SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-26918
eXegenics Inc.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2402409
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NUMBER)
2110 RESEARCH ROW, SUITE 621, DALLAS, TEXAS 75235
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(214)-358-2000
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
CYTOCLONAL PHARMACEUTICS INC.
(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 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
--- ---
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON EQUITY, AS OF THE LATEST PRACTICABLE DATE: 16,174,173 SHARES OF COMMON
STOCK, $.01 PAR VALUE, OUTSTANDING AS OF NOVEMBER 10, 2001.
TABLE OF CONTENTS
<Table>
<Caption>
Page(s)
-------
PART I. FINANCIAL INFORMATION
Item 1. -- Financial Statements:
Balance Sheets as of September 30, 2001 (unaudited)
and December 31, 2000 3
Statements of Operations for the Three Months Ended
September 30, 2001 and 2000 and for the Nine months
Ended September 30, 2001 and 2000
(unaudited) 4
Statements of Cash Flows for the Nine Months
Ended September 30, 2001 and 2000 (unaudited) 5
Notes to Financial Statements 6
Item 2. -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. -- Quantitative and Qualitative Disclosures About
Market Risk 13
PART II. OTHER INFORMATION
Item 1. -- Legal Proceedings 14
Item 2. -- Changes in Securities and Use of Proceeds 14
Item 3. -- Defaults upon Senior Securities 14
Item 4. -- Submission of Matters to a Vote of
Security Holders 14
Item 5. -- Other Information 14
Item 6. -- Exhibits and Reports on Form 8-K 14
</Table>
eXegenics Inc.
BALANCE SHEET
(unaudited)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2001 2000
ASSETS (UNAUDITED)
------------- -------------
Current assets:
Cash (principally money market) $ 19,137,000 $ 35,408,000
Investments 10,030,000
Prepaid expenses and other current assets 692,000 495,000
------------- -------------
Total current assets 29,859,000 35,903,000
Equipment, net 814,000 512,000
Leasehold Improvements, net 52,000
Patent rights, less accumulated amortization of
$820,000 and $654,000 587,000 670,000
Notes receivable-officer/stockholder 278,000 278,000
Other assets 16,000 15,000
------------- -------------
TOTAL $ 31,606,000 $ 37,378,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 2,325,000 $ 633,000
Accrued restructuring expenses 340,000
Taxes payable 0 95,000
Deferred revenue from research and development
collaborative contract 389,000
Current portion of royalties payable 94,000 125,000
------------- -------------
Total current liabilities 3,148,000 853,000
Royalties payable less current portion 687,000 750,000
------------- -------------
Total liabilities 3,835,000 1,603,000
------------- -------------
Stockholders' equity:
Preferred stock - $.01 par value, 10,000,000 shares authorized; 762,712 and
718,353 shares of Series A convertible preferred issued and outstanding at
September 30, 2001 and December 31, 2000, respectively (liquidation value
$1,906,800 and $1,795,900 at September 30, 2001 and December 31, 2000,
respectively) 8,000 7,000
Common Stock - $.01 par value, 30,000,000 shares authorized: 16,174,173 and
16,146,730 shares issued and outstanding at September 30, 2001 and December
31, 2000, respectively 162,000 162,000
Additional paid-in capital 67,284,000 67,083,000
Subscription receivable (357,000) (51,000)
Deferred stock-based compensation (182,000) (70,000)
Accumulated deficit (36,574,000) (29,354,000)
Treasury stock, 511,200 (plus warrants to purchase 40,605) and 260,600 shares of
common stock at cost at September 30, 2001 and December 31,2000 Respectively (2,570,000) (2,002,000)
------------- -------------
Total stockholders' equity 27,771,000 35,775,000
------------- -------------
TOTAL $ 31,606,000 $ 37,378,000
============= =============
</Table>
See accompanying notes, which are an integral part, to financial
statements.
3
eXegenics Inc.
STATEMENTS OF OPERATIONS
(unaudited)
<Table>
<Caption>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Revenue:
Licensing & research collaborative
agreement $ 333,000 $ 67,000 $ 1,000,000 $ 754,000
------------ ------------ ------------ ------------
Operating Expenses:
Research and development 1,106,000 891,000 4,112,000 2,076,000
General and administrative 2,268,000 1,662,000 5,044,000 5,391,000
------------ ------------ ------------ ------------
3,374,000 2,553,000 9,156,000 7,467,000
------------ ------------ ------------ ------------
Operating (loss) (3,041,000) (2,486,000) (8,156,000) (6,713,000)
------------ ------------ ------------ ------------
Other (Income) expense:
Interest (income) 289,000 529,000 1,117,000 1,045,000
Interest expense -- 1,000 1,000 4,000
------------ ------------ ------------ ------------
289,000 528,000 1,116,000 1,041,000
NET (LOSS) (2,752,000) (1,958,000) (7,040,000) (5,672,000)
Preferred stock dividend -- (49,000) (180,000) (136,000)
------------ ------------ ------------ ------------
Net (loss) attributable to
common shareholders $ (2,752,000) $ (2,007,000) $ (7,220,000) $ (5,808,000)
============ ============ ============ ============
Net (loss) per share-basic and diluted $ (0.17) $ (0.13) $ (0.45) $ (0.44)
============ ============ ============ ============
Weighted average number of
shares outstanding - basic and
diluted 16,174,173 15,197,000 16,165,018 13,177,000
============ ============ ============ ============
</Table>
See accompanying notes, which are an integral part, to financial statements
4
eXegenics Inc.
STATEMENTS OF CASH FLOWS
(unaudited)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------
2001 2000
------------- -------------
Cash flows from operating activities:
Net (loss) $ (7,041,000) $ (5,672,000)
Adjustments to reconcile net (loss) to net
cash used in operating activities:
Depreciation and amortization 332,000 195,000
Stock-based compensation (112,000) 2,355,000
Changes in:
Other assets (198,000) (210,000)
Deferred revenue 389,000 (207,000)
Accounts payable and accrued expenses 1,938,000 68,000
------------- -------------
Net cash used in operating activities (4,692,000) (3,471,000)
------------- -------------
Cash flows from investing activities:
Notes receivable - officer/shareholder -- (204,000)
Purchase of securities (10,030,000) --
Purchase of equipment (603,000) (442,000)
------------- -------------
Net cash used in investing activities (10,633,000) (646,000)
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of options and warrants -- 38,538,000
Payment of royalties (94,000) (73,000)
Stock subscriptions (284,000) --
Purchase of treasury stock (568,000) (1,089,000)
------------- -------------
Net cash (used in) provided by financing activities (946,000) 37,376,000
------------- -------------
NET INCREASE (DECREASE) IN CASH (16,271,000) 33,259,000
Cash at beginning of period 35,408,000 3,213,000
------------- -------------
CASH AT END OF PERIOD $ 19,137,000 $ 36,472,000
============= =============
</Table>
See accompanying notes, which are an integral part, to financial statements
5
eXegenics Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(unaudited)
(1) FINANCIAL STATEMENT PRESENTATION
The unaudited financial statements of eXegenics Inc., a Delaware
corporation (the "Company"), included herein have been prepared in
accordance with the rules and regulations promulgated by the Securities
and Exchange Commission and, in the opinion of management, reflect all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the results of operations for the interim periods
presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. However, management believes that the
disclosures are adequate to make the information presented not
misleading. These financial statements and the notes thereto should be
read in conjunction with the financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000. The results for the interim periods are
not necessarily indicative of the results for the full fiscal year.
(2) ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 142-Goodwill and Other
Intangible Assets ("FASB 142"), effective for fiscal years beginning
after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have an indefinite life will no longer be amortized
but will be subject to annual impairment tests in accordance with FASB
142. Other intangible assets will continue to be amortized over their
useful life. The Company has not yet determined what the effect of FASB
142 will be on its operations and financial position.
In August 2001, the Financial Accounting Standards Board issued
Standard No. 144--Accounting for the Impairment or Disposal of
Long-Lived Assets ("FASB 144") effective for fiscal years beginning
after December 15, 2001. FASB 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived
assets to be disposed of. This statement supersedes FASB
121--Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. FASB 144 retains the fundamental
provisions of FASB 121 for (a) recognition and measurement of the
impairment of long-lived assets to be held and used and (b) measurement
of long-lived assets to be disposed of by sale. The Company has not yet
determined what the effect of FASB 144 will be on its operations and
financial position.
(3) RESEARCH AND COLLABORATIVE AGREEMENT
In June 1998, the Company entered into a license and research agreement
with Bristol-Myers Squibb ("BMS") on two technologies related to
production of paclitaxel, the active ingredient in BMS's largest
selling cancer product, Taxol(R). The agreement includes fees,
milestone payments, research and development support and minimum and
sales based royalties. The agreement was renewed in 2000 for an
additional 2-year period.
6
eXegenics Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(unaudited)
(4) LOSS PER COMMON SHARE
Basic and diluted loss per common share is based on the net loss
increased by dividends on preferred stock divided by the weighted
average number of common shares outstanding during the period. No
effect has been given to outstanding options, warrants or convertible
preferred stock in the diluted computation, as their effect would be
antidilutive.
(5) STOCKHOLDERS' EQUITY
The Company accounts for its stock-based compensation plans under
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." In October 1995, the Financial Accounting
Standards Board issued Statement No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"), which establishes a fair value-based
method of accounting for stock-based compensation plans. The Company
has adopted the disclosure-only alternative under SFAS No. 123. The
Company accounts for stock based compensation to nonemployees using the
fair value method in accordance with SFAS No. 123 and Emerging Issues
Task Force (EITF) Issue No. 96-18. The Company has recognized deferred
stock compensation related to certain stock option and warrant grants.
During the nine months ended September 30, 2001 the Company granted
5,000 options to purchase shares of its Common Stock at $7.188 per
share, in return for consulting services. The Company valued these
warrants based on the Black-Scholes option pricing model. In connection
therewith the Company recorded a non-cash charge of $2,088 and $6,264
for the three and nine months ending September 30, 2001. In connection
with other option grants to consultants in previous years the Company
recorded a non-cash charge of $117,532 and $351,956 for the three and
nine months ending September 30, 2001.
(6) DEFERRED REVENUE
The Company recognizes revenue from development agreements over the
stated life of the agreement. Amounts received in advance of the
services to be performed are recorded as deferred revenue. Accordingly,
funds of $1,500,000 received during the nine months ended September 30,
2001, net of $1,111,110 in revenues recognized cumulatively through
September 30, 2001 are recorded as deferred revenue of $388,890.
(7) RESERVE FOR RESTRUCTURE
The Company generally recognizes operating expenses as incurred. As
part of its reorganization efforts the Company has terminated several
employees and is also remodeling facilities and moving equipment, and
has recognized approximately $560,000 related to those activities
through September 2001, of which $465,000 related to severance packages
which were accrued at June 30, 2001. Cash Payments of $124,854 were
charged against the account during the quarter ending September
30, 2001.
(8) SALE OF TREASURY STOCK
In May 2001, the Company sold 100,000 shares of treasury stock to
President/CEO Ronald L. Goode for a purchase price of $3.25 per share
of common stock, the fair market value at the time of the purchase. The
Company values its investment in its common stock at a weighted average
cost of approximately $7.67 per share, and accordingly, reflected a
7
eXegenics Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(unaudited)
reduction of Additional Paid in Capital of $425,000, or the difference
between and the weighted average price of $767,000 and the purchase
price of $325,000.
(9) SETTLEMENT
In September of 2001, the company reserved $1,165,000 with which to
resolve certain outstanding disputes. In October 2001, the Company
purchased 100,000 shares of its common stock and warrants to purchase
40,605 shares of its common stock for $1,165,000 pursuant to a
settlement agreement. Of this amount, $765,000 was recognized as
expense in the third quarter of 2001 and $400,000 as the purchase of
treasury stock.
(10) SUBSEQUENT EVENTS
On October 24, 2001 the company announced a name change to eXegenics
Inc. Trading under the new Nasdaq symbol "EXEG" also commenced on that
date.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Financial Statements and the Notes thereto
included in this report. This discussion contains certain forward-looking
statements that involve substantial risks and uncertainties. When used in this
report, the words "anticipate," "believe," "estimate," "expect" and similar
expressions as they relate to the Company or its management are intended to
identify such forward-looking statements. The Company's actual results,
performance or achievements could differ materially from those expressed in, or
implied by, these forward-looking statements. Historical operating results are
not necessarily indicative of the trends in operating results for any further
period.
We were organized and commenced operations in September 1991. Our
efforts have been principally devoted to research and development activities and
organizational efforts, including the development of products for the treatment
of cancer and infectious diseases. During the past three years we have acquired
advanced drug creation software and technology, recruited experienced scientific
and management personnel and advisors and raised capital.
We have strengthened our Board of Directors with the addition of a new
director and the election of a former director to the position of Chairman. We
have enhanced our executive staff with the addition of a new President/CEO, and
two vice-presidents, one as controller and one in business development. Our
former President and CEO, also a founder of the Company, is remaining with the
Company as Executive Vice President, a director and a member of the team acting
as the Office of the Chief Scientific Officer.
The Company initiated the process of defining the steps necessary to
move the Company towards a commercially viable, "platform" biotechnology company
that can drive revenue-generating partnerships with its drug creation
technologies and build an internal drug development pipeline to create
longer-term value. Our financial position has provided the necessary resources
to review our current progress and implement the changes necessary to become a
fully operational and profitable drug creation, design and development company.
During the second and third quarters of 2001, our management team, with
the assistance of other staff members as well as expert scientific and business
consultants, completed a comprehensive review and analysis of all the existing
operations of the Company, its projections, assumptions and future plans. This
rigorous analysis was driven by a renewed focus to achieve future profitability
and to ensure that existing resources will be adequate. An integral part of this
process was the review of the current marketplace for our technologies, an
updated evaluation of our competitors and their technologies, and a realistic
evaluation of the viability of the technology platforms we have in development.
9
We developed stringent criteria that were utilized in the evaluation of
each of our programs. As a result, we identified the programs that were most
compatible with our strategic objectives and those that have less value. In
addition, we terminated all ongoing development activities on all non-strategic
projects, which are those projects that are not a part of the Company's
strategic focus on technologies that it can itself commercialize. Attempts will
be made to generate future revenues from these discontinued projects (which
include a system for producing glucocerebrosidase {used in Gaucher's Disease}
and use of taxanes in Polycystic Kidney Disease) via outlicensing and
partnering.
Also, at the conclusion of the Company's review on October 24, 2001 the
Company announced a name change to eXegenics Inc. to reflect the new direction
of the company. Trading under the new Nasdaq symbol "EXEG" also commenced on
that date.
We will continue to focus on the expansion of our two drug creation
platform technologies: Quantum Core Technology(TM) (QCT(TM)) and OASIS(TM), as
well as the other activities described below. We have strengthened and expanded
our affiliations with universities and other research institutions to ensure
that we obtain the most advanced scientific knowledge available. In addition, we
have increased our emphasis on identifying opportunities for collaborations,
strategic alliances and joint ventures with pharmaceutical and biotechnology
companies for the commercial development of our products.
The programs that will be the focus of our activities for the next twelve
months are as follows:
o Introduction of the QUANTUM CORE TECHNOLOGY(TM) (QCT(TM)) Platform to the
pharmaceutical industry. QCT is a chemistry-based drug lead "creation"
technology that analyzes protein structure to systematically discover
small-molecule enzyme inhibitors that can become lead compounds for drug
development.
o Selection of lead compounds for Alzheimer's disease, tuberculosis and the
common cold. This program needs at least 12 to 18 months for lead selection
and optimization.
o Accelerated commercialization of the OPTIMIZATION OF ANTISENSE INHIBITION
SEQUENCES(TM) (OASIS(TM)) Platform. This proprietary suite of computational
algorithms can identify the specific biological sequence of individual
antisense drug leads. It can also be used in a "high-throughput" modality
to discover gene function.
o Continued deployment of resources to the ongoing paclitaxel program with
Bristol-Myers Squibb.
o Continued investigation of our promising vaccine creation program that will
include consolidation of current vaccine research facilities into the
Company's Dallas headquarters.
o Divestment via outlicensing or partnering of other projects including: a
system for producing glucocerebrosidase {used in Gaucher's Disease} and use
of taxanes in Polycystic Kidney Disease) as well as other work in Breast
Cancer, Ovarian Cancer, and Melanoma Cancer. An aggressive marketing
10
program will be implemented to identify partners who have the resources to
license and advance these projects into commercialization.
During the strategic planning process, we implemented improvements to
our organization and established a reserve for restructuring that recognizes
compensation expense for terminated employees and other reorganization expenses.
Additionally, we established a scientific team to manage the Office of the Chief
Scientific Officer. Those appointed to that office include two consultants,
Professor Andrew Kende, Ph. D., University of Rochester, emeritus holder of the
Houghton Chair of Organic Chemistry, and Fred Radzialowski, Ph.D., former Vice
President of Drug Metabolism at Searle Pharmaceuticals, who, along with Arthur
Bollon, Ph.D., make up the team. Dr. Bollon will have primary responsibility for
the Company's paclitaxel program with BMS, Dr. Kende will have primary
responsibility for the Drug Discovery platforms (QCT and OASIS) and Dr.
Radzialowski will have primary responsibility for the vaccine creation
technology.
Our actual research and development and related activities may vary
significantly from current plans depending on numerous factors, including
changes in the costs of such activities from current estimates, the results of
our research and development programs, the results of clinical studies, the
timing of regulatory submissions, technological advances, determinations as to
commercial potential and the status of competitive products. The focus and
direction of our operations will also be dependent upon the establishment of
collaborative arrangements with other companies, the availability of financing
and other factors.
RESULTS OF OPERATIONS
Revenue
Revenues of $333,000 and $67,000 were recognized for the three months
ended September 30, 2001 and 2000, respectively. We recognized revenues of
$1,000,000 and $754,000 for the nine months ended September 2001, and 2000,
respectively. Increases in revenues for the three and nine month periods ending
September 30, 2001 over the corresponding periods in 2000 were attributable to
license and research and development payments from our agreements with
Bristol-Myers Squibb.
Research and Development Expenses
For the three months ended September 30, 2001 and 2000, research and
development expenses were $1,106,000 and $891,000, respectively. We incurred
research and development expenses of $4,112,000 and $2,076,000 for the nine
months ended September 30, 2001 and 2000, respectively. The increase in research
and development expenses for the three month period in 2001 as compared to 2000
was due to increases in research and development salaries due to additional
scientific staff and increases in laboratory supplies due to increased
laboratory activities. The increase in research and development expenses for the
nine-month period in 2001 as compared to 2000 was due to increases in research
and development salaries due to additional scientific staff as well as the
salary expense due to the restructuring expenses recorded in June 2001. In
addition these increases in expenses for contract research and research
consultants as well as increases in research material and laboratory expenses as
we expanded our research and development activities, including purchases of
equipment and supplies to establish additional laboratories
11
We anticipate that we will incur increased research and development
expenses as we expand our drug creation efforts. We also expect to hire
additional technical staff to aid in the fulfillment of these goals.
General and Administrative Expenses
For the three months ended September 30, 2001 and 2000, general and
administrative expenses were $2,268,000 and $1,662,000, respectively. The
increase of $606,000 in expenses for the three months ended September 30, 2001
as compared to the same period in 2000 was attributable to the recognition of
expenses of $765,000 due to the resolution of certain outstanding disputes,
offset by decreased expenses for public and financial relations. General and
administrative expenses were $5,044,000 and $5,391,000 for the nine months ended
September 30, 2001, and 2000, respectively. The decrease for the nine month
period ended September 30, 2001 was attributable to decreased expenses for
public and financial relations, partially offset by increased expenses for
salaries, legal and professional services and other operating expenses.
Interest Income
For the three months ended September 30, 2001 and 2000, interest income
was $289,000 and $529,000, respectively. Interest income was $1,117,000 and
$1,045,000 for the nine months ended September 2001 and 2000, respectively. The
decrease in interest income for the three months ended September 30,2001 was
attributable to the decrease in cash available for investment and declining
interest rates. The increase for the nine month period ended September 30, 2001,
as compared to the same period of 2000, was attributable to an increase in cash
available for investment from warrant conversions during 2000.
Net Loss
For the three months ended September 30, 2001 and 2000, net losses were
$2,752,000 and $1,958,000, respectively. We incurred net losses of $7,040,000
and $5,672,000 for the nine months ended September 30, 2001 and 2000,
respectively. The increase in net loss in 2001 compared to 2000 was attributable
to an increase in salaries and services related to reorganization of the Company
as well as a decrease in interest rates.
Liquidity and Capital Resources
At September 30, 2001, we had cash and cash equivalents of
approximately $19,137,000 (of which $1,165,000 was reserved to settle a certain
dispute and which was paid out on October 18, 2001) and investments in
marketable securities of $10,030,000, compared to $35,408,000 at December 31,
2000. Since inception we have financed our operations from debt and equity
financings as well as fees received from licensing and research and development
agreements. During the nine months ended September 30, 2001, net cash used in
operating activities was $4,692,000, net cash used in investing activities,
purchase marketable securities and fixed assets, was $10,633,000 and net cash
used in financing activities, principally the purchase of treasury stock, was
$946,000.
We have agreed to fund scientific research at academic institutions
and/or to make minimum royalty payments for licensing and collaborative
agreements of approximately $300,000 for the fourth quarter of 2001. We do
12
not expect these arrangements to have a significant near-term impact on our
liquidity and capital resources. Although we have cancelled one agreement and
thereby reduced our future financial obligations by $700,000, we intend to
continue to maintain and develop relationships with academic institutions and to
establish licensing and collaborative agreements.
We have no material capital commitments for the year ended December 31,
2001.
We believe that we have sufficient cash and cash equivalents at
September 30, 2001 to finance our plan of operation through December 31, 2002.
However, there can be no assurance that we will generate sufficient revenues, if
any, to fund our operations after such period or that any required financings
will be available, through bank borrowings, debt or equity offerings, or
otherwise, on acceptable terms or at all.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our exposure to financial market risk, including changes in interest
rates, relates primarily to our marketable security investments. We generally
place our marketable security investments in high credit quality instruments,
primarily U.S. government obligations. We do not believe that a 100 basis point
increase or decrease in interest rates would significantly impact our business.
We do not have any derivative instruments. We operate only in the United States
and all sales have been made in U.S. dollars. We do not have any material
exposure to changes in foreign currency exchange rates.
13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed herewith as part of this form
10-Q:
None
(b) The following report was filed on Form 8-K during the quarter ended
September 30, 2001:
None
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
eXegenics Inc.
Date: November 14, 2001 /s/ Joan H. Gillett
------------------------------
Joan H. Gillett, CPA
Vice President/Controller
Principal Accounting Officer
15