interest expense (3,074) (4,929)
----------- ----------
Net loss $(1,519,575) $ (588,498)
=========== ==========
Basic and diluted net
loss per share
available to common
stockholders $ (0.17) $ (0.33)
Basic and diluted
weighted average common
shares outstanding 9,936,000 1,810,230
See accompanying condensed notes to financial statements.
ENDOREX CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative from
Nine Months February 15, 1985
Ended Sept. 30, (date of inception)
1998 1997 to Sept. 30, 1998
Net cash used in operating
activities $(2,930,126) $(1,733,686) $(13,654,961)
----------- ----------- ------------
INVESTING ACTIVITIES:
Patent issuance cost (89,396) (64,945) (516,446)
Investment in joint venture (8,010,000) (8,010,000)
Organizational costs
incurred -- -- (135)
Deposit on leasehold
improvements -- -- (5,000)
Purchase of leasehold
improvements (237,375) -- (414,671)
Purchases of office
and lab equipment (149,865) (52,977) (936,885)
Proceeds from assets
sold -- 1,000
----------- ------------ ------------
Net cash used in
investing activities (8,486,636) (117,922) (9,882,137)
----------- ------------ ------------
FINANCING ACTIVITIES:
Net proceeds from
issuance of common
stock and warrant 1,871,845 1,746,408 30,024,722
Proceeds from issuance of
Series B Preferred 8,010,000 8,010,000
Proceeds from exercise
of options 61,750 -- 200,986
Proceeds from borrowings
from President -- -- 41,433
Repayment of borrowings
from President -- -- (41,433)
Proceeds from borrowings
under line of credit -- 287,490 662,490
Repayment of borrowings
under line of credit -- (287,490) (662,490)
Proceeds from note
payable to bank -- -- 150,000
Payments on note
payable to bank -- -- (150,000)
Proceeds from borrowings
from stockholders -- -- 15,867
Repayment of borrowings
from stockholders -- -- (15,867)
Advances from parent
company -- -- 135,000
Payments to parent
company -- -- (135,000)
Repayment of long-
term note receivable -- -- 50,315
Repayment of note
payable issued in
exchange for legal
service -- -- (71,968)
Purchase of treasury
stock (130,000) -- (573,750)
----------- ---------- -----------
Net cash provided by
financing activities 9,813,595 1,746,408 37,640,305
----------- ---------- -----------
Net increase (decrease)
in cash and cash
equivalents (1,603,167) (105,200) 14,103,207
Cash and cash equivalents at
beginning of periods 15,706,374 905,907 --
----------- ---------- -----------
Cash and cash equivalents at
end of periods $14,103,207 $ 800,707 $14,103,207
=========== ========== ===========
See accompanying condensed notes to financial statements.
ENDOREX CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements included herein
are prepared under the rules and regulations for reporting on Form 10-QSB.
Accordingly, certain information and footnote disclosures normally accompanying
the annual financial statements have been omitted. The interim financial
statements and notes should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's latest annual
report on Form 10-KSB. In the opinion of management, the consolidated financial
statements include all adjustments necessary for a fair statement of the results
of operations, financial position and cash flows for the interim periods. All
adjustments were of a normal recurring nature. The results of operations for
interim periods are not necessarily indicative of the results for the full
fiscal year.
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income" as of January 1, 1998. Since the Company
has no components of comprehensive income for the periods presented, there is no
effect of the adoption reflected in the financial statements.
JOINT VENTURE WITH ELAN CORPORATION
On December 31, 1997, the Company executed a binding letter of intent with
Elan Corporation, plc ("Elan"), to establish a joint venture for the exclusive
research, development and commercialization of oral and mucosal vaccines. The
closing of the transactions contemplated by the letter of intent occurred as of
January 21, 1998.
At the time of closing, the Company issued to Elan International Services, Ltd.
("EIS") for an aggregate purchase price of $2,000,000: (i) 307,692 shares of
the Company's common stock ("Common Stock"), par value $.001 per share, at $6.50
per share and (ii) a nine-year warrant to purchase an additional 230,770 shares
of Common Stock at an exercise price of $10.00 per share. The fair value
allocated to the warrants at the grant date was $846,000, which has been
recorded as a reclassification of additional paid-in capital. In addition, EIS
purchased $8.01 million of Series B convertible preferred stock ("Series B
Preferred") of the Company, which is convertible into Common Stock at a price of
$7.50 per share. The Series B Preferred is voting and pays an 8% annual
cumulative in-kind dividend. The joint venture is being conducted through
Innovax Corporation ("Innovax"), which is initially owned 80.1% by the Company
and 19.9% by EIS. Innovax has licensed certain technology from Elan and certain
other technology from Orasomal Technologies, Inc. ("Orasomal"). The Company has
invested $8.01 million in Innovax and Elan has invested $1.99 million.
In consideration for oral vaccine rights to certain of Elan's proprietary
technology, including patents and know how, Innovax paid Elan an initial $10
million license payment. Elan may receive future milestones and royalties based
on Innovax's performance. Since the technology does not yet represent a
commercial product, Innovax recorded an expense in the first quarter of 1998 for
the initial license fee paid to Elan. The Company recorded its $8.01 million
share of that expense and simultaneously recorded Elan's purchase of $8.01
million of the Series B Preferred.
Orasomal sub-licensed to Innovax oral vaccine rights to its proprietary
Orasome(TM) polymerized liposome technology exclusively licensed from
Massachusetts Institute of Technology ("MIT"). In consideration of the license,
Orasomal may receive milestone payments and royalties.
The Joint Development and Operating Agreement between the Company and Elan
provides for equal control of Innovax, including representation on the Board of
Directors and agreement of both parties for budgets and material transactions.
Therefore, the Company records Innovax's activities using the equity method of
accounting.
Elan and the Company will each fund R&D activities equally in the first year.
Accordingly, the Company includes R&D expenses incurred in conducting such
activities in the consolidated statement of operations. After the first year,
the Company and Elan will fund future joint venture expenditures in proportion
to their respective ownership levels.
NET LOSS PER SHARE
On October 1, 1997, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share." Earnings per share ("EPS")
have been presented on the Consolidated Statement of Operations in accordance
with SFAS No. 128 for the current and prior periods. As operations resulted in a
net loss for all periods presented, diluted earnings per share are the same as
basic earnings per share due to the anti-dilutive effect of potential dilutive
common shares. The net loss per share is computed by dividing the net loss by
the weighted average number of shares outstanding during the period as follows:
NINE MONTHS ENDED
SEPT. 30, 1998
------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ----------------- ---------
Net loss $(12,265,520)
Less: Preferred stock dividends (438,905)
------------
BASIC AND DILUTED EPS
Income available to
common stockholders $(12,704,425) 9,943,532 $(1.28)
============ ================= =========
NINE MONTHS ENDED
SEPT. 30, 1997
-----------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) -AMOUNT
------------ ----------------- ---------
Net loss $ (1,827,224)
Less: Preferred stock dividends --
------------
BASIC AND DILUTED EPS
Income available to
common stockholders $ (1,827,224) 1,329,322 $(1.36)
============ ================= =========
THREE MONTHS ENDED
SEPT. 30, 1998
----------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- -------------- ---------
Net loss $(1,519,575)
Less: Preferred stock dividends (159,761)
-----------
BASIC AND DILUTED EPS
Income available to
common stockholders $(1,679,336) 9,936,000 $(0.17)
=========== ============== =========
THREE MONTHS ENDED
SEPT. 30, 1997
----------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- -------------- ---------
Net loss $ (588,498)
Less: Preferred stock dividends --
-----------
BASIC AND DILUTED EPS
Income available to
common stockholders $ (588,498) 1,810,230 $(0.33)
=========== ============== =========
Options to purchase 1,483,172 shares of Common Stock at a weighted average
exercise price of $3.199 and warrants to purchase 2,459,600 shares of Common
Stock at a weighted average exercise price of $3.243, were outstanding but not
included in the computation of diluted EPS because the effect of the securities
was anti-dilutive. The Series B Preferred in-kind dividends were included in
the computation of basic and diluted EPS.
SUBSEQUENT EVENT
On September 30, 1998, the Company executed a binding letter of intent with Elan
to establish a second joint venture for the exclusive research, development and
commercialization of products using Elan's Medipad/TM/ delivery system for two
drugs in undisclosed fields. The closing of the transactions contemplated by the
letter of intent occurred as of October 21, 1998.
The second joint venture is initially owned 80.1% by the Company and 19.9% by
EIS. The new Company has obtained an exclusive worldwide license to the Medipad
/TM/ drug delivery system from Elan within the undisclosed fields. Medipad/TM/
is a lightweight, disposable drug delivery system, which combines the simplicity
of a patch with the extensive delivery capabilities of an infusion pump.
At the time of closing, the Company and EIS purchased $8,410,500 and $2,089,500
of the second joint venture's common stock, respectively. In addition, Elan
purchased $8,410,500 of Series C exchangeable convertible preferred stock
("Series C Preferred") of the Company. The Series C Preferred pays a 7% annual
in-kind dividend. The Series C Preferred plus accrued dividends is exchangeable
at Elan's option for an additional 30.1% ownership interest of the
second joint venture's common stock, or it may be converted into the Company's
Common Stock at a price of $9.00 per share.
At the time of closing, Elan received an initial $10 million license payment
from the joint venture, and may receive future milestones and royalties based on
the joint venture's performance. Since the technology does not yet represent a
commercial product, the joint venture will record an expense in the fourth
quarter of 1998 for the initial license fee paid to Elan. The Company will
record its $8.01 million share of that expense and will simultaneously record
EIS's $8.4 million purchase of Series C Preferred.
Until December 31, 1999, EIS and the Company each will contribute equally
towards funding the second joint venture's research and development activities,
and each will fund subsequent years' expenditures in proportion to their
respective ownership levels. In addition, during 2000 and 2001, the Company may
require Elan to lend up to $4,806,000, pursuant to a convertible note, to fund
the Company's portion of the second joint venture's research and development
expenses. The note will bear interest at 7% per year, compounded semi-annually,
and will be convertible into Common Stock at $5.70 per share.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion provides information which management believes is
relevant to an assessment and understanding of the Company's results of
operations and financial condition. The discussion should be read in conjunction
with the Company's unaudited consolidated interim financial statements and notes
thereto and the Company's Annual Report on Form 10-KSB. This report contains
certain statements of a forward-looking nature relating to future events or the
future financial performance of the Company. Investors are cautioned that such
statements are only predictions and that actual events or results may differ
materially. In evaluating such statements, investors should carefully consider
the various factors identified in this report, which could cause actual results
to differ materially from those indicated from such forward-looking statements,
including those set forth in Exhibit 99 "Certain Factors that May Affect Future
Results, Financial Condition and the Market Price of Securities" of this
Quarterly Report on Form 10-QSB.
Material Changes in Results of Operations
Net loss for the nine months ended Sept. 30, 1998 increased approximately $10.3
million as compared to the nine months ended Sept. 30, 1997, primarily due to
equity loss from Innovax, which included the Company's 80.1% share of the $10
million license fee paid by Innovax to Elan. Net loss for the three months ended
Sept. 30, 1998 increased $783,532, or 106%, as compared to the three months
ended Sept. 30, 1997. The Company is a development stage enterprise and expects
no significant revenue from the sale of products in the near future.
Research and development expenditures for the nine and three months ended
Sept. 30, 1998 increased $1,180,826, or 107%, and $485,361, or 132%,
respectively, as compared to the corresponding periods ended Sept. 30, 1997.
During the three months ended Sept. 30, 1998, the Company completed its new R&D
center in Lake Forest, Illinois, dedicated to developing the Company's oral
delivery technology for drugs and vaccines. The transfer of the research and
development activities and personnel from Fargo, North Dakota resulted in non-
recurring charges of approximately $120,000 during the first nine months.
Additionally, during the first three quarters, the Company recruited new
scientific personnel, adding 3 scientists to its staff to support Innovax's and
the Company's other increased research activities. The resulting R&D salary
expenses for the nine and three months ended Sept. 30, 1998 increased
approximately $387,000, or 99%, and $150,000, or 106%, respectively, as compared
to the corresponding periods ended Sept. 30, 1997. Due to the start of a new
randomized Phase II clinical trial for the treatment of pediatric bone cancer
with the Company's proprietary cancer drug, ImmTher(R), the evaluation in
animals of the Orasome(TM) technology with selected hormones at Johns Hopkins
Endocrinology Department and the initial startup of Innovax activities,
consulting expenses, clinical supplies, and sponsored R&D expenses increased
approximately $469,000, or 108% and $249,000, or 189%, respectively, for the
nine and three months ended Sept. 30, 1998 as compared to the same periods ended
Sept. 30, 1997. Additionally, the Company signed a research agreement with the
University of Wisconsin-Madison to develop and evaluate other monoterpene
analogs as cancer drug candidates. In August, the Company was issued a Japanese
patent on ImmTher(R). The Company expects to incur increased research and
development expenses associated with the second joint venture.
General and administrative expenses for the nine and three months ended Sept.
30, 1998 increased $1,849,281, or 250%, and $618,887, or 274%, respectively, as
compared to the nine and three months ended Sept. 30, 1997, mainly due to
amortization of $1,180,000 and $398,000 respectively, in fair value of warrants
issued in connection with the financial advisory agreement with Paramount
Capital, Inc., and additional business development personnel and expenses
related to expanded public and investor relations activities. Legal, accounting
and public relations expenses also increased related to the initiation of the
Company's listing on the American Stock Exchange. The Company began trading on
the American Stock Exchange under its new symbol, DOR, on August 6, 1998.
Interest income for the nine and three months ended Sept. 30, 1998 increased
approximately $610,000 and $171,000, respectively, as compared to the nine and
three months ended Sept. 30, 1997 as a result of investing cash proceeds from
the Company's private placement in October 1997 and the sale of common stock to
Elan in January 1998.
Plan of Operation
During the next twelve months, the Company will continue to conduct Phase II
clinical trials for Perillyl alcohol ("POH") and ImmTher(R). During the three
months ended Sept. 30, 1998, the Company expanded the clinical trial for
ImmTher(R) in Ewings sarcoma to Memorial Sloan-Kettering, a major cancer center.
The Company is also evaluating initiation of additional clinical trials with POH
and/or ImmTher(R) in other types of cancer, and continues to conduct a sponsored
research agreement with the University of Wisconsin-Madison to develop and
evaluate other monoterpene analogs as cancer drug candidates.
The Company continues pre-clinical development of its Orasome(TM) technology for
the oral delivery of vaccines and drugs. This development includes ongoing work
with Elan for vaccines and Johns Hopkins Endrocrinology Department for
hormones. The first patent for this technology issued in June 1998. A new R&D
center was completed in July for this development. The amortization and
maintenance of leasehold improvements and related new equipment are not expected
to have a material effect on results of operations or financial condition.
During the three months ended Sept. 30, 1998, the Company received notice of
issuance of a patent for its proprietary cancer drug ImmTher(R) for Japan. In
addition, the FDA designated ImmTher(R) as an Orphan drug for two types of
cancer, Ewings sarcoma and osteosarcoma. This will allow marketing exclusivity
when the drug is approved for market, as well as tax credits. Additionally, the
Company recruited new scientific personnel for Innovax,
bringing total employees as of November 13, 1998 to sixteen, of which eight hold
a Ph.D. and one holds an M.D. The Company does not plan to significantly
increase employees in the next twelve months.
On Sept. 30, 1998 and December 31, 1997, the Company had cash and cash
equivalents of $14,103,207 and $15,706,374, respectively, and working capital of
$13,519,370 and $15,212,680, respectively, exclusive of deferred costs. The
Company's current level of activities requires the expenditure of approximately
$400,000 per month, exclusive of costs associated with the second joint venture
that have not yet been determined. Management of the Company believes that its
current cash resources will be sufficient to support its currently planned
operations for the next two to three years. However, the Company intends, from
time to time in the future, to seek to expand its research and development
activities into other technologies and/or products that it either may license
from other persons or develop. Any such activities may require the expenditure
of funds not presently available to the Company. The Company may seek to obtain
these funds from possible future public or private sales of its securities or
other sources.
In October 1997, the Company completed a $20 million private placement.
Net proceeds were $17.2 million after commissions and expenses. The Company
used approximately $370,000 to repay a loan from two of its major stockholders.
The remaining proceeds are being used to fund research and development
activities, clinical trials, operations and the acquisition of new technologies.
From October 1997 through Sept. 30, 1998, the Company has used approximately
$3.5 million to fund research and development, including capital improvements
and equipment, clinical trials and operations.
In connection with the formation of Innovax in January 1998, the Company issued
to EIS 307,692 shares of Common Stock and a warrant to purchase 230,770 shares
of Common Stock for an aggregate purchase price of $2 million. In addition, the
Company issued to EIS 80,100 shares of Series B Preferred for a purchase price
of $8.01 million. The Company and Elan have invested $8.01 million and $1.99
million, respectively, in Innovax. Pursuant to a license agreement with Elan,
Innovax paid Elan an initial payment of $10 million.
In connection with the formation of the second joint venture with Elan in
October 1998, the Company issued to EIS 84,105 shares of Series C Preferred for
a purchase price of $8.4 million. The Company and Elan have invested $8.4
million and $2.1 million, respectively, in the second joint venture. Pursuant to
a license agreement with Elan, the second joint venture paid Elan an initial
payment of $10 million.
Year 2000
The Company is aware of the issues associated with computer programming code and
certain embedded computer chips used in computer systems as the Year 2000
approaches. Some systems may not be able to distinguish between the year 2000
and the year 1900. The Company utilizes personal computers, software packages
developed by third party vendors, and a service bureau for payroll to manage its
business. It has no internally developed software and does not sell any
products that are derived from internally developed software.
The Company is currently in the process of determining and coordinating the
actions necessary to provide uninterrupted, normal operation of business-
critical systems. There are four stages to the Year 2000 project: 1)awareness
2)vendor assessment 3)selection of new software, and 4) implementation. The
Company has completed the first stage of the project plan. It has inventoried
critical business systems and vendors and estimated the potential impact of
problems should any of the systems be non-compliant. Management believes, that
if necessary, the majority of the Company's systems can be replaced by another
vendor or performed manually with minimal cost.
The Company has cash equivalents which may be exposed to credit risk to the
extent that investment companies are materially adversely affected by the Year
2000 issue. It is anticipated that any such impact would be short lived and
would not impact the liquidity of the Company or its operating results.
The Company will obtain written confirmation from its vendors regarding Year
2000 compliance. It is anticipated that the assessment will be completed by
December 31, 1998, allowing adequate time to arrange alternative software and
services, if necessary. Based on the initial review of its systems to date,
management believes that the Year 2000 problem will not pose significant
operational problems and that the total costs associated with the Year 2000
issues will not have a material effect on the consolidated results of the
Company.
These estimates and conclusions contain forward-looking statements and are based
on management's best estimates of future events. Risks to completing the Year
2000 plan include the availability of alternative software, the Company's
ability to discover and correct potential Year 2000 problems which might have a
serious impact on operations, and liquidity issues surrounding securities
investments.
Impact of New Accounting Standards
In February 1998 and June 1998, FASB issued SFAS No. 132 "Employers' Disclosure
about Pensions and Other Post-retirement Benefits" and SFAS No. 133 "Accounting
for Derivative Instruments and Hedging Activities," respectively. The Company
does not expect the effect of the adoption of these pronouncements to have a
material effect on results of operations or financial condition.
PART II. - OTHER INFORMATION
ITEM 5 - OTHER INFORMATION
As disclosed in the Company's latest proxy statement, the deadline for
Submitting proposals to be considered for inclusion in the Company's Proxy
Statement for the 1999 Annual Meeting is January 1, 1999.
Pursuant to recent amendments to Rule 14a-4(c)(1) under the Securities Exchange
Act of 1934, the Company will have discretionary voting authority if a proponent
does not notify the Company by March 2, 1999 of their intent to present a
proposal from the floor at the 1999 Annual Meeting of Stockholders or of their
intent to commence a proxy solicitation for the 1999 Annual Meeting of
Stockholders.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
10.21 Securities Purchase Agreement, dated as of October 21, 1998,
between the Company and Elan International Services, Ltd.
10.22 Registration Rights Agreement, dated as of October 21, 1998,
between the Company and Elan International Services, Ltd.
10.23* License Agreement, dated as of October 21, 1998, between the
Company, Elan Corporation, plc, Endorex Newco, Ltd. and Elan
Medical Technologies Ltd.
10.24* Joint Development and Operating Agreement, dated as of October
21, 1998, between the Company, Elan Corporation, plc, Elan
International Services, Ltd. and Endorex Newco, Ltd.
27 Financial Data Schedule
99 Certain Factors that May Affect Future Results, Financial
Condition, and the Market Price of Securities
____________________
* The Company has applied for confidential treatment of portions of this
exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934,
as amended.
b) Reports on Form 8-K:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ENDOREX CORP.
/s/ Michael S. Rosen
Michael S. Rosen
President and Chief Executive Officer
(principal executive officer)
/s/ David G. Franckowiak
David G. Franckowiak
Vice President, Finance and Administration
(principal financial and accounting officer)
November 13, 1998